The law passed in 2016 by the Consumer Financial Protection Bureau now allows banks and other card issuers to allow cardholders to spend below $0 balance temporarily. This was called an overdraft protection service. But in reality, the overdraft protection service is still largely unused by banks. There are banks with a strict no-overdraft policy despite this law. Some of those banks include American Express, Green Dot, and Chase Bank. Other card issuers have come up with different terms and conditions for their prepaid account, most of which work in a way similar to the overdraft protection services and incur no extra charge to qualified cardholders.
Purchase Cushion Protection
Most prepaid card issuers offer a purchase cushion protection service that allows customers to make purchases and payments up to a maximum of $10 over their account balance without incurring an overdraft fee. If the customer does not have enough money in their account to cover the purchase, they are given up to 24 hours to make a deposit that will cover the purchase. If the customer does not make a deposit within 24 hours, they will incur overdraft charges on their account. ..
The following prepaid cards have the Purchase cushion protection but each has its own terms and conditions. Some prepaid cards offer Purchase cushion protection, which means that in the event of a purchase that exceeds your available funds, the card issuer will cover the remaining balance. However, each card has its own terms and conditions, so be sure to read them before making a purchase. ..
Brinks Prepaid Mastercard
The purchase cushion protection is a free service that is available by the Brinks Prepaid Mastercard. As stated above, if you are a cardholder receiving direct deposits of salaries and paychecks, including government benefits payments, then you can overdraft up to $10 in your account each month. However, this is the only limit to the purchase cushion protection. If you are a cardholder who does not receive direct deposits of salaries and paychecks, then you cannot qualify for the purchase cushion protection. All these payments have to add up to a minimum of $500 per month.
Paypal Prepaid Mastercard
To fund your PayPal Prepaid Mastercard, go to your PayPal account and select “Add a Card.” On the next page, select “PayPal Prepaid Mastercard.” You will be asked to enter your bank information. Once you have entered this information, click “Next.” You will be asked to choose a purchase protection plan. The first plan is the default, which is “No Purchase Cushion Protection.” To qualify for this plan, you must have received direct deposits with a minimum amount of $200 within thirty-five (35) days. If you do not qualify for this plan, you can choose the second plan which is “Purchase Cushion Protection.” To qualify for this plan, you must be receiving a minimum of $100 monthly from a direct deposit. If you do not qualify for either of these plans, you can choose the third plan which is “Overdraft Protection.” To qualify for this plan, you must have had at least one overdraft in the past twelve (12) months and have at least $10 remaining in your account after all charges are applied. When choosing this option, be sure to enter your bank information so that we can process your application. After choosing a protection plan, click “Next.” On the next page, enter your card details and click “Submit” to finish adding your PayPal Prepaid Mastercard. ..
ACE Elite Visa Prepaid Debit Card
The purchase cushion protection has a similar structure here also. You are allowed to overdraft up to $10 above your available balance. Failure to bring your account to $0 or a positive value after twenty-four (24) hours will incur an overdraft fee of $20. There is, however, a way to avoid this fee. ACE Elite Visa Prepaid Debit Card offers an optional overdraft protection service. To opt in to this service, your account must have received a direct deposit(s) of $400 within the last thirty-five (35) days. After the overdraft protection service is initiated, there has to be a direct deposit(s) of at least $200 every thirty (30) days to continue enjoying this service.
NetSpend Visa Prepaid Card
Netspend’s purchase cushion protection allows customers to enjoy a purchase cushion of up to $200 per thirty (30) days, with a limit of $10 overdraft on an account. Customers must also maintain a $200 minimum balance in order to qualify for the protection. An additional $15 overdraft fee is applied when an account exceeds the $10 overdraft limit.
How to Avoid Overdraft on Prepaid Cards?
The best way to avoid spending more than you have in your bank account is to avoid using prepaid cards that allow overdraft. You can get an American Express card, Chase’s Liquid card, or a Bluebird card. These card issuers have a strict no-overdraft policy. If you want to control your spending, get a card that does not allow you to spend more, no matter how little it is. ..
Another way to avoid overdraft on your card is to use the trick of thinking you have less than you have. If you have a prepaid card limit of $50, pretend it is lower than that. This way, you get to carefully watch your spending once you get to your threshold. This will keep you safe from overdraft.
Conclusion
The new law changes the way prepaid cards work. Previously, you could only overdraft if you had a few dollars left in your account. But now, you can choose to not overdraft and have the card automatically overdraft if you have more money in your account than you need. This is a great option if you don’t want to walk out of a store with no money.
A debit card is a plastic card that can be used like a credit card to spend money. You can use it at stores, online, or to withdraw cash. ..
A direct deposit is a fixed amount of money that comes into an account on a regular schedule, most commonly every month. A common example is paychecks and salaries. ..
If you have an overdraft on your account and fail to bring it to $0 or a positive value after 24 hours, you may be subject to a fee.
