Prepaid debit cards better than cash for those without a bank account
According to a recent study, consumers could pay less in transactions costs if they used prepaid debit cards instead of relying on cash-based lifestyles. The study, conducted by Bretton Woods, Inc., a management consulting firm, compared prepaid debit card fees with the cost of transacting business with money orders and check cashing services. The average person who relies on money orders and check cashing companies spends between $9 and $48 each month, compared to a range of $8 to $20 per month for prepaid card users.
More than 12 percent of Georgia households do not have a bank account, according to the FDIC’s 2009 National Survey of Unbanked and Underbanked Households. Nationally, the figure is 7.7 percent. Hispanics in Georgia are especially impacted; more than 45 percent of households do not have access to a bank account.
The number of Americans outside the banking system is a growing concern for government and business leaders. Ron Hynes, Executive Vice President, Global Prepaid Solutions at MasterCard, said: “Consumers without access to a bank account or electronic payment method are not able to participate fully in today’s electronic economy: They can’t make purchases online or use other financial tools that can help them manage their money more effectively. Using cash exclusively also entails risks of loss, inconvenience, and even physical danger. Prepaid cards are an important tool to help bring these folks more into the financial mainstream.”
For many people, a poor record with Chex Systems, Inc., which provides banks with background on a person’s past banking habits, precludes them from opening a bank account. A prepaid debit card may be the only electronic payment method available to these consumers. They can load funds on the cards with a unique identifying number, as well as freeze and transfer money if the card is lost or