Since financial expert Suze Orman released her Approved prepaid card in early January, a debate has gone on in the media around the value offered by open-loop prepaid cards. The Network Branded Prepaid Card Association sent a press release on January 26 that summarizes the results of independent researching showing that prepaid cards can be a good deal for people who do not have large balances or who have run into financial trouble.
Stacked up against low-balance checking accounts, the yearly cost of using a prepaid debit card is less. Prepaid debit cards, like checking accounts, offer different fee structures to meet each individual’s needs. Most card providers will waive monthly fees if consumers either get their wages or benefits directly deposited to the cards or maintain higher monthly balances, similar to checking account options offered by banks. Moreover, prepaid cardholders can avoid paying ATM fees by using in-network ATMs, just like debit card users, or by requesting cash back with purchases at retailers, just like debit card users.
In discussions of value, prepaid cards are most often compared with free checking accounts. This creates unrealistic comparisons in that the customer bases for the two products are not the same. It appears the industry will continue to struggle until the critics of prepaid attempt to conduct financial transactions with the same constraints as the prepaid cardholder.