The hot career tip to Dustin Hoffman in The Graduate was “Plastics“.
Seems it’s just as true today, as the plastic, prepaid card booms in popularity.
The card can be used for purchases, bill paying, and ATM access. It doesn’t require a traditional bank account.
Some 77 billion dollars was loaded onto prepaid cards in the US last year. By next year, that figure is expected to grow to 167 billion.
Prepaid cards have become the substitute for credit cards, paychecks , and even bank accounts.
Plastic pitfalls
Bad prepaid cards themselves can drain your balance faster than your spending habits, however.
The worst of them are uninsured, come with activation fees, fees for using the card, fees for reloading the card and even fees for not using the card.
Worst prepaid cards
Consumers Union has tracked prepaid cards for years. The best cards, it reports, are now competitive with traditional checking accounts.
Their criterion included value, transparency, convenience, and safety.
CU’s latest study ranks these prepaid cards the worst of the bunch:
AccountNow Gold Visa Prepaid Card (MetaBank)
Reach Visa Prepaid Card (Tom Joyner)
Redpack Mi Promesa Prepaid MasterCard
American Express for Target
Best prepaid cards
CU’s choices for best cards include
Bluebird with direct deposit (American Express)
H&R Block Emerald Prepaid MasterCard
Green Dot Card (Green Dot Bank)
Approved Prepaid MasterCard (Suze Orman)
More on prepaid cards
The Consumer Financial Protection Bureau has a very straightforward question and answer section on prepaid cards. It includes information on the growing use of prepaid cards in place of payroll checks, called payroll cards.
If you are offered the choice of getting your wages on a payroll card, make sure you understand the fees and policies involved. The son of a friend of mine found that the employer’s choice of payroll card came with fees that took a relatively huge bit out of an already paltry wage. Even the most expensive bank account looked better to him, once he figured out the cost of “convenience”.
The legality of paying wages on prepaid cards is becoming the subject of investigation, as reports by Forbes and the New York Times expose the drain on pay imposed when wages come on plastic.
Make sure that convenience comes at a cost you understand.
Image courtesy of Flickr and PGoodhead.
