American Express has recently been scrutinized for lacking FDIC insurance on its prepaid cards. The company instead chose to work through a surety program, which gave its customers different levels of protection based on the states they live in.
Amex has chosen to step up its game. Now fully insured by the FDIC, American Express customers can feel protected every time they deposit money into their prepaid debit cards.
FDIC insurance is required for checking accounts in the U.S., but it is not considered a requirement for prepaid cards as of yet. Thus, Americans may deposit money onto their cards without backing from the government. While big names like Visa and MasterCard have maintained FDIC protection for quite some time, Amex was a little behind the times. Not anymore though.
This change will go into effect for all prepaid cards that carry the American Express logo, including the Bluebird cards at Walmart. It provides $250,000 in deposit insurance for anyone using an Amex prepaid card. The insurance comes at no cost to the consumers, and the protection will be effective immediately.
The prepaid card industry as a whole has grown significantly since 2008, as more and more Americans remain unbanked. These individuals either lack the credit to qualify for traditional credit cards, or they simply prefer to work outside of a bank account. Either way, this industry has expanded to the point that it needs proper protection at all times. $275 million has been deposited on Bluebird cards since their debut six months ago--just to put matters into perspective.
If you have been hesitant about Amex prepaid cards because of recent information in the news, you can now ease your concerns. Rest assured that your money is now protected by the FDIC.