Financial Literacy

PREPAID CARDS FOR EVERYDAY USE

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Advantages To Using Prepaid Cards

Debit transactions are a safe way to access your money for real-time purchases, all on one card. Prepaid cards are safer than cash because the funds are FDIC insured. A prepaid card is a convenient method of accessing your available funds – and faster than a check!

Different from credit cards and safer than carrying cash, prepaid cards (such as your Money Network® Enabled Campus Card) allow you to make purchases that are directly deducted from your prepaid card account. It's your money and no one else's. No bills, no interest fees and no monthly payments. You spend what you have when you want.

  • Withdraw money directly from your prepaid, checking or savings account, helping you keep better track of your daily spending, or transfer funds from one account to the other.
  • No additional processing or future bill payments are required on your part, which means no interest payments.
  • Most prepaid cards offer two forms of transaction authorization: PIN-based and signature-based transactions.
  • The option to receive cash back is available with PIN debit transactions at many merchants.

How Prepaid Cards Work

It takes only a few seconds to access your money using a prepaid card (such as your Money Network® Enabled Campus Card), but how does your money make it from your financial institution to an ATM, or to the cash register at a store? The process is simpler than you think. When making a purchase or withdrawing money from an ATM using your prepaid card, the transaction typically makes three important stops before it reaches your financial institution for approval:

  1. The transaction is sent to a processor for appropriate handling.
  2. The processor forwards the transaction to an ATM/debit network.
  3. The network routes the transaction to the cardholder's financial institution, which verifies its validity, and the available funds, then approves or declines the transaction.

In a matter of seconds, the approval or decline is sent back through the pathway in reverse, either completing your transaction or denying the request. PIN-based transactions are almost instantly recorded in your account. Signature-based transactions can take up to seven days to be reflected in your account. It's always important to check your account statements or online card account information, and track all transactions on a regular basis.

ATM Fees

Since you may encounter fees when using certain ATMs, you should familiarize yourself with the types of charges that can occur on ATM transactions. Just like paying a convenience fee to valet park or use toll roads, these fees enable you to have the convenience of using an ATM at a variety of locations anytime, day or night.

There are two primary types of fees associated with ATM cash withdrawals. A surcharge, or convenience fee, may be charged by the ATM owner to the cardholder in exchange for using the ATM. This fee is designed to cover the cost of operating, maintaining and supplying the ATM. ATMs are required by law to inform you of this fee, which may appear on the ATM screen before you complete your transaction request, or on a sign on the machine. The amount of the fee will vary.

The second type of ATM fee, known as a "foreign" fee, may be charged to you by your financial institution when you use an ATM that is outside the institution's ATM network (also known as an Out-Of-Network ATM). The fee is covered as part of your financial institution's disclosures to cardholders.

How to Reduce or Avoid Fees at the ATM

Not all ATM transactions will be charged both a surcharge and a foreign fee. In fact, many ATM transactions carry no consumer fees at all. There are several ways to reduce or eliminate ATM charges:

  • Use your own institution's ATMs.
    Today, most financial institutions charge no surcharge or fees on ATM transactions conducted by their cardholders at their ATMs (also known as In-Network ATM). Check with your bank or credit union to determine which ATMs fall within your network and find out the potential costs, if any, associated with using these machines.
  • Take the "cash back" option.
    At many retail locations, cardholders can get additional cash with PIN debit purchases without incurring a fee. In many cases, the point-of-sale terminal will automatically ask you if you want cash back before you complete your transaction.
  • Understand your institution's surcharge policies and options.
    As the cardholder, it is important for you to be aware of the details of your own financial institution's fee structure to determine the total cost of an ATM transaction. In addition, find out whether your bank or credit union participates in a surcharge-free ATM network or offers surcharge reimbursements.

By working with your financial institution, you can begin to understand when, where and in what circumstances ATM fees may apply to you. And the more you know, the less it will cost you to access your cash.

Prepaid Card Liability

When cash is stolen out of your wallet, you almost never receive your money back and there is very little you can do to retrieve it. However, a benefit of prepaid card is that there are safety measures you can and should take to limit your liability for stolen funds.

The Electronic Fund Transfer (EFT) Act establishes rights and liabilities of consumers, as well as the responsibilities of your bank or credit union. The EFT Act outlines the conditions under which you may be held responsible for unauthorized use of your prepaid card.

It's important to note, when it comes to liability for unauthorized use of your prepaid card, many financial institutions have adopted zero cardholder liability policies. Contact your financial institution to clarify the limitations of liability of your card.

If you tell us within 2 business days after you learn of the loss or theft of your Card, PIN or information you can lose no more than $0 if someone used your Card, PIN or authorized a Money Network® Check without your permission. If you do NOT tell us within 2 business days after you learn of the loss or theft of your Card, PIN or information, and we can prove we could have stopped someone from using your Card, PIN or authorizing a Money Network check without your permission if you had told us, you could lose as much as $500.

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