It’s Time to Regulate Prepaid Cards as Bank Accounts

The Federal Deposit Insurance Corp. and Consumer Financial Protection Bureau are concerned these days about two related trends: the rising numbers of “unbanked” Americans and the proliferation of prepaid debit cards issued by companies like NetSpend and GreenDot that are popular with people who don’t use traditional checking accounts.

On its face, these trends appear both complementary and worrisome. People abandoned or poorly served by traditional banks often rely on alternative financial tools, like check-cashing services and pawn shops, notorious for high fees and gotcha penalties. And prepaid products have also for years been criticized for high fees and predatory marketing.

This article was originally published in American Banker.