It’s clear that prepaid debit cards – cards you load with cash, spend down and then reload – are hot!
The first thing you will see when you come to the iPeopleFINANCE site in September, is an invitation to sign up for one of our FREE, co-branded debit cards. This card will be your passport to unsecured loans at favorable rates, and a world of personal finance that you’ve never experienced before, including a new and revolutionary credit scoring model that works differently than the big-3 credit agencies, and access to reasonably priced capital with no hidden fees or charges. We are excited about this new banking model and we know you will be also.
In 2009, consumers loaded roughly $29 Billion on pre-paid cards, which are especially popular with young adults and those considered underbanked — meaning they have little access to mainstream financial institutions like banks. But by 2013, that amount is expected to reach over $200 Billion, according to an estimate cited in a report from an arm of the Pew Charitable Trusts.
Even the budgeting guru Suze Orman is marketing a prepaid card.
The project recently released some of its findings, along with excerpts from the comments made by participants in the focus groups. The gist of the findings is that while some users don’t like some of the fees associated with prepaid cards, they prefer the transparency and the predictability over the higher and, from their perspective, less predictable fees that come along with traditional checking accounts from banks.
Some of the comments are not only enlightening but also fun to read, and they support the iPeopleFINANCE credit model which is designed to provide ready access to capital to the 17 million under-banked Americans whom the traditional banks are trying to get rid of, through higher fees and checking account overdraft charges
Male Participant: “Compared to my situation, I went through a lot of late fees with the credit cards, extra fees with the checking accounts. I was paying monthly between $35 to $50 in fees compared to $3.99 that I pay for a maintenance fee to get a card.”
Female Participant, on the prepaid card fees: “I think they are fair because they’re upfront. I’m thinking in contrast to a checking account. I think the ambiance and the idea of the marketing behind a checking account is they’re your friend; they’re your hometown bank. You can depend on them. You can count on them and, really, they’re just lulling you into the sense of comfort because they’re going to whammy you with fees on the backside. Whereas prepaid debit cards, they’re very upfront. This is the cost of the card; this is the cost for the services. It’s up to you at that point.”
“whammy you on the backside!”
Several participants seemed uneasy about the notion of adding credit options to prepaid cards, since they see a major benefit of the cards as helping them stick to a budget and avoid overspending.
Female Participant (Chicago): “It defeats the purpose of a prepaid debit card because it is, like, it’s a credit card. You can use money that you really don’t have to pay back, and I wouldn’t want to do that because I know I’m just going to get myself in some trouble.”
That’s one of the beauties of the pre-paid debit card: it is self-controlling; when you run out of cash, you are out of cash.
One of the reasons you will want to get an iPeopleFINANCE debit card is that you can use the auto-pay feature of the card to service your loan, assuming you are using the iPeopleFINANCE platform to get a loan. You simply instruct your employer to automatically load your card each month with the portion of your paycheck that you want to use to service your loan, and your card will be debited with that payment. Once you do that, your lenders on the iPeopleFINANCE site will offer you loans at very attractive interest rates because they know that you are no longer a credit risk. And, you will be re-building your credit as the iPeopleFINANCE site will track and record those loan payments and build you a new financial health index that will be reported to the big-3 credit bureaus.
The benefits to you are several-fold: You get a debit card that helps you control the amount of money you spend each month, you qualify for lower interest loans, you no longer need paper checks, you can shop online and book travel and hotels like everyone else, and you can predict your fees and budget accordingly. The benefits to iPeopleFINANCE are that in addition to the small fee we collect for card transactions, we are able to participate in a complete revolution of the banking industry while helping regular people get access to reasonably priced capital and credit, while enabling everyone to rebuild their credit histories and strengthen their future positions in personal finance.