Shove it!
That’s what consumers who have had enough of costly bank fees are doing — closing their accounts and signing up for newly popular alternatives, customer-friendly prepaid debit cards and employee-payroll cards.
This market is white-hot. A battalion of providers, several just launched, is targeting a market forecast to grow at a blistering annual rate of 20 percent from 2010 to 2016, a new study by Aite Group reveals.
That would see the gross dollar value loaded onto debit cards more than double from $56.6 billion in 2010 to $106 billion by 2016.
Payroll cards would see dollars loaded onto them more than triple, from $20.9 billion to $62.6 billion.
Among the new cards is one from NetSpend and InComm at Family Dollar and 7-Eleven stores. Walmart has expanded its card services to an American Express prepaid-card product.
Unlike those of some penny-pinching consumer banks, however, many of the cards have eliminated or reduced their activation, annual and monthly fees.
Meanwhile, usage of employer programs for payroll cards are “accelerating,” Aite says. Employer programs with the largest pools of prospective cardholders include McDonald’s, Walmart and Walgreen. Workers often have no bank accounts for payroll direct deposits, Aite says. Employees can convert some payroll cards into prepaid debit cards.
“Since free checking is no longer abundant in the market, the opportunity for prepaid-debit and payroll-card sales to debanked or unhappy checking account consumers is growing,” says Madeline Aufseeser, author of the Aite study.
A survey this year by Bankrate.com showed that only 39 percent of US banks provided checking accounts with no minimum balance and no monthly fee, a 45 percent drop from 2011. By contrast, in 2009, 76 percent of US banks offered checking accounts with no minimum balance charges and no monthly fees.