For millions of Americans, a prepaid debit card takes the place of a checking account for making purchases and paying bills. But unlike most traditional bank accounts, a prepaid card doesn’t guarantee you’ll get your money back if the card issuer goes belly up.
Some prepaid cards offer no recourse whatsoever if the issuer tanks or in cases of fraud or theft, unlike credit cards and bank debit cards. Some do have fraud protection, while others are insured by the Federal Deposit Insurance Corp., meaning the government covers losses of up to $250,000 if your card company fails — as long as you’ve registered the card in advance.
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