Personal Finance Word of the Day: Prepaid Card [Video]

Your daily money bite

In light of the Consumer Financial Protection Bureau’s recent push to update disclosures for prepaid cards, you might be wondering what these cards are and how they work.

Basically, a prepaid card is issued by a financial institution and is preloaded with money. You can use a prepaid card just like a regular credit card. The cards differ in that you are not purchasing items with borrowed funds (such as through a credit card). Rather, your purchases are made with cash that has already been transferred onto the card. It is very similar to a gift card. However, there are many more fees. Take a look at this video produced by the Federal Trade Commission for more information on prepaid cards.

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