A new report from the Pew Charitable Trusts shows that Americans paid less for prepaid cards last year than in 2012. Those who purchased a prepaid card from a bank saved an average of $5 dollars to $14 a month more than those who bought them from nonbanks.
Pew hopes to use its findings to influence upcoming regulations by the Consumer Financial Protection Bureau (CFPB). For example, the organization recommends that the CFPB ban all offers of credit on prepaid cards -- whether they are in the form of an overdraft fee, a payday loan, or otherwise. In Pew's survey, 46 percent of prepaid card cited avoiding overdraft fees as a major reason for using the product. These costs are uncommon among prepaid cards, with only five of the 66 cards evaluated in the study disclosing an overdraft fee and 53 explicitly warning that cardholders can only spend the amount loaded on the card.
The least savvy group of consumers saves an average $66 per month by using a prepaid card instead of a basic checking account, the report found. At the same time, the savviest group of customers -- those who actively take measures to avoid fees -- saved $5 more a month with a checking account than with a prepaid card. The median cost of a bank-issued card was found to be about $4, compared to $10 for a card from a nonbank. The median monthly fee on bank-issued cards is $4.95, but $6.95 on nonbank cards. An exception was out-of-network ATM fees: banks charged a median fee of $2.50, but nonbanks charged a median fee of $2. Most bank-issued cards included in the report, however, do not offer electronic bill pay to customers.