Prepaid Cards

The importance of consumer protections

Prepaid cards, also known as prepaid accounts, are the fastest-growing payment product in the United States. These cards allow consumers to conveniently direct-deposit their wages, withdraw money at ATMs, and pay bills online. Easily purchased at banks, retail stores, and online, prepaid cards can be affordable money management tools, particularly for the 37 million adults without bank accounts.

Over the past five years, Pew has documented the financial risks borne by prepaid card customers and has proposed policy changes to improve this increasingly popular product. In November 2014, the Consumer Financial Protection Bureau (CFPB) proposed rules to make the cards safer and their policies more transparent for consumers. In October 2016, the CFPB finalized these rules and provided basic protections that make prepaid cards a safe financial product for all. 

Prepaid cards
Prepaid cards
Article

CFPB Fights Costly Overdraft Fees on Prepaid Cards

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Article

The Consumer Financial Protection Bureau (CFPB) today finalized rules to regulate prepaid cards and provide protections for 23 million U.S. adults who use them each month and followed through on its original plan to keep prepaid cards free from overdraft penalties. By staying the course, the bureau has closed the door on practices that could have compromised consumers’ ability to use these products safely and stay out of debt.

Prepaid card
Prepaid card
Report

Banking on Prepaid

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Report

General purpose reloadable (GPR) prepaid cards, also called GPR prepaid accounts, are a versatile financial tool for consumers. They can be loaded via direct deposit or with cash, and used at ATMs to withdraw funds and at stores to make point-of-sale purchases, similar to debit cards tied to checking accounts. They can also be used to budget or control spending. This report presents findings from a nationally representative telephone survey of GPR prepaid cardholders—defined as adults who use these cards at least once a month. It examines their attitudes, knowledge, and perceptions, and compares responses based on whether cardholders have checking accounts. The report finds that many “unbanked” consumers, those without bank accounts, are using prepaid cards like checking accounts, underscoring the need for the Consumer Financial Protection Bureau (CFPB) to finalize rules it has proposed that would extend greater safeguards to prepaid card users.

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Report

Consumers Continue to Load Up on Prepaid Cards

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Report

The general purpose reloadable prepaid card is a relatively new consumer financial product that is growing in popularity. This report finds that prepaid cards became increasingly accessible in 2013, and in many instances are now more affordable than basic checking accounts. But, while prepaid cards offer many benefits, consumer protections lag far behind other banking products.

Prepaid card
Prepaid card
White Paper

Making Prepaid Safe for Consumers

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White Paper

Making Prepaid Safe for Consumers: A Framework for Providing Deposit Insurance and Regulation E Protections, provides information on consumer protections needed for prepaid cards.

Additional Resources

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Agenda for America

A collection of resources to help federal, state, and local decision-makers set an achievable agenda for all Americans

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Data-driven policymaking is not just a tool for finding new solutions for emerging challenges, it makes government more effective and better able to serve the public interest. In the coming months, President Joe Biden and the 117th Congress will tackle a number of environmental, health, public safety, and fiscal and economic issues—nearly all of them complicated by the COVID-19 pandemic. To help solve specific, systemic problems in a nonpartisan fashion, Pew has compiled a series of briefings and recommendations based on our research, technical assistance, and advocacy work across America.

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States of Innovation

Data-driven state policy innovations across America

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Data-driven policymaking is not just a tool for finding new solutions for difficult challenges. When states serve their traditional role as laboratories of innovation, they increase the American people’s confidence that the government they choose—no matter the size—can be effective, responsive, and in the public interest.

Prepaid banking
Prepaid banking
Opinion

For Prepaid Card Customers, Overdraft Is the Problem—Not the Solution

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Opinion

Approximately 37 million adults in the United States, a number roughly equivalent to the population of California, do not have a checking account. Some have never relied on traditional banking, while the majority was part of the banking system at one time and subsequently stopped using financial institutions. The primary reason these “unbanked” consumers gave up on traditional bank accounts: overdraft penalty fees.