Prepaid cards are the financial tool of the moment for a growing number of consumers. They are helping consumers to manage their finances, pay bills and take advantage of direct deposit services — all without a bank account.
A new generation of reloadable prepaid cards is giving many consumers a safe, easy and economical way to make purchases online or in person. But, like most consumer decisions, the key to finding the best value is being well informed.
The free education series, produced in partnership by American Express (NYSE: AXP) and Consumer Action, includes an easy-to-read multilingual booklet, two short videos and a question-and-answer guide. For consumers who rely on cash and checks, prepaid is often a good alternative, and those who primarily use debit and credit cards may also find them useful for online shopping, budgeting and distributing funds to family members.
“The prepaid reloadable card industry has historically been laden with hidden fees and confusing terms, but new competition is beginning to change that,” said Alpesh Chokshi, President, Global Payment Options, American Express.
“Competition in the prepaid card industry has brought more ‘fee lite’ card options,” said Ken McEldowney, Consumer Action executive director. “But finding the right card is still a challenge. Our new project aims to help consumers compare card offerings and make an intelligent choice about which prepaid card to use.”
Mr. Chokshi added: “We’re excited to offer consumers a one-stop shop of resources that will help them find the prepaid card that’s right for them.”
For anyone actively shopping for or already using a prepaid card, Consumer Action offers these top three prepaid card tips:
1. Choose a consumer-friendly card.
2. Base your card selection on how you plan to use the card.
3. Change your habits to avoid fees whenever possible.
The brochure is available in English, Korean, Spanish and Vietnamese, and will be available in Chinese soon. It explains how the cards work and offers advice for selecting the right card, controlling costs and managing the card successfully. For those who want to delve deeper, there’s an in-depth question-and-answer guide. All materials—printed and electronic—are free for individuals and organizations involved in non-profit or community educational work. These entities can order printed copies in bulk or freely reproduce the electronic materials for educational purposes.
The two short videos will be available to the public on Consumer Action’s YouTube Channel (www.youtube.com/consumeractionvideos), American Express’ YouTube Channel (www.youtube.com/americanexpress ), and on DVD for community-based organizations that request them. The two videos include:
1. Reloadable Prepaid Cards: An overview of prepaid cards, including how they work and their pros and cons
2. Choosing and Managing a Reloadable Prepaid Card: A five-minute guide to narrowing your card options, reducing or avoiding fees and managing your card wisely
Consumer Action (www.consumer-action.org) has been a champion of underrepresented consumers nationwide since 1971. A nonprofit 501(c)3 organization, Consumer Action focuses on financial education that empowers low- to moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change. By providing financial education materials in multiple languages, a free national hotline, and surveys of consumer financial products, the organization helps consumers assert their rights in the marketplace and make financially savvy choices. More than 8,000 community and grassroots organizations benefit annually from its extensive outreach programs, training materials and support.
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