Say No to AccountNow and You’ll Thank Us Later
The AccountNow card says it’ll curb the power of regular credit cards. With the abundance of hidden fees and the seemingly irresistible temptation to “buy now, worry later,” credit cards have the power to make or break our financial health. AccountNow.com’s prepaid debit card purports to control that insatiable thirst to spend while protecting users from sneaky annual, over-the-limit and other fees. But, unfortunately, the “cure” for credit card fees comes riddled with fees of its own.
Here at NerdWallet, we’ve done what we can to educate consumers on the real story behind the prepaid debit card. They claim to improve credit scores and shield you from the outrageous fees, but they’ve just turned out to be nothing more than the traditional debit card’s ugly (and very expensive) step cousin.
But, despite our various warnings, some people still want to give it a try, so we’d like to at least help you navigate the prepaid debit waters as safely as possible.
The AccountNow Prepaid Debit card from Visa is a popular prepaid card, but one that should definitely be avoided. In addition to its claims about promoting responsible budgeting and other money saving tactics, the AccountNow card also advertises the standard “no credit check” and “no overdraft fees,” gimmicks often used to intensify a prepaid card’s allure.
Account Now also offers free check cashing (but only when using direct deposit) and emphasizes that everyone can join, even those listed on ChexSystems. But although they offer some rather enticing deals, the benefits are severely outweighed by their ridiculous fees.
There are two AccountNow prepaid cards available—the Classic card, for occasional users, and the Gold card, intended for frequent users. The Classic card comes with a $4.95 one-time set up fee and although the Gold card doesn’t have a set up fee, they stick you with a $9.95 monthly fee instead, and attempt to soften the blow by calling it a “Gold Privilege” fee. The Classic card doesn’t have a monthly fee but charges $1 per transaction, coming up about even with the Gold Card by the end of the month.
The lesser of the prepaid debit evils
If you really have your heart set on a prepaid debit card, you’re better off with the new American Express prepaid card in terms of fees. It doesn’t have a monthly fee, a sign up fee, or a replacement fee for lost cards (as opposed to AccountNow’s $15 replacement fee). It gives one free ATM withdrawal a month, and charges $2 per ATM use after that, compared with the AccountNow Gold’s $3.75 withdrawal fee.
But just because it’s better than the AccountNow doesn’t mean it is free of problems itself. American Express doesn’t offer free deposit/reloading with direct deposit (yet), so your deposits will cost you $4.95 with a Green Dot Money pack, unless you have a credit card or a checking account to make deposits (which makes a prepaid debit card more or less irrelevant). For all the media hype, the AmEx prepaid falls a little short of its goal of helping the unbanked. Plus, AmEx card can only be used where American Express is accepted, limiting your choices to about 4.5 million merchants. But still it manages to be cheaper than the Account Now cards for those without bank accounts.
Many look to prepaid cards to improve poor spending habits or to help revive an ailing credit score, but the truth is, if you want to make some real changes to your financial situation, a prepaid debit card won’t help. A prepaid debit (or really any debit) card won’t raise your credit score, no matter what you hear. Despite popular belief, there isn’t usually a credit check involved when getting a checking account, so a prepaid debit card isn’t the only option for those of you with poor credit. If you’re having credit trouble, you’re better off with a regular checking account or one of these credit cards specifically for those with bad credit.