Underbanked can use prepaid cards as source of alternative finance
Jul 17, 2012 Sean Albert
Individuals who do not have bank accounts or forego traditional credit cards have long been deemed unreachable by financial companies, and many consumers were unable to obtain necessary funds to make ends meet. However, more options are now being brought to the table for the underbanked - they are being offered prepaid cards as viable alternative finance solutions. According to CNBC, the trend of prepaid cards for underbanked individuals is on the rise, but there is also an increase in consumers who already have bank accounts and access to credit. Prepaid cards allow users to avoid the risk of overdraft fees, as well as high interest rates for purchases. The cards also let consumers develop more effective budgets in order to avoid overspending. Because of these advantages, businesses are increasingly marketing to customers to generate a larger base and revenue. Recent research by Mercator Advisory Group found that in 2011, approximately $57 billion was loaded onto prepaid cards by consumers. This number is expected to drastically increase by 42 percent each year until 2014. For 2012, the dollar amount is anticipated to be around $82 billion, further lending evidence to the fact that consumers are turning to these forms of alternative finance.