Media Coverage

It's Their Fee Party, and Prepaid Card Issuers Will Charge If They Want To

There’s no doubt that prepaid cards are growing in popularity. Only 11% of consumers used them just two years ago, and not only has the number since grown to 15%, but we’re also seeing big-time celebrities like Lil Wayne, Suze Orman, and George Lopez sign up as endorsers, highlighting the growing mainstream appeal of these products. While some of the best prepaid cards can be cheaper to use than a checking account for certain folks, reaching this conclusion can also be quite difficult. In short, prepaid card fees are out of control, and the problem needs to be fixed.

I’m not talking about the cost of these fees, but rather their sheer number and lack of a consistent naming convention. Prepaid card issuers are known for both charging what seems like a million different fees and calling them by different names in order to hide the true cost of their products.

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We aren’t, and that’s by design. Prepaid card issuers want our heads to spin when trying to decipher the cost of their products. It’s pure psychology. A bunch of little fees don’t seem as bad as one or two bigger ones, even if they add up to more. Take the response from one of the participants in a recent focus group on prepaid cards conducted by the Pew Charitable Trusts Health Group for example:

I’d prefer to pay the $3.95 [that it costs to load some prepaid cards] than have to deal with the things that I know that people go through with their checking accounts. … Nobody wants to pay extra fees. If we had to, I’d take the $3.95 any day over the $35 overdrafting [fee].

Read the full article at walletblog.com.

 
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