Free Republic

American Express announced Tuesday that its prepaid debit cards will now be backed by the Federal Deposit Insurance Corp., the latest indication that a market once shunned by established financial institutions is gaining ground. The use of reloadable prepaid cards has exploded in the wake of the credit crisis that left millions of Americans outside the traditional banking system. But unlike checking accounts, reloadable prepaid cards do not offer the same financial protections for consumers and operate with fewer regulatory constraints.

Got a letter from our bank which basically says: Beginning January 1, 2013, noninterest-bearing transaction accounts will no longer be insured separately from depositors’ other accounts at the same IDI. Instead, noninterest-bearing transaction accounts will be added to any of a depositor’s other accounts in the applicable ownership category, and the aggregate balance insured up to at least the Standard Maximum Deposit Insurance Amount (SMDIA) of $250,000, per depositor, at each separately chartered IDI. For example, if after the expiration of the Dodd-Frank Deposit Insurance Provision a depositor under the single ownership category has $500,000 deposited in a noninterest-bearing transaction...