Despite the observation by some that you are paying to use your own money, the trend toward using prepaid credit cards is not slowing down. In fact, it may be speeding up.
Financial institutions aren’t the only ones issuing these cards.
WalMart, for instance, offers a MoneyCard, a re-loadable prepaid card with a choice of MasterCard or Visa logo. The gigantic retailer markets the card as “the smart and easy way to manage your money,” and offers a minimal rewards program, a feature not found on most other prepaid cards. This card even provides the WalMart customer a discount on gas.
The potential uses of these cards are launching new pathways into the market segment.
American Express has designed a card to appeal to those with higher incomes. American Express also launched a prepaid card with Target.
MasterCard, teaming up with Western Union, jointly offers a re-loadable international prepaid card to encourage worldwide use.
In order to make these cards still more attractive to those with credit problems, some prepaid cards like the RushCard offer credit enhancement features to allow the consumer the ability to try to re-establish their credit by upping their credit scores.
Although the cards sometimes come with high fees, their fees are generally comparable with those of a checking account and there are no overdrafts to worry about. These cards are easier to get because there are no credit checks and they can be replaced if lost or stolen. They can be conveniently funded by direct deposit or online transactions.
Businesses are discovering the marketing advantage to issuing these cards, not only because they offer a dependable way to sell to people with inadequate or damaged credit who might otherwise write a bad check, but to mainstream America as well.
Airlines, utilities, retailers, government agencies and even television studies and actors’ unions are issuing their own prepaid cards. Many come with celebrity endorsements.
According to research from Mercator Advisory Group, about $460 billion was loaded onto prepaid credit cards in 2011. All signals indicate that the use of prepaid card is rising. By 2016, it is expected that usage will be up by 50 percent – close to $685 billion.
Prepaid credit cards are here to stay – not a passing trend!