Report: Prepaid Users Turned Down for Bank Accounts More Often
By Christina Tetreault on Monday, September 28th, 2015
Prepaid users may be relying on prepaid accounts because they can’t get a bank account, according to a new report. Mercator finds that 2 in 5 prepaid users and mobile pay use have been turned down for a new bank account within the last year:
“U.S. consumers who purchase general purpose reloadable (GPR) prepaid cards and those who pay using a smartphone or other mobile device are 4 times as likely as average to have been turned down for a new bank account within the preceding year. And young adults, especially 25–34 year olds, are more likely than older adults to have been turned down for a new checking or savings account over the past year. Bank policies have become strict, and 9% of survey respondents indicated they had been turned down for a new account. This may be the reason for some of the growth in prepaid cards.”
Prepaid cards don’t come with the same protections that debit cards tied to a bank account have, yet these products are often used by financially vulnerable consumers, research shows. More worrying still is that there is evidence that consumers are unaware that their prepaid cards are not subject to federal oversight, are not required to come with deposit insurance, and may charge undisclosed fees.
We believe every way should be safe to pay, and that prepaid accounts should come with the same protections as a traditional bank account. That is why for many years we have urged first the Federal Reserve and now the Consumer Financial Protection Bureau to issue strong final prepaid rules. In November, the CFPB released proposed rules late last year, and we hope to see final rules sometime next year.
Worried about prepaid cards? Tell the CFPB to issue strong prepaid card rules.