Economic Study Finds Reloadable Prepaid Cards a Comparative Value in Environment of Rising Bank Fees

Consumers can manage finances with a prepaid card for as little as $76.35 per year while bank customers can pay more than $218 per year

Mar 01, 2011, 10:00 ET from The Network Branded Prepaid Card Association

MONTVALE, N.J., March 1, 2011 /PRNewswire/ -- According to an economic study released today, consumers who choose a reloadable prepaid card to manage their finances could pay far less in fees than if they use low-balance checking accounts or check cashing for similar financial services. The study found that consumers have many affordable options to manage their finances with reloadable prepaid cards and can pay fees as low as about $6 a month or $76.35 per year.

The comparative economic analysis was conducted by economist G. Michael Flores of Bretton Woods, Inc., an expert on payments and financial institutions. The study analyzed a range of payments options available to consumers, including basic checking accounts, reloadable prepaid cards, cash-based lifestyles and check cashing services, and each of their relative costs for a similar consumer activity pattern. The first comprehensive economic study that compared the cost of prepaid cards versus other financial tools was conducted in 2009.

"Just like our 2009 report, this year we found that prepaid cards offer a compelling value because they fill a growing void created by increasing fees for checking accounts driven by recent legislation," said Flores. "Reloadable prepaid card fees are reasonable and consumers are turning to the products because the cards meet their basic financial needs with consumer protections and convenience of features at an attractive price point."

"The second edition of the Bretton Woods economic analysis report provides additional hard data to support what consumers are saying: reloadable prepaid cards are a great value," said Kirsten Trusko, President of the Network Branded Prepaid Card Association (NBPCA). "This report is an objective assessment of prepaid's increasing value and I hope critics will read it to gain a better understanding for how reloadable prepaid cards help millions of consumers effectively manage their finances every day."

As it did in 2009, Bretton Woods compared the costs of the largest reloadable prepaid card programs versus alternative payments tools for similar transaction activity. The 2011 report adds analysis on the "sea change" that is occurring in consumer banking due to new regulations. Some key findings include:

  • Check cashing and paying bills with money orders are the most expensive payments options available to consumers of the options compared
  • Traditional checking account costs are rising with additional restrictions on account activity, this is affecting the underbanked demographic the most
  • Reloadable prepaid card prices are falling while features of the cards have become more robust

To gain an accurate comparison of the costs to consumers using reloadable prepaid cards versus bank accounts for similar usage patterns, Flores looked at the pricing of basic FDIC insured checking accounts from the top four banks (by asset size) in the United States and the prices from the largest providers of network branded prepaid cards. The analysis utilized the consumer transaction pattern suggested in a recent study by consumer advocacy group Consumers Union. The comparison revealed:

For similar usage patterns:

  • Reloadable prepaid card users' costs range from $76.35 to $261.35 annually if they use direct deposit and $184.35 to $380.15 if they don't take advantage of this feature
  • Bank customers pay from $218.35 to $314 annually for a basic checking account
  • Consumers that utilize check cashers and cash pay $139.68 to $719.64 annually

The full text of the report and a bio for Mr. Flores can be obtained by emailing

About Bretton Woods & Michael Flores

Mr. Flores, President and CEO of Bretton Woods, Inc, is a subject matter expert in the area of financial institutions. He has over 30 years of financial institution experience in both hand-on experience and academic study. Mr. Flores specializes in the study of payment systems and process improvement and reengineering through enabling technologies. He has testified in Congress and spoken to industry groups and has authored several studies and articles for industry publications. Previously, Mr. Flores served as a faculty member with Pacific Coast Banking School in Seattle, Washington where he taught Technology's Role in Community Banking curriculum for bankers in the graduate school.

About the NBPCA

The Network Branded Prepaid Card Association (NBPCA) is a non-profit, inter-industry trade association that supports the growth and success of network branded prepaid debit cards and represents the common interests of the many players in this new and rapidly growing payments category. For additional information visit, the NBPCA Facebook page or follow us on Twitter.

SOURCE The Network Branded Prepaid Card Association