The Opportunity In Users Of Prepaid Cards
WILMINGTON, N.C. — One analyst believes CUs should create a new checking account to grab a segment of consumers who are shifting to prepaid cards.
Bob Giltner, consulting partner with Velocity Solutions, said there is growing popularity of prepaid cards among consumers who hate overdraft fees but can't seem to avoid them. "They like to pull money out of their checking account, load it on a prepaid card, and go shopping because they know they won't overdraft this way."
Giltner advised introducing a checking account that charges a flat $19.95 monthly fee and allows ten overdrafts, after which it is return all. "The $19.95 might sound expensive, but the average prepaid card costs the consumer $25 a month. The checking account is a better deal and there is a segment of consumers, low to moderate income, who will pay for this kind of overdraft insurance."
Giltner added that there is also significant revenue opportunity in raising foreign ATM fees. Convenience stores, and some banks, pointed out Giltner, are now charging $4 and $5 fees. "Credit unions have been slow to recognize people pay these fees."