The general purpose reloadable (GPR) prepaid cards are more accessible for consumers than the basic current accounts but are least protected, according to a report released by The Pew Charitable Trusts.
The GPR card is a debit card that is not linked to any current account and can be used at ATMs, retail cash registers, and to make purchases online.
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The report titled ‘Consumers Continue to Load Up on Prepaid Cards’ also found that US consumers loaded over $64bn onto the cards in 2012, more than double the amount loaded in 2009.
When compared to other banking products, GPR prepaid cards do not have any federal rules to protect consumers from extra fees, authorised transactions or loss of funds.
Pew Charitable Trusts safe checking research director, Susan Weinstock, said more consumers are turning to prepaid cards as a convenient tool to control spending and fees.
"While prepaid cards offer many benefits to consumers, they are a relatively new product with little oversight. A lack of protections undermines prepaid cards as a safe and easy way to manage money," Weinstock added.
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