Credit and Debit Card Ratings

Prepaid Card Popularity Continues To Rise

The meteoric rise in prepaid card popularity is continuing. According to a recent statement by Fitch Ratings, a Chicago-based rating agency, the use of prepaid cards is also likely to continue well into the future, fueled by changing consumer behaviors and banking industry dynamics that have made debit cards less appealing.

Fitch says the combined factors of the increasing popularity of gift cards and a desire by consumers to get away from traditional forms of payment – like credit cards and debit cards – in the aftermath of the recession helps explain the booming prepaid card popularity. According to data from the Federal Reserve, between 2009 and 2012 prepaid card transactions grew by 33.5 percent annually. The total number of prepaid transactions reached 3.1 billion in 2012, which was 1.8 billion more than just three years earlier.

Other factors beyond recession-shocked consumers are at work here, says Fitch. One element driving consumer acceptance of prepaid cards is an overall improvement in the quality of the cards available. Long geared only to people who could not get bank accounts or credit cards, prepaid cards earned a deserved reputation as fee-laden, consumer-unfriendly choices of last resort. But increasing interest on the part of mainstream U.S. consumers has led to large financial companies entering the market offering low-fee, easy-to-use cards.

As an example, Fitch cites the October 2012 launch of Bluebird, a card launched by American Express and Walmart. Recently, American Express reported that $2 billion has been loaded to Bluebird accounts since the card was first offered. In 2013, fully 39 percent of the money deposited to Bluebird accounts came via direct deposit.

Another factor in the rise of prepaid cards, says Fitch, are regulations that have made debit cards less appealing. In particular, the ratings agency notes that the Durbin Amendment, restricted the amount of money banks could charge for debit card transactions. With a large chunk of revenue off the table, banks have made changes to checking accounts, including introducing new fees and canceling rewards programs. The result, says Fitch, has been a continuing consumer shift to low-fee prepaid cards.

 

 

 

 

 

 

 

 

 

 

 

 

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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  • Prepaid Card Popularity Continues To Rise

    Prepaid Card Popularity Continues To Rise

    The meteoric rise in prepaid card popularity is continuing. According to a recent statement by Fitch Ratings, a Chicago-based rating agency, the use of prepaid cards is also likely to continue well into the future, fueled by changing consumer behaviors and banking industry dynamics that have made debit cards less appealing.

    Fitch says the combined factors of the increasing popularity of gift cards and a desire by consumers to get away from traditional forms of payment – like credit cards and debit cards – in the aftermath of the recession helps explain the booming prepaid card popularity. According to data from the Federal Reserve, between 2009 and 2012 prepaid card transactions grew by 33.5 percent annually. The total number of prepaid transactions reached 3.1 billion in 2012, which was 1.8 billion more than just three years earlier.

    Other factors beyond recession-shocked consumers are at work here, says Fitch. One element driving consumer acceptance of prepaid cards is an overall improvement in the quality of the cards available. Long geared only to people who could not get bank accounts or credit cards, prepaid cards earned a deserved reputation as fee-laden, consumer-unfriendly choices of last resort. But increasing interest on the part of mainstream U.S. consumers has led to large financial companies entering the market offering low-fee, easy-to-use cards.

    As an example, Fitch cites the October 2012 launch of Bluebird, a card launched by American Express and Walmart. Recently, American Express reported that $2 billion has been loaded to Bluebird accounts since the card was first offered. In 2013, fully 39 percent of the money deposited to Bluebird accounts came via direct deposit.

    Another factor in the rise of prepaid cards, says Fitch, are regulations that have made debit cards less appealing. In particular, the ratings agency notes that the Durbin Amendment, restricted the amount of money banks could charge for debit card transactions. With a large chunk of revenue off the table, banks have made changes to checking accounts, including introducing new fees and canceling rewards programs. The result, says Fitch, has been a continuing consumer shift to low-fee prepaid cards.

     

     

     

     

     

     

     

     

     

     

     

     

  • Coming Soon: Free FICO Scores For Discover Cardmembers

    Coming Soon: Free FICO Scores For Discover Cardmembers

    First it was cash back rewards and now it’s free FICO scores. In early February, Discover, the card that has become synonymous with cash back rewards, announced that it’s millions of cardmembers will soon see something new on their monthly account statement – free FICO scores. Discover is the first credit card company to include free FICO scores on cardmembers’ monthly statements, an initiative it began as a pilot program last November and will now expand to millions of its customers.

    What is a FICO score? In essence, a FICO score is a numeric representation of a consumer’s credit worthiness. The number is calculated by three credit bureaus – Experian, TransUnion and Equifax. It is based on factors such as how promptly a person pays their credit card, mortgage and other bills, how long they’ve had credit and the types of credit used. Banks and other lenders review an individual’s FICO score in order to determine whether or not to extend credit and what interest rate to charge. The better a person’s FICO score, the lower the interest rate they’re likely to be charged when purchasing a house or car.

    The free FICO scores on Discover cardmembers’ monthly statements will be based on information from the TransUnion credit bureau. According to Julie Loeger, Senior Vice President of Brand and Acquisition at Discover, the decision to expand distribution of free FICO scores is all about customer empowerment. “Knowing their scores can help our cardmembers achieve their personal goals and better prepare to reach life’s many major milestones.”

    Besides providing credit scores to customers each month, Discover will also provide an explanation. “Beyond sharing the FICO score itself, we’re now taking one step further by providing consumers with the specific reasons their score is what it is,” says Loeger. “A knowledgeable consumer is a powerful one, and we’re happy to partner with FICO and TransUnion to give consumers the information they need to make smart financial decisions.”

     

     

     

     

Credit and Debit Card Ratings