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Straightforward Prepaid Card Fee Disclosure Will Benefit Consumers and Boost Industry - Dollar Stretcher Guest Blogger
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Straightforward Prepaid Card Fee Disclosure Will Benefit Consumers and Boost Industry

by Curtis Arnold

There’s no lack of evidence these days about prepaid cards quickly making their way into the financial mainstream. Respected organizations like the Pew Charitable Trusts and Fitch Ratings have recently released studies documenting both the explosive growth of prepaid cards and some of the reasons to explain that rise – reasons that include a reduction in fees that now make prepaid cards increasingly attractive compared to traditional banking products, especially checking accounts.

While these developments are welcome news, especially to the millions of unbanked or under-banked Americans, the prepaid card industry is missing a huge opportunity by not making the disclosure of fees easily accessible and simple to understand for consumers. According to Shane Tripcony, my partner at BestPrepaidDebitCards.com, “We have spent a lot of time reviewing prepaid cards terms pages, and I am happy to say that the fee information has gotten easier to find and read over the past year, so it does seem like the industry is heading in the right direction.”

There are a host of reasons why making information about things like monthly account charges and the cost to add or withdraw money is very much in the industry’s self-interest. For one thing, doing so begins to erase the well-deserved predatory reputation prepaid cards have earned in the past. Long the last resort for consumers who couldn’t open checking or credit card accounts, prepaid cards were not only layered with steep fees, those fees were very hard for consumers to locate and understand.

Besides addressing this image problem, an industry-wide commitment to present fees in a prominent place and in a format that is easy to navigate would also forestall any need for legislation. Earlier this year, Virginia Senator Mark Warner introduced a bill that would require prepaid card issuers to adopt standardized fee disclosure. While Warner’s proposal seems like a straightforward and common sense approach, legislation always carries with it the risk of unintended consequences. Proactively and voluntarily making simple fee disclosure an industry norm would avoid any unforeseen problems in the future.

Already, some prepaid card issuers are seeing the wisdom in this. Not long ago, Chase Liquid adopted the disclosure suggestions formulated by Pew. It was a move that quickly won plaudits from consumer advocates like Pew as well as Senator Warner. It wouldn’t be a surprise if consumers, too, rewarded Chase for voluntary opting to be more transparent.

Of course, if avoiding potential legislation and regulations while also improving the standing of prepaid cards in the public’s eye isn’t enough, there’s yet another reason for companies to go ahead and make it simple and easy to evaluate fees. It’s the right thing to do.

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