News

Report: Prepaid gaining favor as checking account alternative

Surcharge-free ATM access is a component of all four cards named 'Best Alternative Checking Account' in a new study by CardHub.

June 16, 2015

As of 2012, roughly 12 million Americans used a prepaid card at least once a month and collectively loaded $65 billion onto them. That figure is expected to rise to $337.8 billion by 2017 — an increase of 420 percent, according to a press release from CardHub.com.

A press release from CardHub said that prepaid cards can be a great tool for many different types of people, as they’re safer than cash and eliminate the threat of overdraft fees and bounced checks. They also offer guaranteed approval and provide all of the same functionality as a checking account-debit card combo.

CardHub evaluated 40 of the most popular prepaid cards based on common use scenarios and arrived at these key findings:

• prepaid card costs increased 21 percent in 2014 compared with 2013, indicating that checking accounts are now less of a competitive threat;
• the number of fees for using prepaids has dropped over the years to a current average of nine — as opposed to 30 for the average checking account;
• prepaid cards from large banks are up to 84 percent more affordable than those from smaller institutions; and
• celebrity-branded prepaids are disappearing — those that have survived offer relatively competitive fees and features.

According to CardHub, the four prepaids that offer the best alternative to a traditional checking account are American Express Serve and Bluebird products; the Green Dot Gold Card, and Kaiku. All four offer surcharge-free ATM access through network affiliations.

Read the full report.