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Prepaid Card utilize is increasing which is maybe not a thing that is bad

Prepaid Card utilize is increasing which is maybe not a thing that is bad

The WSJ states that the prepaid credit card company is booming and it is likely to achieve $200 billion in income by 2013. The greatest prepaid credit card business, Green Dot Corp, raised $160 million with its IPO final thirty days and it has seen its stock increase by 30 % since that time. The second-biggest business on the market, NetSpend Holdings Inc., hopes to boost $200 million with its very very own coming IPO. This is certainly news that is good.

Prepaid cards are employed as debit cards, with all the distinction that they’re perhaps perhaps maybe perhaps not connected to a bank account, but they are drawing funds from a free account using the bank that is issuing. Yet, they’re not charge cards either, since the issuer is certainly not expanding a personal line of credit towards the cardholder, who’s really buying his / her card’s spending restriction. After the stability can be used up, the card may be re-loaded.

Prepaid cards limit the cardholder’s investing to the total amount that is pre-loaded in the card. Unlike with charge cards, prepaid credit card issuers usually do not offer overdraft security, which, if triggered, allows cardholders go over their restriction, for a fee.

Therefore having to pay with prepaid cards is similar to having to pay with money. They provide the convenience of charge cards, while eliminating the likelihood of operating up debt. Furthermore, many charges associated with prepaid cards are fairly predictable, such as for example activation or reloading charges.