American Express Serve: the Best Prepaid Debit Card Around?
Prepaid cards have surged as a popular alternative payment method for people who are “underbanked,” with limited access to traditional financial institutions, or have bad credit. The problem is that most of the cards are expensive, carrying many fees. Not so with the American Express Serve. It has some of the lowest fees in the prepaid market and offers a slew of benefits.
But while the American Express Serve is one of the best prepaid cards around, it’s not for everybody. We’ll dig into what the American Express Serve offers and explore another option that may fit your needs.
How the American Express Serve adds value
In August 2015, American Express launched the Serve FREE Reloads and the Serve Cash Back, the latter being the first rewards prepaid card in the industry. All three cards stand out in a market segment packed with fee-laden cards. Here is a comparison of the cards’ fees and benefits as of August 2015:
|Fee||American Express Serve||American Express Serve FREE Reloads||American Express Serve Cash Back|
|Card purchase||$0 online, up to $3.95 in retail locations|
(no fee in NY, TX or VT)
|$1, waived with direct deposit of at least $500 during the month||$4.95||$5.95|
|Card reload||Up to $3.95, depending on retailer||$0 at CVS, Family Dollar, Walmart and participating 7-Eleven locations||Up to $3.95, depending on retailer|
|Rewards||None||None||1% cash back on all purchases, to be redeemed on future purchases made with the card|
|Mobile check deposit, direct deposit or checking/savings transfer||$0|
|ATM withdrawal||$0 at MoneyPass ATMs, $2.50 at non-MoneyPass ATMs|
|Online bill pay||$0|
|Send and receive money to other Serve cardholders||$0|
|Foreign transaction fee||2.70%|
Serve cards also boast the following features:
- Subaccounts for family members; American Express allows you to monitor activity and set withdrawal limits
- FDIC insurance
- A linked savings account so you can set aside money for future financial goals
- Purchase protection
- Access to Amex Offers, a program that lets you save on shopping, dining and more
The American Express Serve, Serve FREE Reloads and Serve Cash Back are relatively light on the fees and heavy on the perks. They do require a Social Security number to open an account to verify your identity, but American Express doesn’t perform a credit check.
If you’re thinking about applying for the card because you have bad or no credit history and can’t qualify for a credit card, keep in mind that prepaid cards like the Serve don’t help you build credit because it doesn’t have a credit line. For that, you may be better off with a secured credit card.
The American Express Serve vs. a secured card
You can check out NerdWallet’s best secured credit cards to see some of the top secured cards, but here’s one to compare with the American Express Serve:
on Digital Federal Credit Union's
on Digital Federal Credit Union's
The card also charges no balance transfer fee — perfect if you’re carrying a balance on a high-interest card — and no cash advance fees, which is almost unheard of. Digital Federal Credit Union also reports your activity to all three credit bureaus, giving you a chance to establish good credit history and improve your chances at getting approved for a better card or a loan with a lower interest rate in the future.
The downside to the Digital Federal Credit Union Visa Platinum Secured Credit Card — or any credit card for that matter — is that you’ll pay interest if you carry a balance from month to month. The Nerds generally recommend that you pay off your balance on time and in full to avoid interest. Also, the Digital Federal Credit Union Visa Platinum Secured Credit Card doesn’t offer rewards like the Serve Cash Back, and you have to be a Digital Federal Credit Union member to apply, although the eligibility requirements aren’t strict:
- Someone you are related to is a current member
- The company you work for or retired from is a participating employer
- You belong to a participating organization
- You live, work, worship or attend school in a community which has been designated as underserved and the credit union has a branch in it
Is the American Express Serve right for you?
You still may want to choose one of the Serve cards over a secured credit card in certain situations, including if you have a teenage child or elderly parent you’re supporting who might need a subaccount, you don’t have a Social Security number or you simply don’t want to deal with credit cards. If none of these cases apply and you plan to pay your balance in full every month, you may be better off with a secured card like the Digital Federal Credit Union Visa Platinum Secured Credit Card.
Image via iStock.