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
- Some cards have limitations on where they can be spent
New Consumer Protection now in force [1
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  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!