The Consumer Financial Protection Bureau on Wednesday released new federal rules that will require issuers of prepaid accounts to provide more security and clarity about fees and services.
Federal consumer protections on checking accounts and credit cards under two U.S. laws will be extended and tailored to users of prepaid debit cards, starting Oct. 1, 2017. Here’s what will be applicable:
Many financially disadvantaged Americans, who can’t open bank accounts due to negative banking history, use prepaid debit cards as a substitute for checking accounts. The CFPB expects the total amount loaded onto prepaid cards to nearly double from about $65 billion in 2012 to $112 billion by 2018.
The new rules aim to treat the cards more like checking accounts. They include:
Prepaid debit cards are not credit cards nor do they build a user’s credit history. However, some of them let you borrow money through features such as overdraft programs, cash advances or other credit services. The CFPB calls these products “hybrid prepaid-credit cards” and will apply the following rules:
These new regulations will provide prepaid account holders with more clarity, security and, hopefully, some peace of mind.