Another prepaid card hits the market, as the prepaid market continues to boom despite recently taking heat from the federal government’s Consumer Financial Protection Bureau over high fees and lack of fraud liability.
In spite of recent concerns raised by the Consumer Financial Protection Bureau (CFPB) over prepaid cards, the cards continue to be extremely popular, with new cards being launched all the time. The latest entry to the field is the Synovus Connections card, now available at all Synovus bank divisions within its five-state area.
Prepaid cards are similar to gift cards or check cards – the user loads them with cash and uses them until the balance zeroes out. They can reload them with cash, withdraw money from ATMs, and in many cases even have direct-deposit payments made to the card.
The Chase Liquid Prepaid Card, which launched last month, made many people wonder if prepaid cards will replace checking accounts altogether in the future. Depending on the fee structure of the prepaid card in question, prepaid cards can be a better bargain than checking accounts that charge high fees.
The Feds Step In
Those fees were the subject of an investigation by the CFPB recently, when Director Richard Cordray said that the cards take advantage of “the most vulnerable among us,” and that “every dollar they pay in hidden fees is a dollar they cannot spend on supporting their families. These consumers are least able to take a hit if their prepaid card is lost or stolen, and yet they often have no guaranteed protection against this kind of a disaster.”
The concerns about prepaid cards centered on several things:
- High fees charged for everything from activating the cards and reloading them to withdrawing money from ATMs and calling customer service with questions
- No fraud liability protection or insurance against bank failure
- Lack of clarity around disputed charges and inability for customers to get money back in case of a disputed charge
Perhaps anticipating government regulation on a product that was previously unregulated, many new prepaid cards, like the Chase Liquid, responded by having lower fees and being more transparent with cost structures.
Good Option for Many
Prepaid cards remain an excellent option for many customers, as they offer approval for everyone in spite of credit history. Anyone who has money to load onto the card can be approved for a prepaid card and use it anywhere that takes credit cards. In today’s world, using credit cards is a necessity, and if a lack of credit history or bad credit history makes getting a credit card difficult, a prepaid card can be a lifesaver.
Synovus’ chief banking officer, R. Dallis Copeland Jr., says in a press release that “We are excited to bring this new payment option to our customers because it gives them a prepaid card they can use for a wide variety of purposes,” and their chief community banking officer, Wayne Adkins, adds: “From the time we made this card available in our test markets, the acceptance rate has exceeded our expectations for a brand new product. Our card is a great alternative to a checking account, is easy to load, and offers all the conveniences our customers expect.”
The Synovus Connections Card has no fee for reloading, and can be reloaded through direct deposit or cash deposit. Prepaid customers will surely be glad to have one more option when they are shopping for a good, low-fee prepaid card.