Prepaid Cards: How Safe are They?
With so many enticing features and a lot of amazing benefits, it’s no surprise the best prepaid cards have become quite massive in just a few short years. They are especially popular among the unbanked since they offer unmatched ease and convenience.
The best prepaid cards today are considered by many as truly powerful inclusion tools, financial management tools, and travel companions. Even businesses big and small are now using prepaid cards, a true testament to its clout and popularity.
How Safe are Prepaid Cards?
However, those who are considering using prepaid cards often have one nagging question in mind: how safe are they? Read on and find out for yourself!
Are prepaid cards safe?
Prepaid cards are considered very safe. When you withdraw money, you will be using a PIN so all your withdrawals are protected. Understandably, loading your money on your prepaid card is way safer than carrying cash around with you wherever you go.
In the event that you lose your card or it gets stolen, you have a higher chance of avoiding any financial loss unlike stolen or lost cash. In some cases, prepaid card providers will voluntarily replace money stolen from cards although similar policies can change from time to time.
Do prepaid cards provide the same consumer protections as debit and credit cards?
Prepaid cards are not subject to the same laws that govern debit and credit cards. However, some prepaid card providers offer similar protections like zero liability for transactions that are unauthorized and replacements of lost funds.
It is important that you have a clear understanding of what your card’s policies are. Start by reviewing the information that appears on the issuer’s website or the one that came with your card.
Also, to maximise the benefits you can get from your issuer, you might need to follow specific procedures (i.e. notifying issuers of unauthorised activities within a specified number of days). Voluntary policies however are subject to change.
What is meant by “zero liability” protection?
Zero liability protection is a voluntary policy certain issuers have set in place that warrants prepaid cardholders won’t be held responsible for any unauthorised transactions in the event that the card gets lost or stolen.
Typically, this policy will require that the cardholder registers the card and will notify the issuer promptly in case of unauthorised transactions. It is crucial to remember that there are limitations and exclusions on zero liability for prepaid cards.
For instance, the policy may not cover certain types of transactions like ATM withdrawals. And just like most policies, it is also subject to change every now and then.
What does “registering” my card mean?
Simply put, registering your card means providing a few basic information and one or two IDs. Generally, some prepaid card providers required that users register their cards to qualify for certain cardholder protections. In other cases, some online merchants will also require a billing address.
When does “purchase protection” apply when it comes to prepaid cards?
Purchase protection is another benefit provided voluntarily by some card issuers. Typically, it involves reimbursing cardholders for accidental damage, extending the warranty, and lengthening the period during which an item can be returned.
However, exclusions and terms can vary so it would be best to check with your provider so you can check the card agreement. Not all prepaid cards will offer purchase protection.
What happens to the money loaded on the card if my prepaid card is lost or stolen?
When stolen or lost, get in touch with your issuer immediately. In line with this, make sure you have a copy of your prepaid card number and the toll-free customer service number. Once reported, the old card will be invalidated to protect the remaining funds.
Check your online statement as well for any transactions that are done that you did not initiate or authorise. If you find any, make sure you report it to your issuer immediately.