Loaded With Uncertainty

Are Prepaid Cards a Smart Alternative to Checking Accounts?

Loaded With Uncertainty

QUICK SUMMARY

General purpose reloadable prepaid cards are rapidly growing in popularity. Consumers are using them to make purchases, withdraw money from ATMs, and pay bills. This new study reveals that the prepaid card is a risky, largely unregulated alternative to the traditional checking account, but may work for some consumers who frequently incur high bank overdraft fees.

The report, Loaded With Uncertainty: Are Prepaid Cards a Smart Alternative to Checking Accounts? reviews 52 prepaid cards that comprised at least 75 percent of the market in 2011. It finds that:

  • The varying fee structures and disclosures for prepaid cards make comparison shopping very difficult because most products have 7 to 15 individual fees to consider and their disclosures are not uniform.
  • The cost of prepaid cards can be less than checking accounts, but the cards come with significant risks. These products are not covered by laws requiring disclosure of fees and terms - nor those that limit consumer liability for unauthorized electronic fund transfers.
  • Most consumers use prepaid cards as a way to keep spending within their means; overdraft options run counter to this goal and should not be offered.
  • FDIC insurance does not necessarily apply to funds loaded onto GPR prepaid cards. Those companies that claim funds are FDIC-insured are not federally supervised and, therefore there is no guarantee the protections are executed correctly.

Spotlight on Mental Health

Composite image of modern city network communication concept

Learn the Basics of Broadband from Our Limited Series

Sign up for our four-week email course on Broadband Basics

Quick View

How does broadband internet reach our homes, phones, and tablets? What kind of infrastructure connects us all together? What are the major barriers to broadband access for American communities?

Pills illustration
Pills illustration

What Is Antibiotic Resistance—and How Can We Fight It?

Sign up for our four-week email series The Race Against Resistance.

Quick View

Antibiotic-resistant bacteria, also known as “superbugs,” are a major threat to modern medicine. But how does resistance work, and what can we do to slow the spread? Read personal stories, expert accounts, and more for the answers to those questions in our four-week email series: Slowing Superbugs.

Explore Pew’s new and improved
Fiscal 50 interactive

Your state's stats are more accessible than ever with our new and improved Fiscal 50 interactive:

  • Maps, trends, and customizable charts
  • 50-state rankings
  • Analysis of what it all means
  • Shareable graphics and downloadable data
  • Proven fiscal policy strategies

Explore

Welcome to the new Fiscal 50

Key changes include:

  • State pages that help you keep track of trends in your home state and provide national and regional context.
  • Interactive indicator pages with highly customizable and shareable data visualizations.
  • A Budget Threads feature that offers Pew’s read on the latest state fiscal news.

Learn more about the new and improved Fiscal 50.