Is a prepaid

card account

right for you? Get the

information you need to decide.

Prepaid card accounts are a growing financial alternative to traditional checking and savings accounts or credit cards.Many people 50 and older don’t have access to affordable, dependable financial services. Living without bank accounts or credit cards can make it hard and expensive to manage everyday life. One solution is a prepaid account. That’s why AARP Foundation gathered this information. You’ll learn about the benefits as well as the drawbacks of prepaid accounts, so you can determine if one is right for you— or someone you care about. We’ve also included some tips to help you choose the best prepaid card account for your needs. We’re proud to be a resource and an advocate for people 50 and older, especially when it comes to helping you manage your finances and make the most of what you have.

to learn more about aarP foundation, the separate, charitable affiliate of aarP, please visit aarpfoundation.org.

Prepaid card accounts generally work like any debit card associated with checking accounts.

First you’ll need to load money onto your card account. Funds can be loaded by cash, online transfer or direct deposit. Some accounts enable you to set up direct deposit of social security and other benefits. Once money is loaded onto your card account, you can make purchases anywhere the card’s brand (such as Visa or MasterCard) is accepted.

Using a prepaid account is safer than carrying large amounts of cash. It can help you avoid credit card debt because you can only spend money that’s loaded onto the card. Prepaid card accounts can also generate automatic electronic records of your spending, which can help you stick to a budget.

Transfer funds from a bank account, set up direct deposit, or load cash through authorized prepaid network locations. Note that some fees may apply.

Check your balance and track your spending—online, on your monthly statement or over the phone. Note that some fees may apply.

Prepaid card account

5151 5800 1234 5576Cardholder Name 12/13

how it works1 Load/reload money to

fdic-insured card account

3 access and use your money a variety of ways

Withdraw cash, pay bills, book travel, shop for groceries and more!

2 store and manage money

how much it wiLL cost

Prepaid card accounts come with costs and fees, typically including:

activation fees A number of prepaid accounts include an activation fee, or the cost to turn on the card.

ongoing fees Most prepaid accounts have a monthly fee. However, the amount varies and may even be waived depending on how often you use the card or if you are able to meet other criteria, such as direct depositing a certain amount on a regular basis. Sometimes monthly fees may be waived during an introductory period that lasts for a limited time.

cash withdrawal fees Prepaid accounts may also charge you a fee to withdraw money from an automatic teller machine (ATM) or financial institution.

fees to add money to your account While direct deposit is generally free, you may have to pay to load money onto your card account using other methods.

transaction fees Prepaid card accounts may charge you a fee to use the card to make purchases. Generally, PIN-based transactions (purchases where you enter your PIN rather than your signature) will incur higher fees.

You also may pay fees to check your balance, access customer service or receive paper statements.

The bottom line: as with all financial services, you should review and understand all the fees, terms and conditions before you get a prepaid account.

who’s eLiGibLe

Prepaid accounts are not dependent on a credit score, credit check or Chexsystem review.

In fact, debit and credit cards offered by a bank may be harder to obtain because they may require a review of your credit history and other personal information. But prepaid card accounts do not build personal credit because your transactions are generally not reported to a credit bureau.

Prepaid accounts make sense for people who:

• Currentlydependonalternativefinancialservicessuch as check-cashing outlets, payday lenders, supermarkets or convenience stores to cash checks, pay bills or make purchases

• Donotwantorcannotopenanaccountwitha bank or credit union• Areconcernedaboutmanaging spending and want to make sure they only spend money that they have • Understandthecostsandfees, disclosures and contract of a prepaid card account

Prepaid accounts may not offer the same safeguards as traditional credit or debit cards.

When you report your prepaid card lost or stolen, or your prepaid card issuer goes out of business, you may not get the same protections for the recovery of your money. The funds loaded onto a prepaid card accountmayormaynotbeFDIC-insured,soit’simportant to check your card terms. Consumer protections offered by prepaid card accounts are voluntary and can be revoked or revised by the issuer at any given time and for any given reason.

choosing the best prepaid card

account for you

think about how you will use the account.

•Willyouneedacardaccountthat allows you to send check payments?

•Willyoureceivefederalbenefits(such as social security or other payments)

on the card? • Ifthesefeaturesareimportanttoyou,besurethe

account you choose can do these things.

think about the costs that you will incur. • Doyouunderstandthefees,disclosuresandcontract

related to the card account?• Canyoutaketheactionsneededinordertoavoid

the fees?

Look for a card account that protects you and your hard-earned money.• IsthecardaccountFDIC-insured?• Whataretheaccount’spoliciesoncardtheftandfraud?

benefits1. Safer than cash 2. No credit check3. Widely accepted 4.Difficulttospend more than you have

drawbacks1. No credit building2. Fees can add up3.NotallcardaccountsareFDIC-insured4. Customer service can vary

how it Protectsyou

Prepaid card accounts are intended to be an easier, safer and cheaper way to manage your money—and get the benefits and protection you deserve. But make sure you understand what a prepaid account can and cannot do for you.

AARP Foundation601 E Street NWWashington,DC20049

Toll-Free Nationwide: 888-OUR-AARP (888-687-2277)Toll-FreeTTY:877-434-7598

aarpfoundation.org

Information for this brochure was adapted from the Center for Financial Services Innovation (CFSI), AssetPlatform.org— a resource for nonprofits developed by the Aspen Institute and the Center for the Study of Social Policy—and Community Fiancial Resources.

make an informed choice

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Uncertainty is the new normal—and Americans 50+ face choices and pressures unlike those of any other age group. Choices no one could have prepared for.

Older workers suffer the largest increase in long-term unemployment, the longest spells of joblessness and the least likelihood of finding jobs. Many are living paycheck to paycheck, and one in four workers has burned through his or her savings. Having worked hard, paid taxes and served their country and communities, they find themselves in circum-stances far beyond what anyone could have prepared for. Many of them are one step short of economic catastrophe.

Those who are 50+ and struggling need a voice and an advocate now more than ever. AARP Foundation—a charitable affiliate of AARP—serves that purpose. Building on AARP’s reputation and expertise, AARP Foundation has the ability to support and work with local organizations and programs nationwide to coordinate, fill in the gaps and help effec-tive initiatives grow. This multiplier effect ensures we don’t duplicate resources or reinvent the wheel.

By 2030, one in every five Americans will be age 65 or older. Let’s not wait until poverty becomes a way of life they can never escape. Through the programs of AARP Foundation, we can give struggling Americans 50+ a chance to recover their confidence, regain a foothold and stay on track. The more we do now, the less we’ll have to do later.

Drive to enD Hunger 2011 RepoRt

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