Prepaid Cards Continue to grow in popularity among Unbanked American Consumers

It wasn’t too long ago that on birthdays or other occasions that called for gifts people actually bought a present for someone. Sometimes, of course, people would forego purchasing an actual gift and just give other people cash and a card. Fast forward a few more years, and we saw the rise in popularity of gift cards. Lots of people enjoy being able to pick up a gift card to hand out during holidays, on birthdays or for other special occasions. Since the market for gift cards continued to grow over the years, it is easy to understand why other forms of prepaid cards started to pick up.Credit_card-first_4_digits

Think about it – when you don’t have the ability to shop around for an actual gift, or even access to the kinds of stores that the person you are buying for actually likes, you just pick up a gift card. This allows the recipient to purchase what they want where they want. This underlying concept, helps us to understand why GPR (General Purpose Reloadable) cards have taken off in popularity. When people do not have access to traditional banking services, or they feel underserved by their banks they can simply choose to put their money into a prepaid/rechargeable card. These cards pretty much act like debit/credit cards. They allow folks to make purchases and withdraw cash the way that they want to, or the way that they must, if they are unbanked or underbanked.

This isn’t just a wild concept, it is actually backed up by recent findings from the Pew Charitable Trusts. They published a report in June titled “Banking on Prepaid.” This report demonstrated that about 23 million American adults make use of GPR cards on a regular basis. Since the people who get these cards can use them like cash or even directly deposit checks to their prepaid accounts, it is easy to understand why so many people choose to use these cards. The mainstream banks have repeatedly shown that they are not really interested in serving some folks with lower income levels or bad credit scores. These cards level the playing field a bit, and allow people to stay in control of their money and how they access it.

The findings we just cited come from a survey conducted by Pew. They used a cross section of 587 people who stated that they use prepaid cards at least one time a month. These people were questioned at the end of 2015 with regards to their thoughts on and use of these types of prepaid cards.

The study went on to say that the increased usage of prepaid cards represented a jump of about 50 percent between 2012 and 2014. Some of the things that seem to contribute to this spike seem to be that even people who have access to traditional banks are also making use of prepaid cards to supplement their normal banking services. But, unbanked people lean more toward using their cards like a regular checking account than people who actually have regular checking accounts.

Though no one knows for sure, some experts believe that the trend toward higher usage of prepaid cards will likely increase in the future. Just as people continue to use old-school gift cards when they have no other choice, or are not satisfied with the choices they have, so too will people continue to use prepaid cards to take the place of banking services that they either cannot get from their local banks or that they simply don’t feel like handling via their traditional checking/savings accounts.

Luann Abel posted at 2016-9-19 Category: Financial Tips