Most Consumers Pay Less than $7.50 a Month to Use a Prepaid Card as Primary Payment Tool
4th Annual Bretton Woods Analysis Examines Customer Cost of Various Payment Tools Based on Program Manager and Issuing Bank Data
MONTVALE, N.J., Nov. 12, 2013 /PRNewswire/ -- According to the fourth annual Analysis of General Purpose Reloadable Cards released today by Bretton Woods, Inc., the majority of consumers who use a prepaid debit card to manage their finances do so for less than $7.50 per month, a cost advantage over a basic checking account. Using data gathered from program managers and bank issuers, the third annual study is the only report of its kind that examines actual fees incurred by prepaid card holders, providing a highly accurate snap shot of card costs instead of generalized assumptions.
"The three-year trend shows that the costs of basic checking accounts are increasing while the costs to use general purpose reloadable cards (GPR), also known as prepaid debit cards, are decreasing. The 2013 analysis is able to pinpoint with more accuracy what it costs the majority of consumers to use their cards and revealed that high fees incurred by consumers are from outlier cards only and are completely avoidable," said G. Michael Flores, President of Bretton Woods Inc., and author of the report.
"While similar to checking accounts, prepaid cards fill a critical financial services need for a new generation that prefers the consumer friendly technology, as well as consumers with limited access to checking accounts. Prepaid cards allow users to safely, securely and conveniently manage their money," said Kirsten Trusko, President and Executive Director or the Network Branded Prepaid Card Association (NBPCA). "The trends are unmistakable. General purpose reloadable prepaid cards are serving the needs of Gen Y and the underbanked, and also gaining a foothold with traditionally banked consumers – fueled by the number of banks and credit unions now offering GPR cards."
The 2013 Analysis of General Purpose Reloadable Cards found that:
- Direct deposit basic checking accounts cost more than twice, on average, than direct deposit GPR cards while non-direct deposit checking accounts are 1.5 times more expensive
- Nearly 60% of banks are now offering GPR cards
- The cost of a cash-based lifestyle has reduced thanks to retailers such as Walmart offering check cashing services, but the costs do not reflect the security risks inherent in carrying cash or the time and inconvenience associated with the practice
- Users of reloadable prepaid cards without direct deposit spend from $58 - $333.75 annually
- Users of reloadable prepaid cards with direct deposit incur costs of $58-$263.95 annually
- Consumers that use basic checking accounts pay $263-$473 annually
The comparative analysis was conducted by economist G. Michael Flores of Bretton Woods, Inc., an expert on payment systems and financial institutions. Each year the study has analyzed a range of consumer payment options, including low-balance checking accounts, reloadable prepaid cards, check cashing services, and their relative costs. The Bretton Woods report utilizes independent, third party sources along with input from prepaid card providers to verify fees and typical transaction patterns. Bretton Woods compared the costs of FDIC insured checking accounts from fourteen banks representing 43% of the total deposits in the U.S. and the largest FDIC insured reloadable prepaid card programs.
The full text of the report can be downloaded at http://bit.ly/1cgtuOl.
About Bretton Woods & Michael Flores
Mr. Flores, President and CEO of Bretton Woods, Inc, is a subject matter expert in the area of financial institutions. He has over 30 years of financial institution experience in both hand-on experience and academic study. Mr. Flores specializes in the study of payment systems and process improvement and reengineering through enabling technologies. He has testified in Congress and spoken to industry groups and has authored several studies and articles for industry publications. Mr. Flores serves as a faculty member with Pacific Coast Banking School in Seattle, Washington where he teaches Retail Banking in the 21st Century curriculum for bankers in the graduate school.
About the NBPCA
The Network Branded Prepaid Card Association (NBPCA) is a non-profit, inter-industry trade association that seeks to educate, advocate, protect and promote on behalf of network branded prepaid debit cards and represents the common interests of the many types of companies who come together to deliver the wide variety of prepaid products. For additional information, visit www.NBPCA.org.
SOURCE Network Branded Prepaid Card Association
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