The prepaid debit card – an all-in-one tool for the financial wellness toolbox

Joseph – Joseph comes from a family who never had a bank account. He recently started his first full-time job without a bank account of his own. He quickly discovers the inconvenience and added expense of finding locations where his paycheck can be cashed after work.

Joseph and his family are not alone. Based on a 2017 FDIC survey¹, an estimated 8.4 million households are unbanked.

Bill – Bill appreciates the fact that he’s able to have a bank account, but it seems like the fees are starting to total more than the funds he has available. It’s really tough to keep that minimum balance in his checking account when unexpected emergencies pop up.

June – Before clocking out at the end of her work day, June realizes with dismay that she doesn’t have enough cash in her wallet to pay the babysitter. She spends the remainder of her day working – on a convenient cash solution.

Sandra – After paying off her credit card debt in 2018 (hooray!), Sandra went into 2019 with the optimistic goal to follow her budget. She doesn’t have a debit card and prefers not to use a credit card for purchases as it is still too easy to buy on impulse and go over budget. This makes shopping inconvenient, time consuming and more expensive since she no longer makes purchases online and now has to carry cash or checks whenever she shops.

Any of these money-related situations can create stress for employees, contributing to presenteeism at work.

Many employers have started to include financial wellness programs in their benefit offerings to help their employees improve their financial health, reducing stress and associated presenteeism. According to Prudential’s 10th survey of employee benefits², 83 percent of employers are now offering financial wellness benefits. By adding a prepaid card to their financial wellness offering, employers can further support their employees while providing a more comprehensive benefit package for the continuation of an especially tight labor market.

According to Brian Westfall, a senior HR analyst for Capterra, “We’re definitely going to see more employers offer these types of financial wellness perks moving forward. Companies may not have asked to take on this responsibility, but now that they’re suffering the consequences of a financially stressed workforce, like lower productivity and higher turnover, it’s forced their hands to get involved.”³

Employee situations WITH a prepaid card option

Not long after starting his new job, Joseph’s employer added a new financial wellness program which included a prepaid debit card. Joseph learns that not only can he have his paycheck direct deposited to his prepaid card, he can use that card at ATMs and to make online purchases.

When Joseph’s employer introduced a new prepaid debit card benefit, Joseph quickly opted-in and requested his card. He arranged to have his paychecks direct deposited onto his new card. Joseph no longer walks around with a wad of cash on payday. His hard-earned money is securely saved and available on his prepaid card – and none of it is spent on expensive check cashing fees.

Admittedly, Bill would like to do better at managing his money but he knows that won’t happen overnight. His company just started offering a financial wellness program which seems pretty cool, and he can get a free prepaid card that doesn’t have a minimum balance. Bill can brush up on his money management skills, and he now has a banking option that won’t eat all of his hard-earned money!

June’s dilemma over paying the babysitter ended as soon as she remembered the new employee prepaid debit card she just received. June stops at a convenient ATM, retrieves the cash and sends her sitter home happy.

Sandra saw a secure, convenient budgeting tool with her employer-offered prepaid debit card. Each pay period, Sandra loads her card with the amount budgeted for groceries and essentials. Since her card cannot carry a negative balance, she only spends what she budgeted. No more impulse purchases. She has even found that using her prepaid card to make online purchases is saving her time from having to go to stores and money since she is able to purchase the best deals. Sandra feels good about herself – she has managed to stay on budget, out of credit card debt, with a little more time to spare.

With the help of a prepaid card, these employees can be more focused during the workday, no longer distracted by credit card debt or unnecessary shopping trips. They appreciate their employers more for offering this helpful benefit. They feel like their employer genuinely cares about helping them solve personal challenges and is an active partner in contributing to their wellbeing. Everyone wins, thanks to a simple financial wellness benefit.

Prepaid cards are not simply a budgeting aid or an alternative to traditional banking. They are an employee benefit that can replace costly banking relationships; they can also provide data and feedback on spending and card use along with access to tailored solutions and services. The future of prepaid cards is not about getting banked, it’s about going beyond the traditional bank account.

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¹ 2017 FDIC National Survey of Unbanked and Underbanked Households
² Benefits and Beyond: Employer Perspectives on Financial Wellness
³ Prepaid finds a role as an employee perk