Report: Most GPR Cardholders Pay Less than Half the Cost of Checking (Nov. 12, 2013)
The cost to consumers of using a reloadable prepaid card continues to decline, while direct deposit-based checking accounts on average cost more than twice that of direct deposit-based GPR cards, suggest the results from the fourth annual “Analysis of General Purpose Reloadable Card” study released today. Bretton Woods Inc. compared a broad range of checking and GPR card fees across the U.S. and found that the majority of consumers using a GPR card as a primary payment tool pay less than $7.50 per month.
Entry-level checking accounts have monthly fees that range up to $13.95 that are waived with recurring direct deposit or a daily minimum balance of up to $1,500, though the typical GPR customer maintains a balance of less than $100. The report also assumes an average of seven annual overdrafts for checking account customers; the fee-analysis is based on data as of Dec. 21, 2012.
Bretton Woods’ comparative analysis of average costs to consumers for typical transactions for basic checking accounts versus GPR cards found that the monthly cost to consumers using GPR cards was $11 with direct deposit and $17 without direct deposit, while the average monthly cost to consumers using basic checking accounts was $25 with direct deposit and $32 without direct deposit. The study also found that some GPR cards, such as American Express’ Bluebird, cost less than $5 a month.
GPR cards with high fees are an anomaly, according to G. Michael Flores, Bretton Woods’ president and author of the report. “Any high fees incurred by consumers are from outlier cards only and are completely avoidable,” he said.
GPR cards increasingly are serving the needs of younger consumers, added Kirsten Trusko, president and executive director of the Network Branded Prepaid Card Association (NBPCA), which sponsored the study.
GPR card costs continue to decline, Flores tells Paybefore. “Competitive pressure and economies of scale are driving GPR card costs down, and as more programs add features like remote deposit capture, text alerts and pass-through FDIC insurance, GPR cards are becoming almost indistinguishable from checking accounts,” he says. Nearly 60 percent of banks now offer GPR cards, Flores adds, as banks recognize younger consumers’ affinity for more flexible financial services products. “There is little loyalty to legacy banking products, and banks are realizing that and improving their offerings,” he says.