American Express (Amex) will be rolling out its first prepaid credit card to the general market later today. The move surprised many in the industry because Amex has such a strong reputation for catering to more affluent clientele and prepaid cards are traditionally marketed to low-income consumers. Amex said that it is confident that the card will find appeal among a broader swath of consumers and that it will in no way hurt the reputation of the company.
"This card is for everyone," said Dan Schulman, head of Amex's enterprise growth unit. "It could be for a parent who wants to give their kid a card, it could be for someone who doesn't have access to credit. It's a very large market that spans demographics."
Amex said that the new card will only charge two fees. One to load money on the card through retailers (though it costs nothing to transfer money to the card through a checking or savings account) and one to withdrawal money from an ATM. Since those are the only two fees that consumers need to worry about they can plan ahead of time or even avoid the fees altogether if they budget carefully.
The Amex prepaid credit card is already available for order online at absolutely no cost. Later this year, when it becomes available in retail locations, consumers will be able to purchase the card at popular stores for around $5.
Once cardholders have their account set up, they will be able to review transaction histories online and sign up for email or text alerts. Of course the cards will also come with safety and security Amex cards are known for with purchase protection against damage and theft.
Amex isn’t the only company eying the estimated $37 billion a year prepaid market. Industry analysts expect major banks to turn to prepaid cards as a way to get around new regulations which limits fees banks can charge merchants and consumers. Instead of offering low-income customers checking accounts with debit cards, analysts say banks are very likely to increasingly offer consumers prepaid cards as an alternative.
As always, stay tuned to Credit Cards Professor for more credit card news and updates.
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