More people are using prepaid cards, a Cardbeat report published by Auriemma Consulting Group shows.
Over 40 percent of those surveyed said that they received an “open-loop” card, those made by Visa or Mastercard that don’t have to be used at a specific store. Only a quarter of shoppers had one of the prepaid cards five years ago.
Consumers who have difficulty obtaining traditional cards due to a low credit score may benefit from using prepaid cards. Since money is loaded on the card in advance, consumers don’t have to be concerned about a low FICO score affecting their ability to get a card.
With many Americans trying to get a hold on their credit card debt, there is great room for growth of prepaid credit cards in the future.
“General-purpose stored-value cards have the potential to replace traveler’s and payroll deposit checks in the same way that gift cards replaced paper gift certificates, but fewer than 10 percent of our consumers have used a prepaid travel or payroll card,” says editor of Cardbeat Nancy Stahl.
The number of consumers using payroll cards may be on the rise. States have reported considerable savings by using the cards instead of traditional checks.