So are Pre-paid Visas not considered bank accounts?

[Txgirl]

I have been reading a lot over the past few weeks. I have read that if you think a judgment will be placed against you or your account will be frozen to move to prepaid debit and cash.

So is this not considered a bank account? (You know like when they ask about your bank account on a summons, etc.)

TIA!

[AngelinaCatHub]

HHHMMMMMMMM prepaid is money, it is an account, but what will it purchase? That is the question. Keep your records and if asked, carrying a card is safer than carrying cash. Cash is the best though but of course it isn't always convenient. 'Hub

[Txgirl]

I guess maybe it's not considered a personal bank account?

[treehugger1]

Read the 'terms and conditions" of most of these cards. They explicitly state, "This is not a bank account." As a least sophisticated consumer, why would you consider the pre-paid card to be a bank account when the terms and conditions state that the card is not a bank account? I'm quite curious about this also. I envision someone being asked in a debot exam to turn over all infomration related to bank accounts. Would you offer up your pre-paid account when by using it you agreed that the card does not constitute a bank account? While it is clear these cards are tied to some bank somewhere, you yourself never signed an agreemnt with the bank that supports the card.

[Txgirl]

Read the 'terms and conditions" of most of these cards. They explicitly state, "This is not a bank account." As a least sophisticated consumer, why would you consider the pre-paid card to be a bank account when the terms and conditions state that the card is not a bank account? I'm quite curious about this also. I envision someone being asked in a debot exam to turn over all infomration related to bank accounts. Would you offer up your pre-paid account when by using it you agreed that the card does not constitute a bank account? While it is clear these cards are tied to some bank somewhere, you yourself never signed an agreemnt with the bank that supports the card.

That makes for a very interesting point! It seems that these prepaids are supposed to be used like cash (however safer due it being on a card.)

I guess if they ask about bank account..according to their Terms and Conditions you don't!

I am curious as to what others think?

[OhioFiler]

The card is issued by a bank, your deposit is held in an account for you to draw against. I'd say it's an account at a bank. It's not a checking account, nor a savings account (unless they pay interest of course).

[treehugger1]

Here is pretty much what all of them state:

"The Card: The Card is a prepaid card. The Card allows you to access funds you place on the Card. The Card does not constitute a checking, savings or other bank account and is not connected in any way to any other account you may have. The Card is not a credit card. You will not receive any interest on your funds on the Card."

It seems pretty clear to any least-sophisticated consumer that the card is a card. It clearly states it is not a checking, savings or other bank account. In fact once you apply for any of these cards, you are acknowledging you have read and agree to the terms and conditions.

So, should the question come up, "Do you have a checking, savings, or bank account, one could answer no." I mean you already agreed that what you might have does not constitute any of the three. Since the more-sophisticated consumer might think the card is somehow related to a bank account, he/she already agreed that they understand it does not. It is strange, I know. I wonder why most of the prepaid cards all have this disclaimer.

There are a lot of other questions that come to mind. One could be asked to produce all statements over the past 6 months. Many folks opt not to get statments from their prepaid accounts (usually costs a lot more for paper statements, nor do they create a login to the card's website account info. You can't produce a statement you don't have.

I'm just playing the devil's advocate here. How does one answer a query related to documents for prepaid accounts? The disclaimer to the consumer is not there without reason. Perhaps, the bank holding the funds that the card accesses does not want any contractual tie to the consumer. There are millions of people who don't have or can't get regular checking accounts due to all kinds of reasons (CHEXSYSTEMS bein one of them.) Other folks prefer to simply live an alternative lifestyle.

[fireworks]

I wonder why most of the prepaid cards all have this disclaimer.

The pre-paid card providers don't want to be a bank. If they're a bank, then they're subject to all kinds of regulations that they don't want to deal with. PayPal is very similar - if you have a PayPal account you can put money into it, you can withdraw money from it, you can put it into a money market account and get interest on it, you can get a debit card to make purchases or withdraw from an ATM. Very similar to a bank, but not a bank, which means they have a lot more freedom to do what they want with your money.

My lawyer has advised me that trustees in this area are very quick to ask if you have a PayPal account and will want to know about it. I'm sure it won't be long before they start asking about pre-paid debit cards as well.

[treehugger1]

It makes total sense that a trustee should ask about prepaid debit cards. On the other hand, I made a few calls to some banks (some major and some minor) and discovered there are now regional and national banks around that "sell" their own prepaid debit (some are called "gift" cards, LOL) cards. I found a couple that are reloadable to $2500.00 simply by swiping the card. Your NAME isn't even associated with them. In addition, it appears the "holder" is insured under the FDIC. Hell, you could buy 100 of them and no one would ever know the difference. You don't fill out any paperwork, nothing, nada, zip. You purchase the card for a one time payment ($5 - $9) and then can reload it anywhere on the visa interlink system. Since they are in the VISA/MC system, one can use them for paying bills just as one would use any debit/credit card. How on earth would anyone ever discover if one had one of these cards?

I'm not advocating fraud or dishonesty. Don't get me wrong. But, I do believe these financial devices are available because there is a need. $2500 seems like an awful lot to put on a "gift" card that is not traceable and no consumer name attached to it. So much for the Patriot Act. I would prefer to believe that the government is more than willing to turn it's eyes away from this market, as the unused portion probably plays a role in the daily movement of commercial paper, end-of-day financial assets, etc.

I think it is only a matter of time before one can link their prepaid cards to their optional retirement accounts such as 403(B), 457, 401(k), etc. Why not? The flow of money is important. The big difference is that a consumer becomes their own lender. You borrow money from yourself.

[Txgirl]

Treehugger---I sent you a pm!

[catleg]

Looking at it from a different angle, when you buy a gift card, you're becoming someone's unsecured creditor.

And we all know what a wonderful experience that can be for the creditor. :-)

[Recessionist]

It seems to me it is an "account", just not a "bank account".

[catleg]

It seems to me it is an "account", just not a "bank account".

And absent indications otherwise, an account is a contract is an unsecured debt.

[OhioFiler]

As a salesperson I've studied body language quite a bit. I've learned to read when someone is answering in a deceptive or dishonest manner. I suspect the trustees are also pretty good at reading body language. I would not want to have money on a prepaid debit card that was not declared.

[azguy]

ok- am curious about this as well.

Question- How would a trustee ever know that you had a pre-paid account? Is there a way for them to track this down easily? I pulled my credit reports- mine doesn't show up anywhere (as it shouldn't). So how would the BK Trustee even know about it, let alone prove you had it?