Prepaid card accounts have hit their stride as a viable option for banks to target consumers who are unhappy with traditional products, a Javelin Strategy and Research report says.

But the product category still feels the sting of its biggest public-relations nightmare: the Kardashian Kard, a celebrity-endorsed product that was vilified for charging up to a year's worth of fees up front.

The Kardashian Kard, which was shut down within weeks of its launch, serves as an example of everything that was wrong with prepaid cards in the past, says report author Aleia Van Dyke, a payments analyst for Javelin.

However, prepaid cards can now serve a new role for banks that want to repair their own images.

"Banks … are using prepaid accounts to rebuild reputations and relationships with the underbanked, and it's a product that won't make the customer dig into their wallets to pay for," she says.

Many people remain wary of prepaid cards, particularly the cards with celebrity endorsements attached. When SpendSmart, formerly BillMyParents, signed a deal with Justin Bieber to promote its prepaid card, the company found its fees put under a microscope.

Even finance guru Suze Orman couldn't dodge the criticism attached to her own card's pricing.

In some cases, the criticism is deserved. "There will always be cards out there pushing the line to get every penny or profit out of it," Van Dyke adds. "For people to say they are creating a prepaid card to help people manage their money, while charging large fees at the same time, doesn't make sense."

With the Consumer Financial Protection Bureau pushing regulations and fee transparency, fee disclosure for prepaid products has improved in the past year, Van Dyke says.

"We found a lot of high-functioning prepaid accounts with simple fee disclosures," she adds.

The Javelin study used surveys of nearly 11,000 consumers from the past year and research of financial institutions and prepaid providers.

Banks are likely to find the "optimal prepaid customer within their own walls" as underperforming checking account holders, the report says.

For most of the banks reviewed, a prepaid account offers a lower cost than a basic checking account. Thus, banks can target budget-conscious customers with a prepaid option, the report states.

"Banks can offer a prepaid product to the consumer and maybe transition them into a higher level checking account in the future," Van Dyke says.

Prepaid purchase volume, estimated at $150 billion this year, will grow by almost $45 billion over the next five years, or a compound annual growth rate of 5.56%, the study says.

New prepaid products such as Chase Liquid and the Bluebird card by American Express and Walmart are softening consumers' negative view of prepaid accounts through "tightly structured fees designed to limit consumer costs," the report states.

One of the more innovative prepaid cards is Plastyc's UPside Card, which offers a savings account and pulls in social media aspects for cardholders to check account balances, Van Dyke says. "It is very appealing to younger consumers," she adds.

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