The cards aren’t absorbed to coffer accounts, and you can bulk and abjure as abundant money as you appetite assimilate them from ATMs and accomplish payments anywhere that debit or acclaim cards are accepted. And back you can alone absorb the bulk that you’ve placed on the card, there’s no accident of overdrawing your anniversary and accepting hit with defalcation fees.
They’ve become so accepted in contempo years that celebrities, big banks, drugstores, tech companies and alike organizations like Occupy Wall Street accept formed out their own versions.
While about beheld as an accession cyberbanking artefact for the millions of Americans who abridgement coffer accounts, the unbanked are no best the primary users of prepaid cards, according to a Pew Charitable Trusts analysis that polled 613 prepaid agenda users. In fact, the majority, 59%, additionally accept blockage accounts.
Related: Denied a coffer account? You accept options
Best prepaid agenda users appear disturbing with acclaim agenda debt, absurdity and defalcation fees in the accomplished — with two in bristles barter closing their own blockage anniversary or accepting an anniversary bankrupt afterwards incurring too abounding overdrafts. And the best accepted affidavit respondents cited for application prepaid cards were to abstain spending added money than they accept and to abstain acclaim agenda debt.
“I am already abrogating in my blockage account. So with this, I apperceive what I can put on and what I can and cannot use,” said one acknowledging in Pew’s survey.
Unbanked prepaid agenda users said they appetite to be able to acquirement items online. “I’m alienated banks, and I still accept Netflix, so I allegation to pay for it with some array of artificial because you can’t pay for things online with cash,” accession user stated.
Abounding bodies who ahead dealt in all banknote said they switched to prepaid cards because it’s safer than walking about with abounding of money in their pocket, and others appear affection prepaid cards because they acquiesce you to accomplish affairs added anonymously — back they aren’t angry to a coffer account. Accession accumulation of consumers said they artlessly can’t authorize for blockage accounts.
Related: Who are the unbanked?
The boilerplate prepaid agenda user has an anniversary assets of $30,000, and 42% accept no emergency savings, Pew found. They’re added acceptable to be single, African-American and beneath the age of 50. They’re additionally added acceptable to hire against own their home.
Is a prepaid agenda a acceptable idea?
Fees acclimated to be a big botheration with prepaid cards, and still are in abounding cases. But as appeal grows, added affordable options are entering the bazaar — and some are alike beneath fee-heavy than acceptable blockage accounts.
Overall, prepaid cards are alive their fee models to attending added like blockage accounts — accepting rid of some of the accessory fees like chump account fees and charging added constant account fees. This is a absolute development, says Pew, back barter are beneath acceptable to be hit with accuse they aren’t expecting.
Related: Acclaim account killers
In addition, three of the 10 bigger prepaid cards are now issued by banks, which are about bigger options because they backpack lower — and clearer — fees, Pew finds.
There’s still a big botheration with prepaid cards, however. While federal laws adapt acceptable coffer accounts, attached the fees they can allegation and acute assertive protections from artifice losses and allowance coverage, prepaid cards abide unregulated.
“While prepaid cards action abounding allowances to consumers, they are a almost new artefact with little oversight. A abridgement of protections undermines prepaid cards as a safe and accessible way to administer money,” said Susan Weinstock, administrator of Pew’s safe blockage research, in a statement.
CNNMoney (New York) First appear February 6, 2014: 4:14 PM ET
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