Creditnet News Story
Unbanked households may turn to prepaid credit cards
Friday, December 4, 2009
By Thomas Astery
A number of people have turned away from using traditional bank accounts.
A recent survey from the Federal Deposit Insurance Corp. shows that 9 million households in the country are unbanked, which may leave many to consider the option of using prepaid credit cards.
That number makes up 7.7 percent of U.S. households, according to the FDIC. Additionally, an estimated 17.9 percent of households in the country, or about 21 million, were shown by the poll to be underbanked. In all, about 43 million adults in the country are considered underbanked.
The survey also showed that a "substantial" number of lower-income households are unbanked or underbanked. Almost 20 percent of low-income households - those that earn less than $30,000 a year - are unbanked, which comes to a total of about 7 million. Furthermore, low-income households account for about 71 percent of those that are underbanked.
According to the poll, many unbanked households have turned to prepaid cards in order to meet their financial needs. Of those polled, 12 percent of households indicated they used some form of prepaid card, and roughly 3.1 percent receive their payroll through such a card.
Along with unbanked households, a number of employers have turned to using prepaid cards. For example, Walmart has shifted away from paper checks to pay its employees, opting instead for a prepaid card. Also, the government has given those on Social Security the option of receiving payments on prepaid cards.
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