For millions of individuals throughout the nation, a prepaid debit card is a positive substitute for a checking account.

In terms of paying bills each month and making purchases this is very convenient. However, there is one distinct difference that you must know if you are a prepaid card user. If the company that you purchased the card from goes down, in most cases, you are not guaranteed your money back. However, with a traditional bank account, you are provided with that guarantee. In order to qualify for protection on the prepaid card, you must opt for those that specify unique protection referred to as “FDIC Insurance Coverage”.

In this brief guide, you will be provided with information on the FDIC’s coverage on prepaid cards.

 

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Ensure Protection

According to the latest figures, well over 20 million people use prepaid cards each month. Not too many consumers realize that they must opt for a card that is insured by the FDIC. However, when using these types of cards, this is one of the most important steps that should be taken.

Upon purchasing a card that is insured by the FDIC, the consumer must complete a registration on the card to lock in the protection that the FDIC insurance offers. If the card issuer folds or experiences financial complications, the consumer in possession of such a card will rest easy, knowing that all of the funds on the card are 100% protected.

Legal Requirements

The issuers of the prepaid cards that are on the market today are not legally required to insure the money placed on those cards with the FDIC. However, each issuer is required to provide a complete disclosure on whether or not the funds placed on the prepaid cards are directly protected by the FDIC insurance.

While it is true that the coverage may be listed deep within the terms and conditions associated with a prepaid card, it is in the consumer’s best interest to confirm this prior to purchase. Upon purchasing the card, the consumer should then register that card for complete coverage protection.

While it is true that there are options in the world of prepaid cards to protect the money that you place on those cards, it is advised that you utilize a traditional checking account in order to cover your financial responsibilities and ensure optimal protection of your money. In taking this step, you will know that you are 100% protected by the FDIC and that you will never lose your money.

For more information on this topic and common banking topics, visit our blog today at: http://somervillenationalbank.com/blog/