A Tool for Getting By or Getting Ahead?
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Consumers’ Views on Prepaid Cards
Report originally published by the Center for Financial Services Innovation (CFSI).
The past decade has seen a rapid transformation in the financial products and services available and marketed to households without conventional checking or savings accounts. Reloadable prepaid cards, released in the early 1990s, have become the most popular in a series of "bridge" products offered to consumers under financial stress.
In the report A Tool for Getting By or Getting Ahead? (originally released in 2009), CFSI seeks to understand how consumers use prepaid cards and whether the cards help financially underserved households get on a path to financial security and prosperity. The report leverages knowledge and experience from the provider firms AccountNow and NetSpend in addition to in-depth interviews with over 22 consumers.
For many low income to moderate income Americans, meeting financial goals can be difficult without access to affordable and well-designed financial services. According to the FDIC National Survey of Unbanked and Underbanked Households, an estimated 9 million households are unbanked (meaning they have no savings or checking accounts), and an additional 21 million are considered underbanked (meaning they may have an account, but aren’t using it to its potential).
This report first examines prepaid cards and outline some basic advantages. Then it breaks down the research process and findings, describing the participants’ financial situations, prior experiences with traditional bank accounts, reasons for migrating to prepaid, month-to-month card use, and financial goals. Finally, the report details customers’ reactions to additional card features offered by AccountNow and NetSpend.
The Center for Financial Services Innovation is the nation's leading authority on financial services for underbanked consumers. Since 2004, its programs have focused on informing, connecting, and investing - gathering enhanced intelligence, brokering and supporting productive industry relationships, and fostering best-in-class products and strategies. CFSI works with leaders and innovators in the business, government and nonprofit sectors to transform the financial services landscape. For more on CFSI, go to http://www.cfsinnovation.com/.