What's the big deal about prepaid cards?

[Razeus]

A friend of mine was talking about how she uses her prepaid card for pretty much everything.  I got to thinking about commercials I've been seeing lately from Chase (Liquid) and AMEX prepaids and how it seems they are making a big push for people to get these.

What am I missing?  What is the appeal?

If these people are somewhat "mismanaging" regular bank accounts and get get a checking account/debit card, why would AMEX or Chase even want these customers? Is it about the swipe fees for them?

[Tommy5746]

---

@Razeus wrote:

A friend of mine was talking about how she uses her prepaid card for pretty much everything.  I got to thinking about commercials I've been seeing lately from Chase (Liquid) and AMEX prepaids and how it seems they are making a big push for people to get these.

What am I missing?  What is the appeal?

If these people are somewhat "mismanaging" regular bank accounts and get get a checking account/debit card, why would AMEX or Chase even want these customers? Is it about the swipe fees for them?

---

Its abour rewards and less fee's for the consumer... the average bank doesnt offer any rewards for its debit cards... and if it does its very minimal.. With the prepaid cards they offer rewards and no OD fee's etc... making it better than a standard bank account...

[adavis425]

---

@Razeus wrote:

A friend of mine was talking about how she uses her prepaid card for pretty much everything.  I got to thinking about commercials I've been seeing lately from Chase (Liquid) and AMEX prepaids and how it seems they are making a big push for people to get these.

What am I missing?  What is the appeal?

If these people are somewhat "mismanaging" regular bank accounts and get get a checking account/debit card, why would AMEX or Chase even want these customers? Is it about the swipe fees for them?

---

They want them because they can still profit from the cards without taking the risk. It's the same as any prepaid service. If the customer pays up front, there is no risk to the provider of that service. So a customer buys a prepaid card, AMEX (or whomever) gets a fee and then there are sometimes maintenance fees associated, etc. It's a black hole.

[jcstarkey8826]

---

@Razeus wrote:

A friend of mine was talking about how she uses her prepaid card for pretty much everything.  I got to thinking about commercials I've been seeing lately from Chase (Liquid) and AMEX prepaids and how it seems they are making a big push for people to get these.

What am I missing?  What is the appeal?

If these people are somewhat "mismanaging" regular bank accounts and get get a checking account/debit card, why would AMEX or Chase even want these customers? Is it about the swipe fees for them?

---

They are another revenue generator for banks. Have monthly fees, interchange fees, etc. but typically dont allow you to get OD fees if you go overdrawn. For some people they are just a better option, and for banks there is less risk on pre paid cards as opposed to checking accounts.

[WhiteCollar]

The Durbin Amendment decreased the interchange fee revenue for banks. Prepaid cards are unregulated products with high fees. Banks can charge consumersexpensive fees and not worry about rule compliance all while making money to offset the loss of revenue due to the Durbin Amendment. 

[fuzzybean]

The Amex reloadable has no fees unless you use an ATM more than once per month. We only use it for our $100 allowance (aka fun money) and replenish it the first of each month. We used to give ourselves cash, but I would wind up using mine on the kid's lunches or other things. It works for us.

[jsickz32]

question? if i were to get the Chase liquid, would it show up on my CR as a new account and cost a HP? im thinking about getting it just for the hell of it.

[fuzzybean]

Chase Liquid has a monthly fee of $4.95.  That's one reason we picked the Amex reloadable prepaid.

I don't think it would show on your CR, though.

[WhiteCollar]

Prepaid cards do not require credit checks, and do not report to credit agencies. Noto worry about a hp. 

[Tommy5746]

---

@jsickz32 wrote:

question? if i were to get the Chase liquid, would it show up on my CR as a new account and cost a HP? im thinking about getting it just for the hell of it.

---

No hard pull and it doesnt count towards your credit at all.. Its simply a prepaid debit card