Prepaid debit cards will become subjected to tightened regulations proposed by the Consumer Financial Protection Bureau by October 2017. According to Lauren Saunders, the associate director of the National Consumer Law Center, the standard of regulation for prepaid debit cards will match that of bank accounts and bank-issued credit cards in terms of loss compensation, fee disclosure, and overdraft fees. Saunders announced: “The rules bring prepaid cards out of the shadows, with protections that in many ways are stronger than those for traditional bank accounts.” Newly implemented regulations will impose: High overdraft fees on prepaid debit card users with credit lines Requirement for debit card providers to offer liability protection on par with bank accounts & credit cards Additional policies that would limit the efficient usage of prepaid debit cards Prepaid debit cards have become increasing popular due to a rising number of users that weren’t eligible to establish bank accounts or credit cards. Most credit card issuers demand a certain amount of minimum monthly wage in exchange for credit lines, to ensure that their consumers are capable of paying back their pre-made transactions. However, because of the difficulty in setting up credit cards, many working class employees and workers prefer to use prepaid debit cards that are sold across the US, in places of their convenience or departmental stores. The regulations of the National Consumer Law Center will deny the only two benefits of using prepaid debit cards, which are: elimination of overdraft fees and strict control of user funds. If debit card issuers begin to impose $35 overdraft fees to hundreds of millions of prepaid debit card users, it will lead to an outstanding amount of fees that were previously unimaginable. “Research shows many consumers turn to prepaid cards to control spending and to avoid overdraft fees,” […]
