Prepaid debit cards allow consumers to upload their own money to access funds at ATMs or make purchases, but unlike traditional debit cards they are not attached to bank checking accounts. These cards are branded with a Visa, MasterCard, American Express, or Discover logo. The prepaid card industry is large and growing fast. In 2009, $28.6 billion was placed onto reloadable prepaid cards in the United States and that figure is expected to reach $201.9 billion in 2013 according to the Mercator Advisory Group. While users without bank accounts may see these cards as a safe repository for their money, they may not be aware of the fees that may deplete card balances or the overall lack of consumer protections for these products.
In November 2011, the Pew Safe Checking in the Electronic Age Project conducted focus groups with consumers who purchase and use prepaid debit cards to understand the motivation behind this practice.
This fact sheet chronicles our findings.