Feb 11, 2013 Sean Albert
Credit card spending was hit hard by the recession, along with new restrictions imposed by the Credit Card Accountability Responsibility and Disclosure Act (CARD) of 2009. While the sector continues to rebound, many consumers are adopting other payments methods - such as prepaid debit cards.
"For folks unbanked or underbanked, this can be a better solution than high-priced loans or traditional credit cards or even in carrying cash after short term," Liz Coyle, spokeswoman at Georgia Watch, recently told MCT Information Services.
According to the news source, these alternative credit methods are aimed at consumers who have no checking account, poor credit scores or still use check-cashing services. At the same time, the unbanked and underbanked aren't the only ones using prepaid cards. Steve Ledford, partner at Novantas, told the source that middle-class families are using them more, particularly those with kids in college.
According to the Daytona Times, Americans made 6 billion purchases using prepaid cards in 2009, for $140 billion in expenditures. Meanwhile, a study by Mercator Advisory Group found that reloadable prepaid card spending totaled $483 billion in 2011, according to MCT Information Services.
As traditional cards bounce back, alternative credit will likely continue its rise as well.