Prepaid Debit Cards to Face New Rules and Regulations


. By Charles Benson

With the holidays fast approaching, many consumers may be considering gifting prepaid debit cards for the difficult-to-shop-for people on their list - and with the propositions for new regulations in place, patrons may be able to finish their Yule-time shopping with little fear of exorbitant debit card fees.

The Federal Reserve has announced new procedures for billing on prepaid debit and retail gift cards that prohibit the accrual of fees on inactive cards for up to one year and would require clear and conspicuous notice of fees.

Under these new provisions, cards with a remaining balance will stay valid for at least 5 years and retailers will be unable to charge fees when issuing replacements for lost, stolen or expired cards.

The move reflects consumer concerns raised by items like the Green Dot Visas, which charged fees for everything from initial purchase, ATM withdrawals, cash advances and balance inquiries in addition to a monthly fee assessed for any card with less than $1,000 on it.

Though the rules currently only apply to gift cards, they represent a larger motion towards increased accountability from debit card providers.


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