Lenders are seeking out new strategies to appeal to Americans who prefer cash products, such as prepaid credit cards, rather than credit cards. Prepaid cards have several benefits that entice consumers, and credit card issuers are focusing on one particular feature that these products do not currently exhibit to draw more individuals to their services: credit reporting abilities.

Prepaid debit cards function similarly to bank-issued debit cards, because they hold a certain amount of money, and each transaction made with the card is debited from this amount until the funds have been spent. Once the funds are gone, money must be reloaded on the card to continue use. Because the card is pre-loaded with funds and consumers cannot spend beyond the amount on the card, there are no interest rates or overdraft fees. In addition, prepaid card activity is not reported to the three national credit bureaus.

However, American Express recently proposed changing this scenario to allow consumers with prepaid debit cards to earn credit reporting benefits, according to CardRatings.com. The "Make Your Move" initiative would allow customers to convert their prepaid cards into credit or charge cards, and report their payment activity to the three credit bureaus. The company also said the move would allow it to determine a prepaid card user's eligibility for other products by tracking and analyzing his or her spending habits, the website explains.

However, analysts say this method may not entice customers to the lending market, namely because prepaid users have already been using a similar model with many non-bank financial services providers. For example, some consumers obtain loans from financial services providers by providing records of utility payments and other obligations, the news source explains.

A recent Javelin study reveals that while prepaid debit card use is becoming more popular among consumers, many turn to these products because of the convenience of not working with a traditional bank. Consumers can now reload the same card instead of purchasing new ones when the funds are gone. In addition, prepaid debit cards provide consumers with a payment method that is functional and widely accepted at all locations that accept credit and debit cards, but without the need for a bank checking account.