Two Things You Need To Know About Prepaid Debit Cards
According to the September 2004 issue of the Nilson Report, around $588 billion dollars worth of debit cards were bought in the United States in 2003. By 2008 that volume is expected to grow to $1.231 trillion putting a significant dent in the nation's use of pure credit cards as consumers continue to favor the use of prepaid debit cards. If you are among the nation's millions who are currently using prepaid debit cards or are among those considering their use, you need to know two things that may detract and enhance your use of the prepaid debit card.
First, know what you're getting. Most people understand the prepaid debit card as the retail gift card. Others know that such gift cards can be purchased through their local bank. What some consumers don't know is that those purchased through their bank can come with hefty fees attached, and those fees can come in a myriad of disguises from up-front purchase fees to various administration fees including replacement costs account maintenance fees and fees for checking the balance. Such fees are currently being debated in the courts, but until a fair resolution is offered, it is up to the consumers to be aware of what they are buying.
Second, despite consumer and fair trade concerns, some applications of the prepaid debit card are both innovative and convenient. For example, there are now some tax preparation services offering what is known as the "stored value" card. In other words, in lieu of waiting for your refund to arrive, you can simply tell your tax preparation service that you would like to have your refund loaded onto your prepaid debit card. Once you have your prepaid debit card "loaded" you can make arrangements with your bank to assign it a routing number so that you may use it just like a checking account. Another new use of prepaid debit cards come from the currency exchange companies, better known as remittance services. The usual remittance companies such as Western Union and MoneyGram are facing new competition from small companies who are targeting the immigration population by offering speed and convenience in sending money on-line using a bank account, a credit card or a PayPal account. The customer simply electronically "loads" the desired amount onto a Visacard which is then mailed to the beneficiary.
With the help of the internet, the potential to send money via "loaded" cards is without precedent. The ease, speed and convenience of such services are becoming so popular that many companies are aggressively marketing prepaid debit cards to consumers through customization. Visa, for example, has a prepaid debit card marketed exclusively to teens, know as Buxx. American Express has the TravelFunds Card marketing "for people on the go" and MasterCard has its I-Gen MasterCard marketed to those who prefer to either forego traditional checking accounts or keep only a minimum amount while "loading" their card with the cash their budgets dictate they can spend.
© Gunnar Berglund
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