Reloadable prepaid debit cards have gone so mainstream they share space now with top bank brands on at least one credit card comparison website.
NerdWallet Inc., a firm with offices in New York and San Francisco that operates a credit card comparison website, on Jan. 31 added a new tool to enable consumers to compare 58 reloadable debit cards’ various costs, including maintenance, usage and reload fees.
The firm claims the site is the first of its kind to provide ongoing comparisons of prepaid card products. It is providing the information as a public service “to show the real costs and hidden fees of prepaid debit cards,” Anisha Sekar, NerdWallet’s vice president of credit and debit products, tells PaymentsSource.
Unlike its credit card comparison tools, for which it receives compensation when site visitors are approved for cards they explore on the site, NerdWallet so far receives no referral rewards from prepaid card issuers. But NerdWallet does provide links for site visitors to apply for the various prepaid cards it compares.
NerdWallet hopes the information will drive more visitors to its site, Sekar says.
NerdWallet’s interactive tool enables consumers to compare reloadable prepaid debit card features not just with other similar products but also with checking accounts, several of which are described as free or far cheaper than prepaid debit cards on the site.
For example, NerdWallet ranks reloadable prepaid debit cards from American Express Co. as the most affordable, with average costs reaching $48 annually for features that include bill payment. It calculates the annual cost of a prepaid card from Green Dot Corp. to be as high as $195 annually with typical use.
But analysts say direct comparisons among reloadable prepaid cards, and also between prepaid cards and checking accounts, often are misleading because the actual costs depend on how consumers use the products.
For instance, a Green Dot prepaid debit card with rich features, including online bill payment, can be virtually free if a consumer obtains it online and makes at least 30 card purchases per month.
“I disagree with NerdWallet that checking accounts generally are cheaper than prepaid debit cards,” Madeline Aufseeser, a senior analyst with Aite Group, tells PaymentsSource. “Most large banks charge customers far more than the cheapest prepaid debit card to maintain a checking account, and many of these so-called free checking accounts have steep restrictions, particularly on ATM access.”
What may be most significant about NerdWallet’s site that enables comparisons of prepaid cards is the growing consumer and media awareness of the products, Ben Jackson, a senior analyst with Mercator Advisory Group, tells PaymentsSource. “These cards are becoming more mainstream products and are seen as financial tools for an increasingly diverse group of consumers,” he says.
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