The CFPB’s Prepaid Card Rule Protects TN Consumers
A new rule from the Consumer Financial Protection Bureau gives all prepaid cards the basic fraud protections that cover debit cards; provides a simple, uniform chart to prevent hidden fees; tells employees about the fees on payroll cards and their choices for receiving wages; and limits excessive overdraft features on the few prepaid cards with overdraft fees. It is a common-sense rule that will benefit not only consumers but also banks, credit unions and employers that offer low-fee cards or are asked to cash payroll cards from other companies.
Who in Tennessee Uses Prepaid Cards?
Prepaid cards are often Visa/MasterCard-branded and are like debit cards, but no bank account or credit check is required. More than 12 million households nationwide use prepaid cards. In Tennessee, they are used by:
Underbanked households who can’t get a bank account or have had trouble with overdraft fees.
Employers like the University of Tennessee, KFC, McDonalds and Home Depot, who pay wages on payroll cards to employees without bank accounts.
Government agencies for Social Security, unemployment insurance and child support payments.
College students, who may get a card like the Tennessee Credit Union prepaid card to control expenses, or may receive a campus debit card from their school.
More Tennessee households are unbanked or underbanked (30%) than nationally (27%). Lower-income, lesseducated, younger, black, and working-age disabled households are especially likely to use prepaid cards.
Overall, 12.5% of Tennessee households used prepaid cards in 2015 – the sixth highest rate in the nation. Among Tennessee underbanked households, 24.3% used prepaid cards compared to 15.4% nationally. (FDIC National Survey of Unbanked and Underbanked Households, 2015)
Congress should put Tennessee consumers first and uphold the CFPB’s Prepaid Card Rule.
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