OK, so the Kardashian sisters caught quite a bit of flack last month for their Kardashian Kard, a prepaid debit card with high fees, including a start-up cost of $100 just to buy the thing.
But it turns out that the sisters may have been guilty of little more than bad timing. That’s because consumers and financial companies are beginning to think differently about prepaid cards.
Until recently, most banking people assumed that consumers would throw the cards out after the first use, meaning they needed to charge high fees to make any money off the cards at all. For a lot of consumers, prepaid cards remain disposable.
But for a growing number of people, the cards are serving as substitutes for checking accounts and credit cards. Some may have been bitten by high overdraft fees or interest rates in the past; others, the classically “unbanked,” assume (often incorrectly) that they don’t make enough money to justify opening a bank account.
Whatever the reason, more companies are offering prepaid debit cards with low fees on the hopes that people will reuse them again and again.
The “prepaid card industry has suffered an image problem in the past from high and sometimes opaque fees,” Zilvinas Bareisis of Celent, a financial consulting firm, told American Banker. “There has been a general trend toward lower and clear fees.”
One company, nFinanSe, introduced a card this month with a $3 activation fee and a $2.95 monthly fee.
SmartyPig charges $4.95 to activate its new prepaid debit card. It charges no monthly fees, and offers 10% cash-back at about 9,000 local and regional stores. There’s also Mango, a prepaid card that costs nothing to activate. Mango charges $5 a month, but even that fee is waived if you load more than $500 onto it during the previous month.
So don’t hate the Kardashians because they’re beautiful. Maybe they just weren’t keeping up with the latest prepaid card trends.