The AmEx Prepaid Debit Card’s Secret - NerdWallet
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The AmEx Prepaid Debit Card’s Secret

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We wrote last week about American Express’ new prepaid debit card, which is being billed as a low-fee, easy-to-understand alternative to the cluttered prepaid debit market. We agreed, to an extent: most prepaid cards charge for everything under the sun, including withdrawals, purchases, and balance inquiries. We even compared it favorably to some checking accounts. But then we found a deal-breaker in the terms.

Outside of ATM fees, the American Express card has only one fee to worry about, and that fee renders the card essentially irrelevant: the cost of reloading with cash. If you want to reload through an AmEx credit card or through a checking account, there’s no charge. Otherwise, though, you need to buy a MoneyPak from Green Dot, which costs $4.95.

This little caveat is what kills the AmEx prepaid debit card, since no one with an AmEx credit card or a checking account has any use for a prepaid debit card.

The card for the unbanked requires a checking account

The primary reason to get a prepaid debit card is to avoid having a checking account to begin with, whether because you can’t make the minimum balance requirements to avoid paying fees, or because you simply don’t want to keep your cash with a bank. In fact, prepaid debit is marketed as a “safe” alternative to credit and cash; there’s no possibility of overdrawing or going into debt, and it’s less cumbersome than bills and coins. But if you need a checking account to reload your prepaid card, then you already have a debit card that isn’t charging you to reload it.

This reveals the biggest hole in AmEx’s prepaid strategy — their cards don’t have access to direct deposit. Most prepaid debit cards allow you to get your paychecks deposited onto the cards at no charge. By using direct deposit, you can avoid having to pay any reloading fees, and you can avoid having to pay more fees to get cash from shady check-cashing locations. But American Express doesn’t offer this crucial feature yet.

If the AmEx card is supposed to be a “fee-free” alternative for the unbanked, it falls short of its goal. Anyone with a bank credit card or checking account – who can reload the AmEx prepaid for free – has no need for a prepaid card. And anyone who doesn’t will have to pay Green Dot $4.95 every time they reload the card. If you get paid bi-monthly, that’s $9.90 each month out of pocket already.

First among prepaids no more

Unfortunately, we’ll have to revise our estimation of the AmEx prepaid debit cards. A customer service rep told us that AmEx is working on setting up a direct deposit system, which would allow users to reload for free, but for the moment, the only way to avoid opening a checking account is to pay Green Dot $4.95 per reload.

Here’s a hypothetical breakdown of the cost of the AmEx prepaid card, the popular Walmart MoneyCard, and the RushCard, which is currently under investigation by Florida’s attorney general. We assume that the user withdraws money from an ATM twice a month; loads the card with $200 twice a month via direct deposit, for a total of $400; and avoids all other fees.

Card Name ATM Fees (2x) Reloading Fees (2x) Monthly Fees Cost per Month
AmEx Prepaid $2 $9.90 $0 $11.90
PinkDiamond RushCard $0 $0 $9.95 $9.95
Walmart MoneyCard $4 $0 $3 $7

*There is $4.95 monthly fee incurred for loading less than $500 a month.

  • StanG

    Check out the BB&T MoneyAccount – once you pay the Monthly Fee, pretty much everything else is free. And they have actual branches.

  • Mixafm

    Walmart charges $3 per reload

  • Slay

    western union pre paid card charges no monthly fee and if you load it through Pay Pal they reimburse you the 4.95 plus another 5.00

  • BoughtMyPoints


    Quite a hatchet job on what I am finding is a “too good to be true but is” product.

    Is the prepaid especially useful for U S commerce for the “banked” ?

    Just marginally so but there are hotel deals that from time to time favor AMEX, others that favor VISA.

    As others have pointed out, it’s the foreign use where the Amex is in a league of its own (pace Schwab).

    I need to preface this by saying that I previously used PerkStreet for foreign charges which was 1% currency adjustment – 2% cash back. But PerkStreet (who are NOT bankers but an internet marketing company) are reined in by their corporate masters, Bancorp Corp and kick out heavy foreign users like myself. No, I am not making this up.

    The meat and potatoes : I ran the identical foreign charge on my Chase Mastercard and the Amex prepaid. There was a 3.5% differential between the 2, favoring AMEX.

    On ATM usage :

    The local banks now charge $5 per ATM withdrawal. One incredible exception : AMEX.

    Therefore the cost of my purchasing local currency is never more than 1%. Only a $10,000+ wire transfer could come close.

    I have now trained myself to go to the ATM every 7 days and withdraw, stockpiling local currency. If I were more frugal, I could restrict myself to the once per calendar month free ATM withdrawal.

    Each social security number can support a max. of 4 cards (one prepaid and 3 Pass).

    Actually, what I think is going on is that AMEX have re-invented the travelers check which well heeled people historically used for both domestic and foreign travel.

    I, for one, think they’ve got it right!

  • John

    This card is still difficult to use. $4.95 to load the debit card is the going rate. I cannot direct deposit onto it.

    I use my checking account to load it, but it takes 4 days before I can use the funds!

    If you use it to reserve a room at a hotel, then pay cash or use a different card to pay when you arrive at your hotel. The charge will remain on your American Express Prepaid card for 30 days.

    I suggest WESTERN UNIONS PREPAID MASTERCARD. This card is Fee Free. No Fees for nothing except, of course ATM use. You can use the card at the store as a debit charge you can get cash back with no fee.

    You can direct deposit onto the Western Union MasterCard prepaid debit card. Once your parole deposit is posted your employer cannot “reverse” the deposit. With a regular checking account, your employer can take back or reverse an “erroneous” deposit. But not so on Western Unions deposit accounts. Deposits only. If you have ever had a direct deposit reversed and taken out of your checking account you know what I am talking about.


  • Jperryrt

    Not entirely true. If you have an Am Ex account in good standing as I do and I want to load the card for someone else then this is a great idea. You judged Am Ex unfairly because you don’t understand all the ways it could be used for or individual situations. Great to give to a teen and I can reload off my Am Ex.

    Enough said!!

  • H20girle

    this is good when booking a NCL cruise. for those who dont have amex…
    NCL has an offer if you book a suite and pay ur first and last payment with amex they give u $500 shipboard credit. thats HUGE, i will get this card if only to book my suite. its under partner specials on ncl site.

  • Domino362

    This information regarding direct deposit and American Express prepaid is either outdated or faulty. I direct deposit to my card every week.

    • Robbie Fields

      You’re right. Not only is direct deposit now possible with both the pre-paid card and “pass” cards, the ATM limits have been totally revised.

      Still one free withdrawal per month, otherwise $2 fee.

      On the pre-paid card : $400 daily limit. (At foreign ATMs, may be capped lower at $300 daily).

      Pass cards : $200 daily limit.

      These cards just get better and better.

    • NerdWallet

      Hi there,

      Sorry about that – we wrote an update to the post in March 2012, but should have made it easier to get to that page from this post. Please do check out our updated coverage here: Thanks for pointing it out!

  • Domino362

    This information regarding direct deposit and American Express prepaid is either outdated or faulty. I direct deposit to my card every week.

  • jescott418

    Just another fee for the banks to enjoy. But to be honest Walmart is getting into the banking/credit card business too. pre charged cards and check cashing. All to make the money on fee’s. Its not unique to banks.