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

by on March 26, 2012

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.

Don't get burned by prepaid debit fees!
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Don't get burned by prepaid debit fees!
Use our prepaid card finder to save money and find better deals.
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  • http://privatemoneyutah.com/ Private Money Lender

    A new innovation of prepaid debit card. I find it very useful as well. Amex has been giving great things in credit card industry.Thanks

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  • http://twitter.com/patz2009 Patrick Connor

    “Once a good track record is developed, you may be invited to apply for an American Express Charge Card. It’s just one more way to work toward financial independence.”

    This might possibly make the AmEx prepaid the best prepaid card out there.

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  • dewbieZ

    Learn how to be responsible with your money and you don’t worry about shit like this.

  • NName591

    Guess what – the direct load feature using a bank account option is broken. You’re still forced to pay $4.95 to load the card.
    This would be a great option if it worked – but it doesn’t. In my case, all my credit cards are all paid off and I don’t need any, except to travel once or twice a year, so I was looking for a prepaid option for hotels and security.
    I had to cancel my prepaid card with Amex because they couldn’t resolve the online technical problem, and their customer service, unless you spoke to a supervisor’s BOSS, didn’t seem able to understand even basic requests. Stay away…