Community Bank Online | Checking Account Card | Prepaid Debit Cards May Augment Bank Accounts | PREPAID debit cards tend to be regarded as a different for individuals that can't qualify for traditional checking accounts, because you typically don't ought to undergo a credit check to obtain a prepaid credit card. But a majority of Americans who use prepaid credit cards also have a vintage-fashioned checking account, according to new information through the Pew Charitable Trusts, which was studying consumer utilization of prepaid credit cards. That might seem counterintuitive, such consumers make use of the cards to assist manage their and follow an allowance, said Alex Horowitz, a Pew research manager, within a call concerning the findings.
In the telephone survey of 613 adults who use prepaid credit cards at least one time per month, 59 percent said additionally they stood a banking account and those typically feature a bank card. The finding suggests that many people begin to see the prepaid credit cards as complementing traditional accounts. They rely on them to gain treating their finances, Mr. Horowitz said.
They do carry other fees, however, including monthly service fees and, sometimes, transaction fees although those have grown to be less frequent, in accordance with Pew. In addition to the survey, Pew prepared an investigation determined by its examination of fees and consumer disclosures for 66 pre-pay credit cards.
Consumers loaded a lot more than $64 billion to the cards in 2012, up from roughly $57 billion the prior year. Nearly three-quarters of users are under 50, in line with the Pew survey, conducted in late 2012.
They work like an atm card, but aren't linked to a traditional bank account you load money to the card, and generally can't spend more importantly amount without adding more funds. If you try to buy something that is more epensive than the card's balance, the acquisition is often declined, which means you typically don't need to panic about overdraft fees, because you would with your bank checking account and it is debit card. You can aquire prepaid credit cards at drugstore and retail chains, or at some bank branches.
They are increasingly accessible, Pew found, and have become more affordable in some instances, cheaper than basic checking accounts. In the initial prepaid-card study this year, Pew found that the cards were mostly provided by financial manufacturers like the pin Dot Corporation and the NetSpend Corporation (which Pew calls non banks to distinguish them from traditional retail banks). Those cards still dominate industry. The good news is, no less than 10 big banks offer prepaid credit cards, including JPMorgan Chase, Wells Fargo and BB&T.
When comparing the cost of prepaid cards and checking accounts offered by large finance institutions, Per centu Pew concluded, prepaid cards will often be a greater deal.
While fees on bank-issued prepaid cards are often lower than those offered by nonbanks, there are a few drawbacks with bank-issued cards, the Pew report noted. Banks have started to make available prepaid credit cards for the reason that cards generally are exempt from regulatory caps on the swipe fees that banks charge merchants for processing bank card purchases. But to keep up the exemption and the substitute for charge higher fees banks can't offer certain services around the cards, like online bill payment.
Pew also found drawbacks with prepaid cards over all. Consumer protections are scant, and the cards are largely unregulated; while most cards carry federal deposit insurance, it’s unclear in some cases when the protection applies.
Here are some questions to consider about prepaid debit cards:
Prepaid Debit Cards May Augment Bank Accounts # What fees will I incur?
More prepaid cards now charging monthly fees rather than per-transaction fees. Pew found that about 20 percent of the cards charged no monthly fee, while about three-fourths charged a fee ranging from less than $2 to nearly $15. A few cards waive the fee if you load a minimum amount on the card each month, or arrange for direct deposit.
Prepaid Debit Cards May Augment Bank Accounts # Does the card allow for overdrafts?
Most cards in the study don’t allow users to overspend their card balance; just five of the 66 cards charged an overdraft fee, and all charged $15. (An overdraft fee on a basic checking account at a large bank, by comparison, is commonly $35.) Susan Weinstock, director of Pew’s safe-checking project, said that four of the cards charging overdraft fees were offered by the same company, NetSpend, and that the option was available to customers arranging direct deposit of funds onto their card — presumably, so that any overspent funds and the fee can easily be recovered.
Prepaid Debit Cards May Augment Bank Accounts # Are funds protected from unauthorized transactions?
Under the Electronic Fund Transfer Act, checking accounts must limit liability if your card is lost or stolen, but prepaid cards have no such requirement, Pew said. Many cards provide such protection voluntarily, but Pew wants it to be mandatory. - nytimes.com
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