The Pros And Cons Of Prepaid Cards
April 12, 2012 4:10 PM
(Image: ThinkStock)
Pro: Fewer Hidden Fees
Some participants said prepaid cards' monthly maintenance fees are cheaper, and more transparent, than bank fees. (Image: ThinkStock)
Con: Too Many Fees
Some participants complained that there are too many fees associated with prepaid cards, including monthly maintenance and reloading fees, and even charges for calling customer service. Fee rates and terms vary across providers. (Image: ThinkStock)
Pro: Budget Friendly
Prepaid users said the cards help them tighten their belts when shopping, keeping them on budget and out of debt. (Image: ThinkStock)
Con: Adding Credit Lines, Overdraft Fees
Consumers in the focus groups opposed the idea of adding a credit line or overdraft feature to prepaid cards, reiterating that they want to avoid overspending. (Image: ThinkStock)
Pro: Credit-Building And Other Add-Ons
Participants were supportive of savings and direct deposit tools linked with prepaid cards, and roughly half favored adding functions to build a credit history or repair damaged credit. (Image: ThinkStock)
Con: Lack Of Oversight
Some consumers in the focus group were "very concerned" to learn that prepaid cards do not have the same FDIC insurance coverage or disclosure requirements as bank products. (Image: ThinkStock)
Pro: Anonymity
Some participants liked that they aren't required to register the cards, and others said they think prepaid offers better identify theft and fraud protection. (Image: ThinkStock)
Con: Nobody's Comparison Shopping
Few study participants said they researched cards before selecting one, with most saying they chose the most convenient option or what was recommended to them. (Image: ThinkStock)
