Prepaid: The Best Kept Secret
If you’re like most Americans, your bank account balance averages less than $1500 a month. We’ve all been there–the fact is saving is hard and spending is easy. We all know this. What many of us don’t know is that banking fees are depleting your account more than they need to. A trick that many Americans are starting to clue into is that you don’t need a traditional bank to do your banking. All you need is a general purpose reloadable debit card. I know that is a mouthful so what is a general purpose reloadable prepaid card? The abbreviation for this card is often GPR card. GPR cards are fabulous but few people understand why. Here are a couple of reasons:
A GPR card is not a gift card. A GPR card is most similar to what everyone is familiar with as a debit card. It is usually Visa or MasterCard branded and it can be used anywhere debit cards, prepaid cards or credit cards are accepted. It can be used at ATMs. It can be used for shopping online. You can receive your payroll check directly to a GPR card. And you can keep it separate from all of your other accounts–credit, debit, bank and investment accounts.
GPR cards often have more features than debit cards. They also are great for people who don’t want to get into debt and who want to avoid overdraft fees. Also, people who do not have good credit but wish to shop online and have all the benefits of a Visa branded card appreciate the fact that a GPR card does not require a credit application. If you are a legal citizen of the United States of America and have a valid ID which includes matricula ID for Latino residents you qualify for a GPR card.
Even people with multiple cards often appreciate using a GPR card for the extra security it provides when shopping online, or in unfamiliar places or while traveling abroad. Many people consider GPR cards the best option in these uncertain situations because the balance is separate from any of their other accounts (e.g., high limit credit cards or direct deposit accounts and savings accounts that may have large balances). If your GPR card is compromised it will not affect accounts at other institutions nor other cards. Also, GPR cards have among some of the best security precautions including text alerts that can be configured to enable monitoring of authorized and unauthorized transactions and tell the difference between either transaction.
There is a persistent myth that GPR cards are expensive. This may have been true 15 or 20 years ago when the product category was invented; however, these days the exact opposite is true. While there are still the odd GPR card programs with high fees, today most programs offer low or no monthly fees if you use the card for basic banking and payroll deposit. Additionally, due to high prices when products were initially introduced, regulators and competition have led to the greatest transparency and lowest fees available to consumers for basic banking services.
GPR cards also evidence the tendency for new technology to leapfrog old-fashioned legacy systems. For example, debit cards and credit cards have been around for many decades and are built usually on technology that is equally old-fashioned. GPR cards tend to utilize and demonstrate next generation technology ahead of their more traditional peers. GPR cards were the first to adopt highly customizable text alerts. They were also early adopters of remote deposit capture which enables card holders to avoid check cashers and load almost any type of check to a GPR card for no or low fees. GPR cards were also among the first to facilitate card to card transfers enabling parents to send money to their kids at school, disperse allowances and track family spending.
GPR cards also enable people to break free from the brick and mortar chains of traditional banking. GPR cards are available online and were the first to be available at grocery stores and convenience stores across the country. Without stepping foot inside of a bank, these cards enabled people, for the first time, to access basic banking services while buying groceries, or from the comfort of their homes. Because delivery of the services required no brick and mortar, no branches and no retail staff, very soon costs related to GPR cards dropped below the cost of basic banking services at traditional banks.
Another myth about GPR cards is that fees are unclear or confusing. Nothing could be further from the truth. GPR cards are held to the highest standard of disclosure. Most reputable programs followed the guidelines originally set out by the Center for Financial Services Innovation (CFSI) called the Compass Guide. Today most GPR program managers and issuing banks work together to ensure that disclosures meet the highest standards for transparency and fairness.
Another innovation introduced by GPR card program managers is referred to as accelerated direct deposit. Programs with accelerated direct deposit enable employees to receive their pay anywhere from 2 to 3 days ahead of the normal schedule. For example, most companies pay their employees on a Friday but if you have a GPR card, you will receive your pay on a Wednesday if you direct your employer to deposit your pay to the bank account underlying your GPR card. Related to this, many people are unaware that GPR cards usually have a fully FDIC insured bank account associated. These accounts enable you to receive ACH deposits and set up automated payments and pay bills. Most everything you need to do in your day-to-day banking can be facilitated with a GPR card at a lower cost than traditional banking.
GPR cards continue to be early adopters of new technology. Almost every GPR card has a full-featured mobile app associated with it. Many also have mobile tap or wave and pay capabilities, EMV, and free ATM withdrawals at select networks or locations.
So now you know. The best kept secret in banking. The next generation of banking is here and it doesn’t have marble columns, tellers or vaults. The only bank you may ever need fits in your pocket and you can open an account as easily as clicking a link like the one below!
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