Reloadable prepaid card use has increased dramatically over the past few years. Many people, who have bad credit and can’t get a credit card or a bank account, have turned to these cards for relief. Consumers this year will likely load $82 billion to these cards and will more than likely double by 2014. But these cards can carry high fees and are not regulated like a normal credit card. That is about to change though.
A consumer financial watchdog group is moving to regulate prepaid cards that have become a new source of fees for some banks. Many experts believe the terms and conditions of these cards are undisclosed and sometimes hard to understand. People buy these cards at gas stations where the terms are only accessible after the card is purchased. Prepaid cards are also not insured by the FDIC if the issuing bank goes bankrupt.
If you have or are about to get a prepaid card, Oaktree Law encourages you to get educated by visiting www.consumerfinance.gov.