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New consumer protection for prepaid debit cards



  woman's hand holding colorful prepaid debit cards

Prepaid payment cards are becoming more common in our daily lives. They have become the standard for gift cards. Parents find them a convenient way to send a child to college with a scholarship of credit to use for expenses and emergencies. Some employers even use them to pay their workers. And increasingly, instead of issuing a refund check, an increasing number of companies issue prepaid credit cards. A report in LA Times talks about some of the problems that practice can create for consumers: More repayments are made with prepaid debit cards. Is it good for consumers?

Some of these problems are:

  • You become a fair game for marketing from the financial company that issues the card
  • The card can have an economic cost if it is unused For a certain time, eat in the value
  • Prepaid cards are often forgotten and unused
  • You must read the fine print to learn about fees, editions and other terms of use
  • Some cards have limitations on where they can be spent

New Consumer Protection now in force [1

9659003] As of April 1 this year, consumers will get more protection when choosing prepaid debit cards thanks to the Consumer Financial Protection Bureau – but to enable that protection, users must register the cards on the card issuer's website. Consumer Reports explains: New prepaid card rules come into force.

Prepaid cards issued on April 1 and thereafter will have clear information on important outside packing fees so consumers can compare cards before buying.

Consumers using these cards will also be protected from liability in the event of unauthorized transactions or fraud, as payment card users have long been.

The rule applies not only to the plastic you buy in brick shops but also to pay cards, cards for state benefits such as social security. This also applies to funds held in dedicated "stored value" accounts on mobile personal additional services such as Venmo and Cash.

Among the protections the article explains in detail:

  • Protection against unauthorized errors and charges [19659005] Information about the card does not have an FDIC insurance cover
  • Basic account details without charge
  • Limits on how cash flows are handled

Prepaid cards are popular for various reasons. They are safer than cash and they work a lot like a debit card, but they do not need predetermined credit. But until now, consumer protection has been limited.

As with most financial vehicles, it pays to be a knowledgeable consumer. US News presented a good overview, including the pros and cons, of an article on how prepaid credit cards work. It talks about the card types, offers alternative payment options and compares the benefits of those with secured credit cards and debit cards. Be an informed consumer!


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