Credit unions face a heightened degree of competition from prepaid cards, according to a new report from CardHub.com, a website dedicated to helping consumers with payment issues.
In its 2013 Prepaid Card Report, CardHub recounts that the cost of using a prepaid, reloadable card instead of a checking account has dropped 46% from last year and that cards from large asset institutions average 200% less expensive than cards from smaller asset institutions.
But the report also found that 62% of existing cards do not carry enough services to make them viable replacements for checking accounts, such as online bill pay and free check loading.
The report also said that celebrity-founded/endorsed cards are 17% to 36% more expensive than non-branded prepaid cards that do not carry an endorsement and that, on average, prepaid cards carry 10 different fees.
The report did not include any cards issued by credit unions or CUSOs in its evaluation.
“While prepaid cards were a relative unknown to most consumers just a few years ago, it’s safe to say they are no longer on the periphery of personal finance,” said Odysseas Papadimitriou, CEO of CardHub and a personal finance expert.
“Financial institutions are now making major investments in new prepaid card offerings, bringing heavyweight celebrity endorsers on board to pique the interest of younger demographics and offering innovative mobile account management services to make usage as appealing and easy as possible,” Papadimitriou said.
“Consumers now have myriad different prepaid card options to choose from, and while the right card can indeed outperform more traditional banking services for certain consumer segments, the wrong one can cost you a great deal in terms of money and functionality,” he said.