Prepaid Credit Cards Offer Consumer Protection
Prepaid cards have revolutionized the payment systems globally in more ways than one. Gone are the days when the card was a tool that vouched for financial inclusion among the unbanked, it is now a necessary convenience to anyone that handles money which is more or less everyone.
Every prepaid news article you will read will tell you of the immense innovation in the card, the banking and money transfer industry. This goes to show that consumers are placing a high demand for greater functionality of card services.
Laws for consumer protection
With this demand, this is a booming business, especially with over 23 million people using cards in the U.S alone. The Consumer Financial Protection Bureau has to work around the clock to ensure that there is no consumer exploitation as business booms due to rising demands. Over the past few months, the CFPB has put in new frameworks that will require financial institutions to disclose critical information to their customers. Such information that may be required may include card fees. This mostly applies to prepaid cards that allow for small overdrafts these new rules are effective from October 1, 2017. The U.S being a frontier for innovation in matters finance, this move will usher in similar demands for consumer protection.
Prepaid cards are a lot safer than cash, debit or credit cards. With consumer protection initiatives by stakeholding financial institutions worldwide, the attraction on them is set to rise even higher. If you are keen on not running into debts, prepaid cards are the thing for you. You load what you need to spend. In the event of an emergency, you don’t have to lose your cool as some financial institutions allow for small overdrafts. The only downside is that using prepaid cards does not improve your credit score in any way since you will not be borrowing money or having to repay anything.
In the event your card goes on overdraft, the new regulations allow you a 21 day grace period for you to pay back the money without any fee.
Prepaid cards will have fewer fees in the days to come once new regulations are enacted. Prepaid card companies will then be required to send you a monthly statement outlining your card usage. This statement is more or less what you get if you hold a checking or credit account. It is important to check statements comprehensively to avoid paying mediocre charges like the point of sale fees.
Better protection on losses.
If you lose your card or your wallet gets stolen with a prepaid card with an amount on it, you will be in a position to get most of it back. Regardless of how much was on the card, the most you get to lose is $50 on condition that you report the loss within two business days. That puts the prepaid card at par with debit or credit cards.
Students stand to benefit a lot from prepaid cards, so does anyone who is keen on maintaining a debt free lifestyle by living within their means.