More Prepaid Debit Cards to Access Overdrafts, Albeit with Strict Restrictions
Prepaid Debit Cards to Access Overdrafts,
More consumers using prepaid debit cards are set to be able to spend amounts beyond their balance from October next year. As prepaid cards users welcome this extended usability feature, some consumers somehow felt that this facility isn't any different from the customary checking account. However, a closer check reveals that there is a host of differences. These key distinctions between a traditional checking account and prepaid card overdraft service have thus given more US Cardholders increased benefits and promoted their easy access to fast credit.
The Consumer Financial Protection Bureau, while working on the final rules to govern this novel financial development that has been warmly received by thousands of grateful punters, said that customers seeking overdraft protection may also follow the common credit card application procedures. Prepaid debit cards haven't had overdraft services because most clients have remained averse to this facility for a few good reasons. Consequently, only a little percentage of prepaid debit card issuers bothered to incorporate this unpopular service feature.
While some consumer watchdogs argue that this feature the new CFPB's regulations are likely to introduce increased prepaid debit card overdraft services across the industry despite the fact that most card users are totally against it. However, a number of top issuers who have already included the feature defend these attacks as a non-issue since the facility remains purely optional.
The most interesting fact is that prepaid cards have grown exponentially widespread as a fantastic substitute for a traditional bank account, belying the initial intention to make it function as a gift card. Statistics now show that the number of prepaid debit cards has incredibly multiplied tens of times in the last 15 years alone. For instance, an estimated $65 billion was preloaded on prepaid cards within 2012 alone.
The impressive tell-tale 2012 figure doubly surpasses that of 2009 - a verifiable indication that prepaid cards have been on a steady rise as a plastic money transaction/storage avenue. Due to the all-pervasive evidence of a card option on an upward projectile and CFPB, leading fiscal opinion predicts that the total amount loaded in 2012 is likely to have almost tripled by the end of 2018. Unlike the initial views of many corporations in the money-handling sector, this formerly card option has defied trusted forecasts to hit unprecedented all-time highs.
As the predictably rosy future of these cards unfolds year after year, they're generally anticipated to continually mimic nearly all the present features of a customary checking account that they have almost phased out. Right now, what a big number the option doesn't have is the overdraft facility, probably due to the chief reason that it hasn't been a favorite to most individuals.
According to a 2015 survey carried out by the Pew Charitable Trusts, most cardholders cited the ability to shun overdraft charges as the top reason why they preferred prepaid debit cards. This opinion was expressed by a really huge chunk of users - 72%. As at now, the only large card issuer who provides overdraft protection measures is NetSpend, although the embattled firm is barely out of its recent bad rap due to massive activation failures and other technical glitches.