In the past few years, financial services providers have investigated and begun offering a set of alternative credit
options, especially to segments of the population classified as "under-banked" or "un-banked."
One of the most popular financial offerings are prepaid debit cards, which are believed to provide users with greater convenience than traditional bank cards. However, according to a recent article in Daily Finance, the cards aren't just a win for consumers - they benefit financial institutions as well. For many banks and service providers, prepaid debit cards are used as a stepping stone to other banking products. The website characterizes this strategy as "grooming" under-banked consumers for checking accounts and credit cards. "As banks start offering customers what they want, rather than what the banks think they should have, they may find that people become less estranged from the banking community," the source reports. "Prepaid debit cards represent a golden opportunity that banks can't afford to miss." However, the industry may see some changes. Prepaid debit cards are currently receiving attention from Congress, which is determining whether regulations are necessary.