Prepaid Cards

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.

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.

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.

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