The second-largest bank in the U.S., Bank of America, recently announced that they are discontinuing the proposed $5 monthly fee for those customers using debit cards. Subsequent to many protests and a planned “Bank Transfer Day” on November 5, the banking behemoth decided to take a hiatus on the monthly fee. The question remains…Should you still consider other financial alternatives like a prepaid debit card?
It is estimated that over 60 million people in the U.S. do not have a banking relationship or are “under” banked. In a recent Bretton Woods study, it is shown that prepaid and credit card electronic financial transactions are growing more rapidly than cash or paper based transactions and should continue to do so. Barring any major political or financial catastrophe, it can be assumed that electronic transactions are the wave of the future.
For the majority of Americans with strong financial capabilities, the argument for prepaid might be a little thin. After all, if you can maintain a checking account balance of a few thousand dollars, keep a clean credit record or successfully carry a credit card or mortgage burden, then there may not be an overwhelming choice to go with a prepaid card. This might be the case from a “bottom line” point of view, but there might be other reasons that originate from the heart.
For example, you may want to instruct your teenage child (with a teen card) on money management without putting your own credit at risk. Another reason might be for identity protection and minimizing potential loss (although many prepaid cards do offer liability protection). Even further, many prepaid cards geared toward travel are considered the new “Traveler’s Cheques” and are much simpler to use. Prepaid companies today are considered leaders in technological advances in text messaging, email alerts and Interactive Voice Response when it comes to account information. Finally, depending on which bank you currently use, there actually CAN be significant “bottom line” savings by carefully using certain prepaid cards. And by direct depositing wage or benefits income on most prepaid cards, the monthly maintenance fee will be waived.
The only way you can determine if a prepaid debit card is right for you is to look into it yourself and do the comparisons, read the cardholder agreement and search within yourself for the right answer. As far as the big banks go, they are carrying a lot of overhead, not to mention a continuous string of abandoned real estate and bad mortgages. They are not benevolent societies and will continually be looking for ways to be profitable.