Tuesday, February 11, 2014
Prepaid found to be a 'better deal' than checking
The Pew Charitable Trusts released a report that concluded what is becoming increasingly apparent, that general purpose reloadable (GPR) prepaid cards rival basic checking accounts in affordability. The research found that GPR cards offered by large banks are "particularly economical" when compared to similar products studied in 2012.
The report, Consumers Continue to Load Up on Prepaid Cards, noted that three of the 10 most popular GPR cards are now offered by banks, whereas none made the list back in 2012. But, more importantly, when GPR cards were compared to checking accounts offered at the same large financial institutions, "prepaid cards are often a better deal," according to the report.
Additionally, prepaid providers' fee disclosures are being published in clearer, more user friendly formats, according to the report. "The terms of almost all prepaid cards explicitly state that customers’ funds would be covered by FDIC insurance, but some disclose that they do not − with disclosure much clearer in 2013 than it was in 2012," the report said.
Among the recommendations Pew made to the CFPB, prepaid providers should:
- Not have overdraft or other automated or credit features linked to prepaid cards
- Protect cardholders against liability for unauthorized transactions
- Provide access to account information and transaction histories
- Clearly disclose terms, conditions, and fees in a uniform, concise, and easy-to-read format
Pew's research was based on the examination of disclosures and fee structures of 66 prepaid cards by accessing documentation on the websites of American Express Co., MasterCard Worldwide, Visa Inc., and the 10 largest retail banks that offer prepaid cards.
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