Personal finance predictions for 2010: Your paycheck
More businesses will replace paper checks with prepaid cards
|2010 Financial Predictions|
|10. Your spending|
|9. Your credit card|
|8. Your debit card|
|7. Your rewards|
|6. Your phone|
|4. Your home|
|3. Your mail|
|2. Your ID|
|1. Your kids|
One day, perhaps this year, your paycheck may disappear -- replaced by a prepaid card.
As recession and regulation restrict the use of other cards, prepaids are gaining favor as the clean alternative: no messy revolving debt, little risk from hackers, no penalties or interest.However, some prepaid cards come laden with fees, so consumers must be mindful of the fine print.
Prepaids work like debit cards, though they need not be linked to an account of any kind. You don't need a bank account to cash them, and you can never dig yourself into debt with one.
According to Mercator Advisory Group, the prepaid card market grew from $220.3 billion in 2007 to $247.7 billion in 2008. The increase was largely driven by federal and state governments switching to them to pay out unemployment benefits, food stamps, Social Security payments and civil service paychecks.
Small businesses, especially those that employ unbanked workers, like the convenience. Governments and industries struggling to eliminate paper are onboard as well.
Next in the countdown, 4: Your home
See related: More employees say hello to payroll checks, 9 things you need to know about prepaid cards, 8 tips to reduce unemployment prepaid card fees, 5 secrets of smart debit card use, Study: Prepaid card full of hidden dangers
- Merchants have a big incentive to lure you away from credit cards – As general market credit cards become costlier to accept, retailers are under pressure to lure cardholders away from premium rewards cards. That could mean discounts for using gift cards, store cards and other payment methods ...
- You can now rent a car with a debit card without all the hassle – If you prefer to use debit cards instead of credit when you travel, your next trip may be less stressful. Some travel companies have relaxed their restrictions on using debit cards to book rental cars ...
- Wearable payments are finally starting to take off in the U.S. – A growing number of U.S. brands and financial services companies are embracing payment-enabled wearables that you can tap to pay without fumbling for a physical phone or card ...