Underbanked consumers turn to prepaid cards
As a result of the high volume of charge offs made by lenders in recent years, many consumers now find themselves without access to credit cards.
This in turn has led to a rise in popularity among consumers for prepaid cards, which some industry experts say could become a $447 billion industry by 2017.
Underbanked consumers who have trouble opening new accounts, or getting credit cards, can obtain a prepaid card to help them manage their budget and shop online. However, despite their convenience, many consumer advocates and legislators say prepaid cards have a number of monthly fees and activation costs that could quickly leave consumers with a negative balance, USA Today reports.
“For the most part, it’s very difficult to find out what you’re getting into before you buy the card,” Suzanne Martindale, a policy associate for Consumers Union, told the news source. “This makes it difficult for consumers to compare the costs of prepaid cards.”
In addition, while recent legislation calls for a number of packaging warnings so that consumers are aware of the costs, those who opt for prepaid cards should visit issuers’ websites for a full disclosure of fees before making a decision.