A resounding majority of consumers who lack bank accounts or full access to banking services expressed satisfaction with prepaid cards, in the first substantial survey of this kind.
Of 400 underbanked users of reloadable cards who were surveyed in March 2009, 96 percent said the cards were useful and 94 percent would recommend them to others. The study was done by the Center for Financial Services Innovation (CFSI), a non-profit affiliate of ShoreBank Corp. ($2.4 billion in assets, Chicago) and the Network Branded Prepaid Card Association (NBPCA), a Montvale, N.J., trade association representing the major card issuers.
Jennifer Tescher, Director of CFSI, said, "The survey results are encouraging and complement the growing body of industry research on why reloadable prepaid cards are becoming a reliable option for many underbanked consumers". She described prepaid cards as "a valuable financial service choice" for the underbanked.
Tescher spoke at BS&T's 2008 summit on banks' overlooked profit potential in underbanked consumers.
The NBPCA-CFSI survey polled those with incomes of less than $30,000 per year, who typically rely on a combination of cash, money orders, check cashing and payday loan services, in lieu of regular banking services.
Among the reasons they cited for favoring prepaid cards were:
- Protection of funds if the card is lost or stolen (84 percent)
- Security because of the ability to carry less cash (77 percent)
- Budget control because of the ability to spend only the amount that is on the card (76 percent)
- Value versus alternatives such as check cashing locations, money orders or credit cards (72 percent)
- Straightforward pricing (81 percent)
- The ability to gain the social (80 percent) and practical (83 percent) benefits of utilizing plastic