As consumers explore checking account alternatives, more banks are providing solutions.
According to a new study by Mercator Advisory Group and the American Bankers Association, 52 percent of banking institutions currently offer or plan to offer general purpose reloadable, or GPR, cards. Respondents indicated that prepaid gives them the ability to add value to existing account holders and attract new customers. Those new customers often fall into a lower income bracket, and the survey results showed that banks see growth opportunities in this category.
Lisa Westermann, assistant vice president of corporate communications at Wells Fargo, says the bank has seen increasing interest in prepaid cards over the past year. While new customers primarily use prepaid cards for their everyday needs, Westermann says that some existing customers use them for managing expenses, such as business travel.
Prepaid cards have received plenty of negative attention due to a reputation of high fees and low consumer protection. However, that reputation is starting to shift. Over the past few months, we've seen promising, low-cost prepaid cards from Chase and a partnership between Wal-Mart Stores Inc. and American Express. Recently, Fifth Third Bank became the latest member of the banking industry to unveil prepaid plans with its new Access 360 card. The card includes a $7 monthly fee, but Fifth Third will reduce the fee to $4 for customers who also have a checking account at the bank or for cardholders who load $500 or more on the card each month.
After reviewing the results from the ABA survey, it's clear that we'll continue to see more cards, which is good news if you're considering a prepaid piece of plastic.
"With more and more banks offering prepaid products, consumers will benefit from the competition among banks to offer a competitively priced product that includes all the latest features that add value to the card," Christopher McClinton, AAP, vice president, payment solutions, American Bankers Association, says.
What do you think of prepaid cards? Have you gotten comfortable with their use? Or are you still afraid of their fees?