Increasingly, underserved Americans are turning to prepaid cards to meet their basic financial services needs. Functioning much like electronic banks accounts without checks, general purpose reloadable, or GPR, prepaid cards can be used make purchases, pay bills, access cash, monitor one’s finances, budget, save, and more. But prepaid cards have a significant weakness—their consumer protections do not serve current and prospective users well. Their fee disclosures in particular need improvement.
Companies typically disclose their fees in a list or box, but their design, content, and location vary widely and could be more consumer-friendly. Card users need to be able to more easily determine the true cost of a prepaid card and compare different products before deciding which to purchase. To help consumers make informed choices, prepaid cards should be offered with a well-designed fee box.
The Center for Financial Services Innovation (CFSI), which has been following the development of prepaid cards since 2004, has designed a model fee disclosure box based on research on current fee disclosure practices for GPR prepaid cards, best practices in disclosure for a variety of financial and non-financial products, and data on current prepaid card fees. The key principles identified through this research and behind the design of this model fee box are described below. The Model Fee Disclosure Box also below shows how these recommendations could work in practice.