Friday, November 15, 2013
Financial services advisory firm Bretton Woods Inc. issued a report that concludes the average amount of fees charged users of general purpose reloadable (GPR) prepaid cards is approximately half the fees charged basic checking account users. The researchers found that the majority of GPR users pay less than $7.50 per month in fees, compared to basic (meaning low balance) checking account fees that range up to $13.95 per month.
In Analysis of General Purpose Reloadable Prepaid Cards: A Comparative Cost Analysis of GPR Cards Using Program Manager and Issuer Data, Bretton Woods analyzed data supplied by prepaid card program managers with research conducted by The Payment Cards Center of the Federal Reserve Bank of Philadelphia and the Center for Financial Services Innovation. The researchers then filtered their results through the transaction profile model created by Consumers Union.
Bretton Woods said that, over the last three years, the average costs that consumers incur for checking accounts is increasing while costs are decreasing for GPR cardholders. At the low-end, the yearly costs of basic checking accounts rose from $60 in 2010 to $250 in 2013. In that same time frame, GPR card costs reduced from $76.35 in 2010 to $58 in 2013.
The researchers concluded that the trends are "unmistakable and undeniable"; GPR cards have "demonstrable cost advantage" over checking accounts. "While similar to checking accounts, prepaid cards serve unique markets and needs and are a textbook example of the market filling a need in a responsible manner," Bretton Woods said.
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