Popularity of Prepaid Debit Cards a Balance of Cost vs. Convenience

Austin American-Statesman 
March 13, 2010
Harrell, Barry

Prepaid debit cards frequently are used by consumers as an alternative to credit or debit cards, but consumer advocates warn that the convenience comes at a high price. A 2009 study by Consumers Union, the nonprofit publisher of Consumer Reports, cites 12 types of charges these cards can carry -- including fees for activation, transactions, and inactivity as well as charges for customer service. Consumer advocates are calling for more transparency and more protection, and Jean Ann Fox of the Consumer Federation of America says prepaid cards should enjoy the same legal protection that traditional debit or credit cards have under the Electronic Fund Transfer Act. Consumers put approximately $2.1 billion on prepaid cards in 2007. In 2009, that amount mushroomed to $36.6 billion; and it is expected that $119 billion will go on the cards by 2012.
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