Credit and Debit Card Ratings

Study Shows Prepaid Growth – Prepaid Cards Multiplying Rapidly

The eighth installment of the Debit Issuer Study was released in July and the results
reaffirmed what many observers can plainly see: prepaid cards are multiplying at a rapid
rate. Commissioned by the ATM/debit network PULSE, a Discover Financial Services
Company, and conducted by the consulting group Oliver Wyman, the annual study took
the pulse of 64 large banks, credit unions and community banks to better understand both
their current activities and plans for the massive debit market.

In general, what the study found was that most financial institutions have already
embraced prepaid cards in one form or another. Indeed, fully 84% of the study’s
participants – which collectively represent almost half of all debit transactions in the U.S.
– offer a prepaid card. Typically, the most popular cards offered are gift cards, which are
sold by 73% of issuers. But the study’s authors also note that financial institution’s
attitudes towards gift cards – which have weak sales – are indifferent at best.

By stark contrast, re-loadable prepaid debit cards are soaring in popularity. In fact,
between 2011 and 2012 the number of financial institutions offering them nearly
doubled, going from 19% to 36%. That rapid growth can be easily explained by study
participant’s expectations for 2013 prepaid card sales. Although respondents project that
gift card sales will slump by 2% in 2013, they anticipate 55% year-over-year growth for
re-loadable prepaid cards.

Naturally, the PULSE study also closely examined the state of debit cards. Although
changes to the law have put a ceiling on fees – known as interchange rates – that can be
charged when consumers use a debit card for either a PIN purchase or one that requires a
signature, the debit market continues to grow. “Even in the face of significant regulatory
challenges, issuers managed to grow their debit volumes in 2012 and expect further
growth this year,” says Steve Sievert, executive vice president of marketing and
communications for PULSE.

Overall, survey respondents saw a 14% increase in PIN transactions and a 6% hike in
signature purchases in 2012. Looking to 2013, financial institutions expect 8% and 4%
increases, respectively. “Issuers are more tepid in their outlook for debit. They still expect
the industry to grow, just not as rapidly as in the past,” says Tony Hayes, a partner at
Oliver Wyman, who co-led the study. “In fact, this is the lowest growth project for
signature debit we’ve seen since the study began.”

Category: Best Low Fee Prepaid Cards

Millions of people are turning to prepaid debit cards as a smart alternative to carrying cash and writing checks. Almost anyone can qualify and they don’t require a credit check or a bank account.

Though they carry credit card logos and can be used anywhere a credit card is used, unlike a credit card, they do not offer a line of credit. The user can only spend the amount that has been loaded onto the card or placed into the account associated with the card.

There are dozens of debit cards on the market, many of them issued by the same bank, but fee structures are vastly different. Bestprepaiddebitcards.com has done all the research for you and provides comprehensive reviews to help you decide which card is best for you.

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  • Study Shows Prepaid Growth – Prepaid Cards Multiplying Rapidly

    Study Shows Prepaid Growth – Prepaid Cards Multiplying Rapidly

    The eighth installment of the Debit Issuer Study was released in July and the results
    reaffirmed what many observers can plainly see: prepaid cards are multiplying at a rapid
    rate. Commissioned by the ATM/debit network PULSE, a Discover Financial Services
    Company, and conducted by the consulting group Oliver Wyman, the annual study took
    the pulse of 64 large banks, credit unions and community banks to better understand both
    their current activities and plans for the massive debit market.

    In general, what the study found was that most financial institutions have already
    embraced prepaid cards in one form or another. Indeed, fully 84% of the study’s
    participants – which collectively represent almost half of all debit transactions in the U.S.
    – offer a prepaid card. Typically, the most popular cards offered are gift cards, which are
    sold by 73% of issuers. But the study’s authors also note that financial institution’s
    attitudes towards gift cards – which have weak sales – are indifferent at best.

    By stark contrast, re-loadable prepaid debit cards are soaring in popularity. In fact,
    between 2011 and 2012 the number of financial institutions offering them nearly
    doubled, going from 19% to 36%. That rapid growth can be easily explained by study
    participant’s expectations for 2013 prepaid card sales. Although respondents project that
    gift card sales will slump by 2% in 2013, they anticipate 55% year-over-year growth for
    re-loadable prepaid cards.

    Naturally, the PULSE study also closely examined the state of debit cards. Although
    changes to the law have put a ceiling on fees – known as interchange rates – that can be
    charged when consumers use a debit card for either a PIN purchase or one that requires a
    signature, the debit market continues to grow. “Even in the face of significant regulatory
    challenges, issuers managed to grow their debit volumes in 2012 and expect further
    growth this year,” says Steve Sievert, executive vice president of marketing and
    communications for PULSE.

