Cash, Credit and Credit Repair Information for Teens by Kevin Hayes

Author:Kevin Hayes
Language: eng
Format: epub
Publisher: Omnigraphics

Not every card charges each type of fee. Some cards charge a monthly fee but not transaction fees. Other cards may skip the monthly fee but charge you transaction fees each time you use the card for certain types of transactions (such as purchases made in stores or online using the card).

What Protections Does the Card Have?

If you have registered your prepaid card, or if your card is a payroll card or a certain type of government benefit card, you have certain error resolution rights that protect you from unauthorized transactions under federal law. Network-branded prepaid card providers usually give some additional protections for loss or theft, but you should check your card provider’s website or your cardholder agreement to find out the specifics.

Call your card issuer right away if your card or PIN is lost or stolen or if you see unauthorized charges.

What Are the Alternatives?

A prepaid card may or may not be the right choice for you, depending on how you plan to use the card. You may want to consider alternatives, such as a bank account.

Prepaid Cards versus Debit Cards

A prepaid card is not linked to a bank checking account or to a credit union share draft account. Instead, you are spending money you placed in the prepaid card account in advance. This is sometimes called “loading money onto the card.”

Generally, you cannot spend more money than you have already loaded onto your prepaid card. Overspending can occur with a checking account for some types of uses, and with a bank account debit card if you have “opted in” to your bank’s overdraft program. This means that your bank may charge you a fee for covering the cost of a purchase or ATM withdrawal that exceeds what you have in your account. Your bank will also require you to repay the overdraft.

Prepaid Cards versus Credit Cards

Prepaid cards are very different from credit cards. This can be confusing because both types of cards may have a card network logo like Visa, MasterCard, American Express, or Discover on them. When you use a credit card, you are borrowing money. Generally, when you use a prepaid card, you are spending money you loaded onto the card in advance. However, if your prepaid card provider offers credit (including overdraft) on your prepaid card, it will need to comply with the rules for other credit cards.

Do Not Forget to Register Your Card!

It is a good idea to register your prepaid card. Registration will provide you with more protections if your card is lost or stolen. Some prepaid card providers may require you to register your card and verify your identity when you buy or receive the prepaid card, or soon after. The card provider likely will limit how you can use the card until the card is registered.

Registration is also necessary for FDIC or NCUA insurance (if it is offered for your card), which protects you if the bank or credit union issuing your card goes out of business.

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