Prepaid Debit Cards Will Finally Get the Same Protection As Regular Cards
Prepaid debit cards can be a useful tool for reducing cost overruns or even increasing your credit . And thanks to some new CFPB regulations, prepaid debit cards now enjoy the same protection as traditional debit and credit cards.
The new CFPB rules will apply to most prepaid debit cards, including cards you purchase from retailers, debit cards, concession cards, and student loan cards. The rules won’t take effect until October next year, but here are some new protections, according to Consumerist:
- Easy and free access to account information : Banks must either offer periodic statements to account holders or provide this balance information over the phone, with at least 12 months of e-account transaction history, and at least 24 months in writing at the client’s request. account transaction history – everything is free….
- Limited liability for fraudulent transactions : The new rule will limit consumer liability for unauthorized prepaid card payments. If the cardholder notifies their financial institution within two business days of receiving information about the unauthorized debiting of funds, their liability will be limited to $ 50 ….
- Greater transparency : Prepaid cards will need to provide clear and detailed information about card fees so consumers can know what to expect before they make a purchase.
The big problem with these cards is that they are often associated with payday loan services . While the cards still have a prepaid feature, issuers also include a line of credit marketed as “overdraft protection” when in reality it’s just a payday loan.
Under the new rules, issuers will have to comply with many of the rules set out in the CARD Act . For example, during the first year of the credit account, the total commission cannot exceed 25% of the credit limit. This is just one of many protections, and you can read more about the changes by following the links below.
Prepaid Accounts Under the Electronic Funds Transfer Act (Regulation E) and the Truth in Credit Act (Regulation Z) (PDF) | CFPB via Consumerist
Photo by Bo Giles .