Prepaid Cash Cards Gain in Popularity

   

Posted: Mar 19, 2009

A recent New York Times article described a new trend that may be especially helpful to people with bad consumer credit and low credit scores.

According to the article, several companies are enjoying strong growth in the area of prepaid cash cards that people can replenish at retail stores instead of banks. The cards feature logos from top credit card companies, like Visa and MasterCard, and fees are generally charged for monthly maintenance and for transactions.

The Times reports that the volume of transactions on these cards is expected to reach $7.2 billion in 2009 and $10.8 billion in 2010, up from an estimated $4 billion in 2008. Consumers with lower incomes and no bank accounts are the ones who tend to use the cards.

One of the companies, Green Dot, also reportedly plans to offer additional financial services to its customers in the coming months.

The trend may be helpful for consumers working to manage their money, but it won't necessarily be as useful to those who have been trying to obtain access to credit in the current lending environment.