    Overall, survey respondents saw a 14% increase in PIN transactions and a 6% hike in
    signature purchases in 2012. Looking to 2013, financial institutions expect 8% and 4%
    increases, respectively. “Issuers are more tepid in their outlook for debit. They still expect
    the industry to grow, just not as rapidly as in the past,” says Tony Hayes, a partner at
    Oliver Wyman, who co-led the study. “In fact, this is the lowest growth project for
    signature debit we’ve seen since the study began.”

  • Separate and Unequal – Varying Consumer Protections

    Separate and Unequal – Varying Consumer Protections

    They may look similar but when it comes to consumer protections, credit cards, debit cards and prepaid debit cards are worlds apart. If a credit card or debit card is lost or stolen, you have federal law on your side. Credit cards are protected under the Fair Credit Billing Act and debit cards get coverage from the Electronic Fund Transfer Act.

    In sharp contrast, there are no federal consumer protections for prepaid debit cards. “The first thing is what happens if a card is lost or stolen? ” asks Michelle Jun, senior attorney at Consumers Union. “There’s no federal law that covers prepaid debit cards. It’s really up to the program manager.” Which is another way of saying that it’s up to the company issuing the card what, if any, protections to provide its customers. Indeed, with prepaid debit cards, consumer protections for unauthorized use are voluntary and can be changed or rescinded by the issuer at any time, according to a Consumers Union report.

    “It’s subject to whatever the company wants to give you,” Jun says. “It’s determined by whatever the contract says or whatever the customer service rep says and that’s pretty important if people are relying on that money to buy groceries.” Here’s a look at the contrasting consumer protections for credit cards, debit cards and prepaid debit cards.

    Credit cards
    Credit cards are the gold standard when it comes to consumer safeguards. Thanks to federal law, your liability is limited to just $50 if a credit card is lost or stolen. “When it comes to plastic, credit cards have the best consumer protections,” says Beverly Harzog, credit card expert and author of the forthcoming book, “Confessions of a Credit Junkie.”

    “Consumers who report their card missing before a thief can use it aren’t liable for any
    charges on their stolen or lost card. But even if you don’t report before a thief uses your
    card, your loss for any unauthorized charges on your credit card is limited to $50. Many
    of the major issuers even offer zero liability protection.”

    Debit card

    There’s no blanket answer to what your individual responsibility may be for charges made on a lost or stolen debit card. Under federal law, your liability depends on how quickly you report the theft to your bank.

    With a debit card, you aren’t liable for any charges if you report it missing before a fraudster can use it,” Harzog says. “Now, if you report it missing within two business days, you’re only liable for up to $50. If you report the loss after two business days have passed, but before 60 calendar days have passed since your statement was sent to you, you can lose up to $500.

    If you allow more than 60 calendar days to go by, you can lose all the money that was taken from your account and from any accounts that were linked to your debit card.” Naturally, being vigilant and acting fast matters when it comes to debit cards. To lower your risk of debit card theft, monitor your account carefully. “You can increase your protection against debit card fraud by checking your statements and your online account frequently,” Harzog says.

    Prepaid debit card

    And then there are prepaid debit cards. Perhaps because these products have only relatively recently gained mainstream popularity, consumer protections for a lost or stolen card are voluntary and vary by card issuer. You have way fewer protections on prepaid debit cards compared to a credit card on limits of liability. It all depends on what kind of prepaid card you have and from which vendor, says Mary Ann Campbell, a certified financial planner who teaches personal and family finance at the University of Central Arkansas and runs the web site www.moneymagic.com. Be sure and read the fine print in your contract and check the web site of your provider

    .Registering a prepaid card with an issuer may be required to receive a reimbursement if a card is lost or stolen, according to a study of prepaid cards by Consumer Action. Campbell recommends acting quickly if a thief should snatch a prepaid debit card. It’s wise to carry your provider’s contact information in your phone or have it at home so you can contact them immediately, Campbell says.

    Campbell recommends acting quickly if a thief should snatch a prepaid debit card. It’s wise to carry your provider’s contact information in your phone or have it at home soyou can contact them immediately, Campbell says If you carry your card and contact numbers in your smartphone, be sure and set a password on your phone to protect your information.”

    Helpful links:

    http://www.consumer.ftc.gov/articles/0219-fair-credit-billing

    https://www.bestprepaiddebitcards.com/debit-cards/death-taxes-and-lost-or-stolen-debit-cards

    http://www.consumer.ftc.gov/articles/0219-fair-credit-billing

    http://www.consumer-action.org/downloads/english/prepaid_booklet_straight_line.pdf

     

     

Credit and Debit Card Ratings