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Study finds prepaid card better than the checking account

2011-05-07

The costs are steadily on the rise in the banking sector and a recent study conducted in March 2011 has found that the prepaid cards are a better decision financially for most people and have even outpaced the checking accounts in most cases.

Most of the general-purpose reloadable cards are prepaid cards which can be used more like a debit card where it may be topped up during periodic intervals. There are certain fees involved in reloading and activating the cards. The reloadable cards are more appealing to people who don’t have a bank account and also for those who are not eligible for credit, like most of the student community or the ones with bad credit.

Due to the recent regulations, most banks have either reduced or eliminated the free checking accounts in a bid to recover some of the lost revenue. These reloadable cards may offer a savings account over the traditional checking account, states Crystal Wright, spokeswoman for Network Branded Prepaid Card Association.

The study has found that these reloadable prepaid cards offer customers a much more competitive alternative to the checking accounts as well as the check cashing services. The fees are as follows:

• Fees for prepaid cards range from $76 to $261 annually if customers use the direct deposit to add on funds to their cards and it is $184 to $380 when they don’t use direct deposit.
• Consumers pay $218 to $314 annually for the basic checking accounts at major banks where the fee includes 5 overdrafts and other fees.