It's nearly a full year since finance guru Suze Orman faced a backlash over her prepaid card fees and two years since the pricey Kardashian Kard went kaput — and yet the prepaid card market remains under fire for its pricing.
Even so, prepaid cards are growing in popularity. A recent Aite Group report predicts the number of prepaid cards in the U.S. will grow from 9.7 million in 2010 to 29.2 million in 2016.
But it's not surprising that financial websites and blogs still consider prepaid cards a risky option. GoBankingRates.com goes as far as calling prepaid debit cards one of its top five "dangerous banking products that could wipe out your savings account."
Prepaid card fees have been a stickling point for consumer advocate groups as well.
Durham, N.C.-based Reinvestment Partners, consumer advocates for low-income communities, released a report calling for new federal guidelines and the creation of some form of "comparison shopping" for consumers trying to determine which prepaid card best fits their needs.
In May, the Consumer Financial Protection Bureau announced it would provide some protection for prepaid cardholders who suffer unauthorized purchases from lost or stolen cards under Regulation E of the Electronic Funds Transfer Act in 1978.
While warning consumers about the downside of prepaid card fees is a worthwhile service, it doesn't appear the notion of extra costs is scaring people away from using the cards. Customers may even favor high fees if the prepaid card provider is more up-front about its pricing than banks are.
"Some issuers are great at disclosing the fees, while others make it harder to get your hands around it and you have to read the 6-point type to get all of the information you need," senior analyst Madeline K. Aufseeser, the author of the Aite Group report, said when her report was published.
If the fee transparency issue stays in the spotlight, the Consumer Financial Protection Bureau would have to step in to establish guidelines, she added.