The Rising Costs of Traditional Banking
Bank account are costly for consumers. Fees rise on an annual basis and consumers are charged more and more each year just to keep their money there. Tougher account requirements and higher fees are continuing to rise as the economy declines. Some of the fees consumers can expect in the coming years include:
- Debit card monthly maintenance fees
- Higher annual account maintenance fees
- Fees charged for closing accounts
- Higher membership fees for credit unions
- Higher overdraft and insufficient fund fees
- ATM withdrawal fees—even at participating locations
On average, consumers pay $2.40 per ATM withdrawal at non-participating locations and over $30 for insufficient funds, which can add up significantly over time. For example, a customer with a traditional checking account may encounter a $12 monthly maintenance fee, $50 for insufficient funds once that month, $5 for ATM transactions, and $5 per month for debit card maintenance, resulting in $72 just to have a checking account that month.
Why Are Prepaid Debit Cards Better Than the Traditional Bank Account?
More consumers are closing their traditional bank accounts and opting for prepaid debit card options. Although there is typically an annual fee for prepaid debit cards, consumers don't have to worry about the traditional monthly and annual fees, such as membership fees, overdraft or insufficient funds, and debit card maintenance. Prepaid debit cards operate just like a bank debit card. Consumers can receive their paychecks through direct deposit or at a participating location without worrying about card processing fees. With prepaid debit cards, consumers can pay bills, purchase items in-store or online, and withdraw cash.
In addition to the annual savings, consumers no longer have to worry about the strict standards imposed by today's banks. With more banks denying consumers access to credit cards because of poor credit history, prepaid debit cards are continuing to grow in popularity.
Prepaid debit cards may help consumers prevent debt as well. Consumers can spend and wait 25-30 days before making a payment with a traditional credit card. Then they have the option of making a minimum payment and tacking on interest, which adds up over time. With prepaid debit cards, there is no interest and no worry about charging more than people can afford.
Consumers who are denied traditional bank accounts or who are simply tired of paying excess fees benefit from the use of prepaid debit cards. They offer simplicity, freedom, and a way to pay without driving up debt.