As bank fees escalate, prepaid cards go mainstream

Rising fees have chased millions of people away from banks and into prepaid debit cards....

A sample of the new ID card, which uses the MasterCard network.

Rising fees have chased millions of people away from banks and into prepaid debit cards.

The entrance of mainstream financial institutions transformed the prepaid debit card market. Customers have more options today, and many of the newer cards closely resemble the checking accounts they are replacing. The big difference is that prepaid cards are more lightly regulated than bank accounts, which is a concern to consumer advocates because the quality and consumer-friendliness of the cards on the market varies widely as a result.

The entrance of mainstream financial institutions transformed the prepaid debit card market. Customers have more options today, and many of the newer cards closely resemble the checking accounts they are replacing. The big difference is that prepaid cards are more lightly regulated than bank accounts, which is a concern to consumer advocates because the quality and consumer-friendliness of the cards on the market varies widely as a result.

Prepaid debit cards are the new celebrity fragrance. In the past two years ago, we've seen stars like the Kardashian sisters, Suze Orman, Russel Simmons, and George Lopez all plaster their faces on plastic. 

By Felix Salmon: Maybe it's a function of the Durbin act, which explicitly excluded prepaid debit cards from the massive decrease in debit interchange fees that it imposed on all other debit cards. But whatever the reason, prepaid debit cards are huge right now.

Prepaid debit cards are the new celebrity fragrance.