To make prepaid credit cards more appealing, some issuers are offering customers better incentives. The cards, which consumers can load with money and use like a credit card, are marketed as an alternative to credit or debit accounts at financial institutions.
Some celebrity supporters, such as Suze Orman, have promoted the cards as a way to build credit without the risk of debt. Since users can only spend what they have already loaded, they don’t have to worry about overdrafting. However, customers have been slow to adopt the cards, which can also carry high fees. Some have start-up fees and continue to charge users monthly, as well as every time they load money onto the card or use an ATM.
Responding to customers’ requests, some custom prepaid cards are providing users with additional services to offset the costs of the accounts. One company is even offering customers an interest-earning savings account, roadside assistance and cash back for gas purchases to gain popularity.
Even without the incentives, prepaid payments are becoming more common at the credit card terminal. A Federal Reserve Payments Study showed that in 2009, consumers used prepaid cards for 6 billion transactions that totaled $140 billion. Prepaid cards are the fastest growing major payment type of non-cash payments and retailers can expect to see them at point-of-sale terminals in the coming future.Back To Blog