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Two Things You Need To Know About Prepaid Debit Cards
By: Gunnar Berglund
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
About the Author:
Gunnar Berglund has been working on the Internet for about five years and runs
www.global-prepaid-cards.com since September 2003 |
