WASHINGTON — The FDIC announced in a legal opinion letter on Nov. 13 that it will insure the money placed on gift cards and other prepaid cards issued by banks. This insurance will also cover cards which are sold by retailers but actually issued by a partnered bank.
These funds will also be counted in the assessment of any insurance fees, the federal insurer said, because they will be counted as "deposits" even if the card purchaser or recipient does not have a direct relationship with the bank.
In a recently issued document summer credit union insurance, the NCUA wrote that share insurance covers "all types of deposits received by a credit union in its usual course of business. For example, savings accounts, share draft (checking) accounts, money market accounts and share certificates."
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The agency also made clear it does not insure money invested in stocks, bonds, municipal bonds, or other securities such as mutual funds, annuities, or insurance products such as automobile and life insurance. The document does not speak to the status of gift cards and the agency has not yet commented on the topic.
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