Business
BET partners with NetSpend to market prepaid payment card
Control card users pay US$7.95 per month, US$2.50 per ATM withdrawal, US$1 for overspending and US 0.5 to check the account balance via telephone or ATM. There’s also an unspecified fee for reloading the card with cash or a check rather than direct deposit.
Those who have US$500 per month deposited directly qualify for a lower monthly fee of US$5, the high-yield checking account and a US$10 “purchase cushion” that allows users to overdraw their accounts without penalty.
Consumer groups have raised alarms about hefty fees and aggressive marketing by some prepaid card companies. In a report released Thursday, Consumers Union said weak regulation has allowed prepaid cards to mushroom into “a second-tier and much less desirable banking system” for many consumers.
It called on the Consumer Financial Protection Bureau (CFPB), the government’s new watchdog agency, to require clearer fee disclosures and make prepaid providers follow the same rules that govern debit and credit cards.
CFPB officials have signaled that the bureau is taking a close look at the prepaid card market. Its review could include their fee structures, marketing materials and disclosures.
Yet clearer fee disclosures, and even lower fees, are unlikely to dampen consumers’ hunger for the cards, Henry, the NetSpend CEO, suggested last year during a conference call with analysts.
“We don’t find a lot of price sensitivity to this product,” Henry said.
That’s because many people prefer the upfront costs of prepaid cards to the unexpected fees banks sometimes charge, says Anisha Sekar, vice president of cards for NerdWallet, a website that researches cards and helps people compare offers.
