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Is the money on my prepaid card FDIC-insured?

Whether the money on your prepaid card is insured by the FDIC in the event of a bank  failure depends on the card program.

For individual bank accounts, the government guarantees you will get back up to $250,000 of the money in your individual bank account through Federal Deposit Insurance Company (FDIC) insurance should your bank go out of business. Credit unions have similar insurance through the National Credit Union Administration (NCUA) or NCUSIF insurance.

Funds loaded onto prepaid cards are typically held in pooled (not individual) accounts at banks or credit unions. Pooled accounts may qualify for FDIC or NCUA pass-through insurance if they meet certain requirements. Among other things, in order for your funds to be insured, the bank or credit union must have information in its files that identify you.

The CFPB’s prepaid rule also requires prepaid card providers to inform you pre-purchase whether the money in the account is eligible for pass-through insurance. However, due to phase-in rules, it may take some time before you start seeing the required disclosures on card packages in retail stores. Your cardholder agreement may also indicate whether your prepaid card account is eligible for pass-through insurance.

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