cards
Big changes are on the horizon for the prepaid card market.
Up to now prepaid cards have had a bit of a stigma attached to them, seeming to carry the implication that the cardholder was unable to qualify for a traditional credit card for whatever reason. Prepaid cards also had a somewhat bad reputation for carrying hidden fees, offering no protection in the event of loss or theft and not being a useful tool for rebuilding credit. However, this is all about to change in the coming year, as 2012 will likely see a sharp rise in the popularity of prepaid cards.
Prepaid cards are no longer just for the unbanked. In fact, now close to three quarters of prepaid card carriers also have a checking account. Many Americans have turned to prepaid cards in the wake of the financial crisis to use as budgeting tools in an effort to gain better control of their spending and, consequently, their debt.
And any fears of falling victim to sneaky fees may soon be a thing of the past. United States senator Robert Menendez, D-NJ, recently introduced the Prepaid Card Consumer Protection Act to Congress that seeks to put an end to hidden fees on prepaid cards altogether.
“Unsuspecting consumers are finding out the hard way that prepaid cards often give you much less than the dollar amount you load onto them thanks to unnecessary fees,” stated Menendez during a press conference back in December. “We need to ensure that families who rely on prepaid cards are not surprised by hidden charges.”
Whether or not his proposal winds up being passed into law, it is in the best interest of card issuers to take note and make some proactive changes regarding the transparency of their fee structures of their own accord. Making prepaid card products more consumer-friendly will only have a positive effect upon card issuers’ bottom lines.
For anyone considering a prepaid card, there are now a wider variety of options than ever before. Even American Express, a card that has built its brand based upon the notion of exclusivity, is seeking to broaden their customer base by launching a new prepaid card option called Serve. Not being tradition credit cards, Serve cards don’t come with an attached line of credit but, rather, provide its holder to fund it via a different credit or debit card – even if from another rlender – as well as a checking account.
“There’s a large segment of the population that would love to be an American Express customer but for whatever reason felt they couldn’t qualify and therefore didn’t apply, or did apply and just didn’t have the credit history to be able to do that,” said American Express representative Dan Schulman, according to the Wall Street Journal.
With Serve, having an AMEX card is now an attainable goal for most anyone.
