Prepaid Debit Cards Not Just for Unbanked Consumers
Prepaid debit cards are most often associated with unbanked consumers who use the cards to receive direct deposits or store their money securely. A surprising new study from Pew Charitable Trusts indicates that may not be the case anymore.
According to their survey, 59% of prepaid card users have active checking accounts. This suggests that people are not necessarily using prepaid debit as a banking replacement.
Why are so many Americans who have bank accounts using prepaid cards? To monitor and budget their finances. Instead of having an unlimited source of money from a bank account, users can deposit a limited amount of money onto a prepaid card to ensure they keep their spending to a minimum.
“They use them to gain control over their finances,” said Alex Horowitz, a Pew research manager.
Some prepaid card users maintain these cards because they do not want people to have access to their bank account information. If their prepaid card data happens to be stolen, they won’t be out thousands of dollars like they may be with their bank accounts.
The cards are much easier to obtain than a credit card. Consumers can get a prepaid card without going through a credit check, and will not be denied a card because of a low credit score.
The survey consisted of 613 adults who use their prepaid cards at least once a month.