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Prepaid cards issued by banks and other government-regulated organizations are
a new way for consumers to make payments and conduct other financial transactions.
There are plenty of situations where a prepaid card might be the most convenient
choice, but be sure you understand the key terms and conditions BEFORE you buy.
Ask these questions when you are considering a prepaid card:
- What are the possible fees associated with using the card?
- Where can the card be used (online, at ATMs, outside the U.S.)?
Reputable distributors of prepaid cards will give you the terms and conditions
in writing or have them available on their website. If you don't understand how your
card works, ask for help where you purchased it, from your employer (if it's a payroll
card), or by contacting the customer service number on the card.
| Payroll and General Purpose Spending Cards
Payroll and General Purpose Spending Cards can be very useful for those who
want to budget their money and for those who don't have a checking account
or credit card.
General Purpose Spending Cards, which may be purchased by consumers, typically
charge a monthly maintenance fee and could charge additional fees for adding funds
to the card and/or making purchases or getting cash.
Payroll Cards are similar to General Purpose Spending Cards except that they
are provided by employers in place of paychecks. Payroll Cards typically allow a
certain number of ATM withdrawals without charge to the cardholder and usually do
not assess fees for purchases.
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While the federal government does not guarantee the same protections for all prepaid
cards, many "branded" cards voluntarily carry protections that are the same as credit and
debit cards. Cards with a major credit card brand logo provide consumer protections, such
as replacing lost or stolen cards and re-crediting money after unauthorized use of the
card. To obtain these benefits, you must follow the instructions for registering and
activating your card. Be sure to record your card information, including the customer
service telephone number on the back of the card, so you can get a replacement if yours
is lost or stolen.
If you have a problem with a prepaid card, first contact the customer service number.
If the problem still isn't resolved, you may want to file a complaint with the proper
authorities:
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