TULSA - Justin Bieber is the latest celebrity to get on the prepaid card bandwagon.
The singer will endorse the SpendSmart card aimed directly at teenagers.
Promising to push it with his 30 million Twitter followers and 48 million Facebook fans.
Bieber says he'll produce videos underscoring the need for responsible spending by teenagers.
Industry experts say prepaid cards have become more popular in recent years because they aren't linked directly to bank accounts so customers don't risk hefty overdraft fees.
They can also serve as a budgeting tool because people spend what's loaded on the card rather than spending money they don't have, which often happens with credit card purchases.
Prepaid cards do not come with the same protections that cover credit or debit cards purchases.
And prepaid cards generally have a large number of fees associated. The SpendSmart card has a $3.50 monthly fee, loading charges range from .75 to $2.95 a pop. A replacement fee of $7.95 and if it's not used for 90 days there's an inactivity fee of $3 to name a few.
LowCards.com CEO Bill Hardekopf rates the growth in prepaid cards among the top credit card stories of 2012. He writes:
Thanks to regulations and legislation on credit cards, banks are turning renewed attention to prepaid cards. Prepaid cards have fewer regulations than credit cards and banks are embracing prepaid cards for needed revenue. Today, competition for the prepaid market is growing, and driving down rates and fees. Consumers loaded approximately $57 billion onto prepaid cards in 2011, and loads are projected to reach approximately $82 billion in 2012, $117 billion in 2013, and $167 billion in 2014, according to the Mercator Advisory Group. Currently, there are no government regulations and consumer protections on prepaid cards--debit and credit card rules and regulations do not apply. But that may soon change. The Consumer Financial Protection Bureau is investigating the fees and practices of prepaid cards and seeking input on ways to enforce safety for consumers.
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