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November 17, 2014

How prepaid cards work and why Feds are watching

By KEN SWEET
AP Business Writer

NEW YORK — Prepaid cards allow users to store and spend their money without tying themselves to a traditional bank. Now regulators want many of the protections that cover bank accounts expanded to this product.

The fees associated with prepaid cards have drawn scrutiny from the Consumer Financial Protection Bureau. Last week the federal regulator proposed expanded protections for these increasingly popular “reloadable” cards now used by some 2 million U.S. households as an alternative to traditional banks, according to the Federal Deposit Insurance Corp.


 
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