A surprising new study conducted by Michael Flores, an economist and expert on financial institutions, found that consumers who use prepaid debit cards , instead of low balance checking and debit accounts, could save up to 70% in fees. That effectively makes the use of prepaid debit cards significantly cheaper than traditional debit cards from banks.
“There is no question that prepaid cards are a much better option for many consumers,” said Flores. “An objective review of the costs associated with these cards compared to costs of alternatives such as basic bank checking accounts, in addition to the safety and security associated of prepaid cards compared to cash, leaves no doubt that prepaid cards are a smarter option for many.”
The study found that using debit cards from banks will typically cost a consumer up to $350 each year. Those fees come from overdraft charges, minimum balance fees, and automatic teller machine (ATM) fees. Similar annual fees were experienced from consumers that didn’t have access to traditional banking accounts, and used a loose system of money orders and bill-payment services.
Based on the study’s results, the use of prepaid debit cards was overwhelmingly cheaper than any alternative. It was found that prepaid debit cards with direct deposits, like the kind you can get from your local ACE Cash Express, had the lowest cost of use.
You can download and read the full text of the report from NBPCA’s website: http://www.nbpca.org/docs/Study-Cost-of-Prepaid-Cards-to-Consumers.pdf