General purpose reloadable (GPR) prepaid cards, also called GPR prepaid accounts, are a versatile financial tool for consumers. They can be loaded via direct deposit or with cash, and used at ATMs to withdraw funds and at merchants to make point-of-sale purchases, similar to debit cards tied to checking accounts. They can also be used to budget or control spending.
In its 2013 national survey, the Federal Deposit Insurance Corp. (FDIC) found
that 8% of U.S. households were “unbanked,” meaning they did not have a bank account—and of those, 22% had used GPR prepaid cards in the previous 12 months. By comparison, the survey found that only 5% of those with a bank account had used these cards.1 Especially for the unbanked, the cards often serve as a primary transaction account.
Due to loopholes in the predatory too-big-to-fail banking system as well as wage stagnation for the last three decades, families have recently turned to prepaid debit cards as a means to manage their daily finances. Unfortunately, there is just as many predatory loopholes and hidden fees in the prepaid debit card industry.
Recently, private employers and state governments have turned to payroll cards as a way to save money instead of printing checks or in case employees don’t have bank accounts. Although there may be more regulations for payroll cards than general pre-paid debit cards, there is still predatory banking by some employers and payroll card companies.
Solutions for prepaid debit and payroll cards:
Limit purchase price to $5
Limit reloading charge to $1 per transaction
Limit monthly fee to $1
Limit overdraft fee to $10
Opt out provision for over draft protection
Make ATM balance inquiries free
Prohibit fees for in-network deposits
2 free out-of-network deposits per month, then $1
Prohibit legal processing fees
Prohibit inactivity fees
Require all fees to be visible and on the outside of packaging