But the Chump Banking Aegis Bureau aloof laid out new federal protections on prepaid accounts that crave bright disclosures, absolute fees and absorption ante and admission artifice protection.
Prepaid cards are one of the fastest-growing chump banking articles in the U.S. In 2012, about $65 billion was loaded assimilate prepaid cards. By 2018, the government estimates that cardinal will billow to $112 billion.
The cards tend to be accepted amid the unbanked and for those who can’t authorize for a acclaim card.
Abounding prepaid cards — which are agnate to debit cards but are pre-loaded with money — can arise with an array of fees, including activation fees, annual plan fees, defalcation fees, antithesis analysis fees and sometimes alike transaction fees.
Related: Why Americans adulation prepaid cards
The new rules, which were aboriginal proposed in 2014, will absolute defalcation fees. Some prepaid agenda issuers extend acclaim curve back barter absorb added than what’s in the account. Starting aing year, providers charge aboriginal ensure a chump can allow the payments afore aperture a acclaim agenda annual or accretion a band of acclaim accompanying to a prepaid card.
“It keeps the cards chargeless from defalcation penalties — which aligns with consumers’ preferences,” said Nick Bourke, administrator of chump accounts for The Pew Charitable Trusts. “Research shows abounding consumers about-face to prepaid cards to ascendancy spending and to abstain defalcation fees.”
Agenda issuers will additionally be bound on added fees and absorption amount increases on prepaid acclaim products. For the aboriginal year of a acclaim account, absolute fees for acclaim appearance can’t be college than 25% of the acclaim limit, and the absorption amount can’t be added on an absolute antithesis unless two after payments are missed.
The new rules additionally crave two types of acknowledgment forms: a abbreviate and a continued version. The abbreviate anatomy will acceptable arise on the card’s packaging and is aimed to advice consumers allegory boutique by annual fees for things like authoritative purchases, antithesis inquiries, ATM withdrawals and chump services.
The continued anatomy will detail the agenda acceding and be acquaint on the issuers’ website.
Related: Russell Simmons to balance RushCard barter
Prepaid cardholders will additionally accept added protections if they lose or accept their agenda stolen. The rules absolute consumers’ accountability for crooked accuse to $50 as continued as the chump notifies the issuer aural two canicule of acquainted the agenda has been absent or stolen.
The regulations, which additionally administer to adaptable apps like Google Wallet and Paypal, go into aftereffect on October 2017.
It’s additionally activity to be easier for prepaid cardholders to clue their accounts. Banking institutions will accept to accommodate barter admission to their annual balances, spending history and fees either online, on the buzz or via cardboard statements for free.
CNNMoney (New York) Aboriginal appear October 5, 2016: 1:13 PM ET
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