Prepaid debit cards are booming

Big money machines like JPMorgan Chase and American Express are entering the prepaid debit card business.  Chase Liquid card which entered the market in July 2012, charges $4.95 a month for the card.  The American Express introduced its Bluebird card in October 2012 and the cards are sold by Wal-Mart.  They do not charge a monthly fee but gets percentage from the merchant.  The card industry is  forecast to generate $168 billion in U.S. funds and generate $1.7 billion in fees by 2016.

Prepaid debit cards come in many forms.  Some holds a fixed amount while others works as a bank account.  According to some research more than 47 percent of U.S. households use prepaid debit cards.  Lack of oversight by Federal authorities makes the card business more lucrative.  However, the Consumer Financial Protection Bureau recently started to review the card business.  Since they are loosely regulated, fees charged by many issuers vary widely.  According to some, prepaid debit cards carry a big risk for the holder because they are not guaranteed by the Federal Deposit Insurance Corporation (FDIC).  As a result some watchdog groups are pushing the FDIC to protect funds and provide regulation and oversight to the industry.