Prepaid Debit Cards Will Finally Get the Same Protections as Regular Cards

Prepaid debit cards can be a useful tool to curb overspending or even to build credit. And thanks to some new rules from the Consumer Financial Protection Bureau (CFPB), prepaid debit cards will now get the same protections as traditional debit and credit cards.

http://lifehacker.com/use-a-prepaid-…

The CFPB’s new rules will cover most prepaid debit cards, including the cards you purchase through retailers, payroll cards, benefit cards, and student loan cards. The rules won’t kick in until next October, but here are a few of the new protections, according to Consumerist:

• Easy & Free Access To Account Information: Banks must either offer periodic statements to account-holders or make that balance information available by telephone, with at least 12 months of electronic account transaction history, and upon the consumer’s request, at least 24 months of written account transaction history — all for free….
• Limited liability on fraudulent transactions: The new rule will limit consumers’ liability for unauthorized charges on prepaid cards. If a cardholder notifies their financial institution within two business days of learning of an unauthorized charge, their responsibility will be limited to $50….
  
• More Transparency: Prepaid cards will have to provide clear, detailed information on a card’s fees so consumers can know what to expect before they buy.

A big problem with these cards is they’re often linked to payday loan services. While the cards still have the prepaid function, the issuers also include a line of credit sold as “overdraft protection,” when in reality, it’s just a payday loan.

http://twocents.lifehacker.com/common-debt-tr…

Under the new rules, issuers will have to follow many of the same rules outlined in the CARD Act. For example, during the first year of a credit account, the total fees cannot exceed 25% of the credit limit. It’s just one of many protections, and you can read more about the changes at the links below.

Prepaid Accounts under the Electronic Fund Transfer Act (Regulation E) and the Truth In Lending Act (Regulation Z) (PDF) | CFPB via Consumerist

Photo by Beau Giles.