Government Prepaid Cards Review

There has been an explosion in prepaid debit cards in recent years. A huge part of that can be attributed to the Card Act and other financial reform bills passed by congress after the great recession hit. Some of those reforms have reduced fees that banks get from traditional products like credit cards, checking account overdraft sees and related services. Gift Cards and prepaid cards were also regulated under the Card ACT, but what was spared was reloadable prepaid debit cards. Even though they came under scrutiny,  Congress pretty much left them alone. And as predicted, banks are now flocking to prepaid debit cards as a way to expand their banking products and more importantly, increase their fee income.

As the video above from the New York Times shows, prepaid cards can come with fees, and that has not changed. But the US Government is also getting into the prepaid card space, requiring that government benefits be paid by electronic means, including on government approved debit cards, which are offered to benefit recipients as an alternative to traditional direct deposits. Even though the government claims that the cards they recommend come with low fees, one wonders how the Social Security Card compares to other prepaid cards on the market.