Prepaid Card Use is increasing and that’s not really a Bad Thing

The WSJ states that the card that is prepaid is booming and it is likely to achieve $200 billion in income by 2013. The largest card that is prepaid, Green Dot Corp., raised $160 million in its IPO final month and it has seen its stock increase by 30 % since that time. The second-biggest business on the market, NetSpend Holdings Inc., hopes to boost $200 million with its very own coming IPO. This can be great news.

Prepaid cards are utilized as debit cards, with all the huge difference that they’re perhaps not associated with a bank checking account, but they are drawing funds from a merchant account with all the issuing bank. Yet, they’re not charge cards either, due to the fact issuer just isn’t expanding a line of credit into the cardholder, that is really buying his / her card’s spending limitation. After the stability can be used up, the card may be re-loaded.

Prepaid cards limit the spending that is cardholder’s the total amount that is pre-loaded from the card. Unlike with charge cards, prepaid credit card issuers usually do not offer overdraft security, which, if activated, allows cardholders to debate their limitation, for the cost.

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