The Secret Banks Don't Want You to Know About Prepaid Cards

Using a card to pay for a purchase
Using a card to pay for a purchase

Banks have a new hot-and-heavy love affair going -- with prepaid debit cards. As we've pointed out, banks stand to lose a lot of money due to new debit-card regulations, and that's on top of the money they lost when the government stepped in and put the kibosh on a lot of fees and rate hikes via the CARD Act. Banks have turned to prepaid cards because, at present, the legislation that protects consumers and their money when it comes to using ordinary debit cards doesn't apply to the prepaid cards.

As this article reveals, financial institutions are being very cagey when asked about their plans for expanding debit card use, but charts like the one featured in the article linked to above show that banks expect this segment of their business to grow very rapidly, up to about 7 million users by 2014.