American Express Prepaid Will Now Take Direct Deposit, Actually Be Useful - NerdWallet
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American Express Prepaid Will Now Take Direct Deposit, Actually Be Useful

The American Express Prepaid Card was all set to revolutionize the market with a simple, easy-to-understand cost: a $2 ATM fee to Amex, after the first per month; whatever the ATM owner charges to withdraw; and retailers’ cash reload fees, usually $3.95-$4.95. The card sounded incredibly appealing, especially compared to its fee-laden peers.

But there was a catch: you couldn’t direct-deposit your paycheck onto the card. You could only load it from a bank account (which begs the question, why have a prepaid card at all?) or take your paycheck, convert it to cash, and load the card with cash (thereby incurring check cashing fees of around $3, plus the reload fee, bringing the total to almost $7-$8).

And the difficulties didn’t stop there: you could only load $2,500 on the card every 28 days, which is a bit of a hindrance if you’re using the card as your primary financial product. Worse, you could only withdraw $200 from an ATM every week, a prohibitively low limit.

But last week, Amex announced that it’s all changing.

Out with the limits, in with the money

The American Express Prepaid will offer a number of new features, and will be sold at Office Depot stores nationwide. Among the changes:

  • You can direct-deposit up to $5,000.
  • You can withdraw up to $400 from an ATM per day – that’s a huge improvement over the previous $200 per week. 
  • You can make a cash reload at Office Depot with InComm’s Vanilla network, which charges $3.95 per load to Green Dot’s $4.95.

The card also comes with a handful of Amex-y perks, like purchase protection, roadside assistance and trip planning and accident services.

This makes the American Express Prepaid one of the better offers out there, if you use direct deposit. The major downside is the ATM fee, since you pay $2 to Amex (after the first withdrawal per month) and the ATM owner’s surcharge, which is usually upwards of $2.50. As an astute reader pointed out, you cannot get cash back with the card – you can only use it as a signature card. (See how the Amex card stacks up with our prepaid debit card comparison tool.)

However, these new limits don’t apply to the Amex Bluebird, which is sold at Walmart stores and can be reloaded for just $1. In terms of fees, it’s one of the best, but you can only load $100 at a time, and of course you’re subject to the old, cumbersome limits of $200 withdrawn per week, etc.

The best of the prepaid cards?

Even though the Amex card is pretty good for a prepaid debit, especially if you can use direct deposit to avoid cash reload fees, prepaid is rarely cheaper than a traditional checking account. You’re still vulnerable to out-of-network ATM fees, among other charges, whereas a checking account includes ATM access, check deposits, direct deposits and access to savings and other accounts. If you’re on ChexSystems or otherwise can’t get a checking account, take a look at our list of second chance checking accounts.

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  • WisTex

    American Express Serve offers direct deposit. They even have a promotion going on right now giving you $50 if you sign up for direct deposit.