Today, two different organizations released two different guides or reports related to prepaid debit cards. One guide, by the Center for Financial Services Innovation (CFSI), is supportive of prepaid cards. The other, by the Consumers Union, criticizes them. Which is right?
The CFSI released their “Nonprofit’s Guide to Prepaid Cards” today, and also released a recorded webinar and announced an upcoming live webinar to educate nonprofits on how they can use prepaid debit cards to better serve underbanked consumers. According to the CFSI, “The guide was developed for nonprofit organizations focused on consumer finance issues that are interested in learning more about prepaid cards. It provides a basic primer on prepaid products, as well as outlines several ways for nonprofits to engage with prepaid, strategic considerations to help them select the right approach, and tips for success with the path chosen. The guide was created in response to an increased number of requests from nonprofits for information about the prepaid industry.” The guide presents a positive view of prepaid debit cards, and recognizes that a large segment of consumers can benefit from proper use of these cards.
The second prepaid debit card report released today is by the Consumers Union and is titled “Prepaid Cards: Second-Tier Bank Account Substitutes”. The report takes a much more critical view of prepaid cards, arguing that they are less desirable banking products. The Consumers Union report is an update to their 2009 report with updated fees. “Prepaid cards come with a long list of fees that are often hidden deep in the fine print,” said Michelle Jun, Staff Attorney for Consumers Union. “Consumers considering prepaid cards should be aware that those fees can add up quickly and that they may be vulnerable to losing their money if their card is lost or stolen.”
Both reports contain excellent information about prepaid cards, including the fees and proper usage of cards.