Personal finance predictions for 2010: Your paycheck

One day, perhaps this year, your paycheck may disappear -- replaced by a prepaid card.

As recession and regulation restrict the use of other cards, prepaids are gaining favor as the clean alternative: no messy revolving debt, little risk from hackers, no penalties or interest.However, some prepaid cards come laden with fees, so consumers must be mindful of the fine print.

Prepaids work like debit cards, though they need not be linked to an account of any kind. You don't need a bank account to cash them, and you can never dig yourself into debt with one.

According to Mercator Advisory Group, the prepaid card market grew from $220.3 billion in 2007 to $247.7 billion in 2008. The increase was largely driven by federal and state governments switching to them to pay out unemployment benefits, food stamps, Social Security payments and civil service paychecks.

Small businesses, especially those that employ unbanked workers, like the convenience. Governments and industries struggling to eliminate paper are onboard as well.

Little wonder that Visa, MasterCard, American Express and Discover, as well as Bank of America, Citi and Chase, are investing heavily in the prepaid proposition.

Next in the countdown, 4: Your home

More from