Pew Report: Prepaid Cards Have Benefits and Risks

by Mercator Advisory Group 0

Pew Charitable Trusts released a report that found prepaid cards can be helpful to those who overdraft bank accounts, but cautioned that disclosure around fees can be unclear. The overage of the report was divided between stories that emphasized risks for prepaid and those that emphasized benefits.

For example, the story published by CNN Money started as follows:

A new study on prepaid cards found that they carry “significant risks,” including lots of undisclosed fees, according to a nonpartisan Washington think tank.

NBC took a different approach in its coverage:

Prepaid debit cards — criticized by many consumer groups for high hidden fees — may actually be a cheaper option for some Americans, according to report released Wednesday from the Pew Charitable Trusts. “I was really surprised,” said Susan Weinstock, director of Pew’s Safe Checking Project. “I didn’t know that prepaid cards would be significantly cheaper for people who overdraft — and they are.”

This demonstrates the difficulty in applying a one-size-fits-all approach in evaluating prepaid cards and especially in regulating them. Different use patterns can dramatically affect the cost of using any kind of financial tool, whether it is prepaid cards, checking accounts, or even credit products. Ultimately anyone considering a prepaid card must evaluate it based on the transactions they need to complete using the card.

Click here to read more from CNN Money. For more on Pew’s report, click here to read more from NBC.