The Top Five Tips for Buying A Great Prepaid Product

by Mercator Advisory Group 0

The top five criteria for selecting a prepaid financial services offering have been announced:

“To highlight the importance of financial literacy and choosing financial products wisely, NBPCA offers consumers five useful tips on things they should consider before buying a prepaid debit card. Branded with the American Express, Discover, MasterCard or Visa logos, prepaid debit cards are accepted anywhere these brands are accepted. With hundreds of cards to choose from, consumers can find the card that best fits their needs. A printable version of the tips may be found on the NBPCA Facebook page. ”

The timing of these five tips is associated with Financial Literacy Month:

“Financial Literacy month occurs in April along with tax filing season, making this a great time for consumers to give themselves a money checkup and learn good financial habits. With bank fees rising, banked, unbanked and underbanked Americans are searching for lower-cost alternatives like prepaid debit cards to help them meet their everyday financial needs and save for the future.

“In an environment where free checking accounts are becoming a thing of the past, more consumers are joining the ranks of the unbanked and turning to prepaid debit cards as safe, secure and efficient tools to budget their money, control spending and avoid debt,” said Kirsten Trusko, President and Executive Director, Network Branded Prepaid Card Association (NBPCA).”

These straightforward tips don’t break any new ground and one wonders how “knowing the fee structure” slipped to third place:

“1. Use: Determine where and how you will use the card, to pay bills, save, shop, buy groceries, or get cash at the ATM. Also, decide what features are important for you to have with a card, such as a savings program so you find the one that best meets your needs. Cards can be conveniently purchased at financial institutions, online or at grocery, big box and drug stores.
2. Terms & Conditions: As with any financial product, before buying a prepaid card you should read and understand the card’s terms and conditions, how it can be used and what fees are charged for what services. Prior to purchasing the card, information about the card should be easy to find and available to you online or by calling the card’s customer service number.
3. Fees: Compare fees among cards for services such as purchase, monthly maintenance, ATM, transaction and customer service fees. Many cards offer free online balance inquiry, text alerts and will waive monthly fees for cardholders who receive their wages directly deposited to their cards or those who maintain higher card balances.
4. Security: Cards should come with FDIC insurance and the card brand’s zero liability policies for lost or stolen cards to protect cardholders against fraudulent purchases.
5. Cash/ATM access: Many prepaid card programs charge no fees when cardholders request cash back with purchases. You should determine how many in-network surcharge-free ATMs are located where you live and work to minimize fees charged for out-of-network ATM access.”

The NBPCA wraps its advice up by stating that “one size does not fit all:”

“A prepaid card helps people budget, control spending, and save while giving them the power of plastic to participate in the financial mainstream. There isn’t a one size fits all prepaid card but rather hundreds of options from which consumers can choose. NBPCA encourages individuals to shop around, and compare fees and services offered by different cards before they purchase a prepaid debit card. By doing their homework, consumers can find the card that best meets their personal needs at a price that is right for them. For more information on prepaid cards, consumers can visit the NBPCA Facebook page.”

Click here to read the article.

Click here to read a related Mercator Perspective on the underbanked and underserved.

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