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Why consumers crave prepaid cards

By David McMillin ·
Thursday, April 10, 2014
Posted: 1 pm ET

For consumers who don't have access to a traditional bank account or don't want to be involved with the banking industry, prepaid cards have started to appear at the top of the list of preferred personal finance tools. Ipsos recently conducted a survey of more than 1,000 adults, and the results show that 62 percent of Americans believe prepaid cards are good for consumers.

That statistic alone may sound surprising. In the past, many financial writers, including me, have focused on some of the dangers of prepaid cards such as hidden fees and limited protection for cardholders. However, some members of the banking industry have made additions to the selection of prepaid cards that have made me reconsider my negative perspective on the checking account alternative.

American Express offers the Bluebird card, which carries essentially no fees other than out-of-network ATM withdrawals and a cost for ordering checks. Chase has its Liquid card with a very consumer friendly and simple, flat $4.95 monthly fee.

The Ipsos research reveals that consumers care about more than just fees. Here's a look at some of the top reasons respondents like prepaid cards.

  • Anywhere acceptance: 70 percent like the ability to use these cards anywhere the network brand is accepted.
  • Spending control: 69 percent like the inherent fixed spending limits of prepaid cards.
  • Starting out: 64 percent believe they make great "first" accounts for teenagers and college students.
  • Banking substitute: 62 percent say these cards are ideal for those who have struggled to manage bank accounts in the past.
  • Paperless power: 59 percent like the ability to receive government and payroll benefits electronically rather than having to cash checks.

What do you think of these benefits? Do any of them sell you on the need for a prepaid card? Check out Pros and Cons of Prepaid Debit Cards.

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