For consumers, the season of giving can also be the season where budgeting is most crucial. Keeping spending in check takes many forms. Some consumers may have a dedicated savings account for holiday shopping. Others may have piggy banks labeled ‘Gift Fund.’ Consumers more inclined to manage their money with plastic have another option: prepaid debit cards.
Prepaid debit cards, also known as pay-as-you-go cards, allow consumers to load money onto the cards before paying for things. Consumers load the cards using checks, cash or funds from their financial institution (FI) accounts. Like traditional debit and ATM cards, these cards can be used anywhere Visa and MasterCard are accepted.
While prepaid debit cards will not assist consumers in their credit-building endeavors, these cards do offer several value-add features including:
- Reload functionality – Once consumers have their prepaid debit cards in hand, they can reload the cards as many times as they like.
- No overdraft fees – Consumers can only use the funds they have loaded onto their cards.
- Robust security – Since prepaid debit cards are not linked to individual FI accounts, consumers are not at risk of having their personal account information compromised when shopping online and in stores.
Budget-savvy consumers aren’t the only ones who may find benefit in prepaid debit cards. These cards can also serve as a payment alternative for unbanked consumers. An estimated 7.7 percent of U.S. households fall into the unbanked category – meaning they do not have access to (or do not want) traditional bank accounts. Since prepaid debit cards are not attached to bank accounts, they can easily serve the unbanked.
Where consumers find value in prepaid debit cards, so can FIs. Prepaid debit programs, such as ATIRAreload, eliminate FIs’ exposure to liability and fraud. They also offer additional opportunities for FI-branded card stock and increased revenue.