Kristina Peterson, of DOW JONES NEWSWIRES reports on a new "industry backed" (limited) study, released yesterday suggesting that Prepaid Cards are cheaper to use than checking accounts.
I am not buying into the study as it represents a prime example of how data and statistics can be manipulated to say whatever you want the data to say.
In this case, because it is an "industry backed" study, they throw out the cards with highest rates and then compare figures against "low balance" checking accounts...in order to come to the conclusion the PrePaid Card "Industry" offers advantages over checking accounts.
I don't buy it, but...here's a clip in order to provide you with your own determination...
WASHINGTON -(Dow Jones)- An industry-backed study of prepaid card fees released Thursday argues that reloadable cards are a cheaper alternative to traditional low-balance bank checking accounts.
Pre-paid cards have come under scrutiny in Congress as it considers creating an agency to monitor consumer financial protection.
The study limits its focus to comparing the costs of four prepaid card programs to the five biggest bank checking account programs. A consumer with a low-balance checking account would expect to pay $200 to $350 annually, which includes the costs of overdraft charges, ATM fees and minimum account balances, according to the survey by management advisory firm Bretton Woods, Inc.
By contrast, a prepaid card user may pay between $108 and $320. The study was commissioned by the Network Branded Prepaid Card Association, an industry group.
In 2007, users made $4.8 billion in transactions using prepaid cards, according to The Nilson Report.
Several cards not included in the study show much higher fees. The Millennium Advantage Prepaid MasterCard, a product of Mastercard Inc. (MA), charges up to $ 99 for an activation fee. The MiCash Master Card charges $8.95 for each international remittance, $4 to make a bank teller withdrawal and $1 to check a balance. Flores said such cards do exist and they must disclose such fees " clearly and prominently" to consumers.
But Michelle Jun, a staff attorney with Consumers Union, said clear, obvious disclosure of fees is rare. She noted it can be hard to effectively evaluate prepaid cards' cost effectiveness because of the wide variation in their fee structures. "You can't even do close to an apples to apples comparison," Jun said.
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