If you're unhappy with your checking account -- or perhaps
haven't had an account for a while -- your bank may have an
alternative for you.
study released this week
indicates that banks are increasingly interested in offering
prepaid cards. The study, which was commissioned by the American
Bankers Association and conducted by Mercator Advisory Group, finds
most banks either currently offer the cards or have plans to do
This rising interest in prepaid cards signals that banks may
view these products as an emerging alternative to traditional
checking accounts -- particularly for consumers who have previously
been squeezed out of banking.
Prepaid cards offer a new alternative
The survey asked banks about their perceptions and plans for a
prepaid card options
, including general purpose reloadable cards, payroll cards,
student cards and gift cards.
Prepaid gift cards were the most popular of these options with
banks, with 58 percent of those surveyed offering or planning to
offer these cards. However, general purpose reloadable cards, which
are often used as an alternative to checking accounts, were a close
second. Fifty-two percent of the banks surveyed said they offer or
plan to offer this type of card.
The ability to attract new customers, as well as offer
additional products to existing customers, were the main
motivations given by banks for offering prepaid cards. In
particular, it appears banks may be interested in attracting
"unbanked" consumers -- those who currently have no bank
Many unbanked customers find traditional accounts too costly or
complex to maintain. But the simple nature of prepaid cards may
allow banks to extend improved financial privileges to consumers
who have previously relied on alternative financial options, such
as money orders and check-cashing services.
Seeking new and former customers
About a third of banks offering or planning to offer general
purpose reloadable cards said they wanted to create an account type
that would target low- to moderate-income consumers. A third also
reported they wanted to provide a new account type for their
existing customers. These customers may include those who struggle
with overdraft fees or fail to maintain an account balance
sufficient to avoid monthly maintenance charges.
Although a significant number of banks still do not offer
prepaid cards, that number may change as more financial
institutions explore this option. According to the study, the more
banks had investigated prepaid cards, the more likely they were to
report satisfaction with them.
As banks look to tap into the market of
, as well as provide flexible payment options to current customers,
prepaid cards may offer an attractive option for consumers and
institutions alike. The result may be more prepaid cards coming to
a bank near you.
Whether these cards appeal to you, however, may relate to how
happy you are with your checking account. If you are diligent in
maintaining your financial records and value the perks of a
good checking account
, the lure of the prepaid card may be lost on you.