Prepaid Card Use Up 18% as Consumers Drop Debit: Study

By Elizabeth Ody - Apr 11, 2012 7:07 AM MT

Debit Drops - From 78% to 66%

Prepaid card use rose by about 18 percent in 2011 as consumers dropped traditional banking products such as checking accounts with higher fees, according to a study released today.

About 13 percent of U.S. adults had prepaid cards in 2011 compared with 11 percent in 2010, according to the study by Pleasanton, California-based Javelin Strategy & Research, a market-research firm.

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Free checking has dropped to about 45 percent of U.S. customer accounts, compared with 65 percent last year, a Bankrate.com study found. Photogapher: Getty Images

“People used to think of them as cards for people who didn’t have a lot of money, whereas today they’re becoming much more common for a variety of uses and a variety of demographics,” said Beth Robertson, director of payments research for Javelin.

Regulations that have increased the cost of checking and debit products may be partly driving the shift, in addition to consumers choosing prepaid as a budgeting tool, Robertson said.

About 88 percent of consumers had a checking account in 2011, down from 92 percent in 2010, the study found. Consumers with credit cards fell to 67 percent from 74 percent, and those with debit cards dropped to 66 percent from 78 percent.  

read more at Bloomberg