According to an article published in the Washington Post, prepaid debit card usage is on the rise. In 2008, consumers added $8.7 billion dollars worth of funds to credit-card-branded prepaid cards, doubling the approximately $4 billion dollars in deposits in 2007.
These cards can be used anywhere where major credit cards are accepted, and they offer many of the same features such as fraud protection. Pre-paid debit cards provide a great alternative to standard credit cards, and may be especially useful for students who are getting used to credit cards for the first time as well as by people who are tired of overdraft, over-the-limit and other standard bank fees.
While it is true that some prepaid debit cards charge monthly maintenance fees and/or other usage charges, as mentioned in the article, these fees are often much less then the fees you would pay on average if you maintain a low balance checking account. As Jim Ashley, a 24 year old college student said,
“I’d gladly pay that [the $9.95 monthly fee associated with is prepaid MasterCard] in exchange for not overdrafting my account.”
The Washington Post suggests that this upswing in the use of prepaid cards may continue or expand when new laws come into effect in February of 2010, making it more difficult for kids under aged 21 to get a credit card. Read more about this trend here.