Shoppers turning to prepaid plastic

Published 1:01 pm Tuesday, October 26, 2010

Consumers are increasingly turning away from traditional bank accounts and credit cards in favor of a different plastic: prepaid cards.

Consumers typically buy them from a retailer, load them with money — sometimes from directly deposited paychecks — and use them at checkout counters or to pay bills online. And the cards are advertised with a phrase rarely used by financial institutions since the beginning of the credit crisis: no credit check necessary.

So it’s no wonder that in 2008 consumers loaded $8.7 billion, up from about $4 billion the year before, on prepaid cards that carry Visa.

Consumer advocates warn that the cards can carry fees. Nevertheless, they have become popular among those who cannot get traditional bank accounts, many of them immigrants who rely heavily on more expensive check-cashing institutions.

Washington Post