What are the pros and cons of prepaid debit cards?
Prepaid debit cards began to take off in the 1990s as credit card company’s realized that a significant portion of the U.S. population was not able to qualify for many of their credit cards. Even among those who did qualify a certain portion often defaulted on their outstanding balances and declared bankruptcy, which drove up losses. An early attempt to address this market need was in the form of a secured credit card, which involved having a credit line that was “collateralized” by an equal sum of money deposited with the credit card bank. During the first few years the secured card’s credit line was set at 100 percent of the savings on deposit. Once a satisfactory payment history was established by the customer the bank would begin extending gradual amounts of credit beyond the savings total – sometimes up to 200 percent of the deposit. This way the bank was able to create a stable credit card customer who might not qualify otherwise and still limit their ultimate losses should the c
