GE backs out of consumer credit sector as alternative options abound

More consumers are choosing to use alternative credit services in order to meet their financial needs. Traditional credit card usage is down and more Americans are starting to invest in prepaid card solutions as a way of avoiding hefty credit card fees and premiums.

Financial Times recently reported that General Electric (GE) is exploring the possibility of selling its finance sector, GE Capital. The move is part of the company's focus on pursuing more commercial investments. However, the source suggested that the decline in credit card use among American consumers has played a large role in GE's choice to consider leaving the consumer credit market.

The source noted that household credit card debt is down to $670 billion in the United States, much lower than the $865 billion peak seen in 2008.

Credit cards are not the only traditional banking products that could be taken over by prepaid cards. Earlier this year, Time reported that prepaid cards offer a better value than checking accounts because they have more affordable fees and don't come with excessive overdraft premiums. For this reason, financial institutions may want to rethink what products and services they will offer to consumers in the coming years.