With bank fees rising, prepaid debit cards could replace checking accounts

These days, new banking fees seem to be spreading like the flu virus, with higher charges for overdrafts, stopped payments, ATM withdrawals and bounced checks popping up on each new monthly statement. The rising costs are leading some consumers to consider the once unthinkable: closing their bank accounts altogether. The alternative? Using prepaid debit cards that can be recharged to handle banking needs.

While such a move isn't right for everyone, a number of reports estimate millions of "unbanked" and "underbanked" consumers with limited or no access to bank accounts are already increasingly using prepaid debit cards. Many of the unbanked and underbanked are minorities or people with incomes below $30,000, according to a report released Wednesday by the Federal Deposit Insurance Corporation. Even consumers with bank accounts are using the cards to pay bills, control their own spending or help friends and relatives with spending needs, reports show.