A recent FDIC survey found that unbanked and underbanked households have increased since last year, resulting in an increased use of costly services such as prepaid cards and check-cashing services. NerdWallet’s analysis found that check-cashing services cost 3 ½ times the cost of having a checking account, and prepaid cards cost 2 ½ times the cost of having a checking account.
Although new prepaid cards like the AmEx Bluebird are changing the face of prepaid cards by finally presenting a consumer-friendly prepaid product, most prepaid cards are much more costly than checking accounts. But checking accounts can be hard to qualify for if you have overdrawn your account often or have a negative banking history, which is recorded on your ChexSystems report (a credit report for banking).
NerdWallet recommends that you only use the NetBank checking account if you are unable to qualify for a traditional checking account due to low ChexSystems scores and if you cannot use an AmEx Bluebird prepaid card. If you can qualify for a traditional checking account, you can find a cheaper one at an online bank or a credit union.
NetBank checking: an alternative to prepaid?
BofI Federal Bank has just launched NetBank checking, an alternative to prepaid cards and check-cashing services. The account has many perks, including:
- Free online banking and mobile deposit
- The ability to fund the account with MoneyPak, a reload card that can be purchased at retail locations
- Cash back offers on the debit card associated with the account
- No overdraft fee if the customer overdraws by less than $25. If you overdraw by more than $25, NetBank levies a $25 fee for each overdraft up to a limit of $75 per day
NetBank checking comes with an assortment of fees. NetBank charges:
- $8.95 monthly maintenance fee,* reduced to $6.95 if you use direct deposit
- $1 to use an ATM
- $5 per month for using their Bill Pay service
- $5 per payment through Popmoney (for sending money to others)
- $15.95 to close the account
*One important issue to note: the monthly maintenance fee is not listed in the fee schedule or on the main checking page, making the account appear to have no monthly fee when it in fact does have a monthly fee. The information can only be found in the truth in savings disclosure, and it was confirmed by a representative from NetBank. This lack of transparency in the fee schedule is concerning, and we recommend that if you open an account, you make sure to ask the banker for full disclosure of their fees.
At the end of the day, NetBank checking is better than every prepaid card except AmEx Blubird, but it is more expensive than most checking accounts at big banks.
If you qualify for a checking account, we recommend that you follow our roadmap to free checking, which allows you to find free checking, likely at an internet bank or credit union.
For those who are unable to qualify for a traditional bank account due to low ChexSystems scores, we recommend the AmEx Bluebird, as it is the most cost-effective option. Another option is a second chance checking account such as the NetBank checking account. For more information, refer to our comprehensive overview of second chance checking.
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