A prepaid debit card can take the place of a bank account or credit card if you don’t have one. Even people with bank accounts have started using these reloadable cards as budgeting tools.
The cards got negative attention last year when hip-hop magnate Russell Simmons’ RushCard left thousands of customers unable to use their accounts for more than a week. The fact is, as helpful as they can be, prepaid debit cards tend to have more fees than bank debit or credit cards, and they don’t have the same strict federal regulations.
At the same time, you don’t have to worry about the interest rates that come with credit cards or the overdraft fees that can accompany bank accounts. It’s also easier to get a prepaid card since they don’t usually require a credit check. Because prepaid debit cards aren’t credit cards, though, you can’t build credit with them. For that, you’d want to consider a secured credit card.
When looking for the best prepaid debit card, consider a card’s protections along with its fees, features and availability. Here are the prepaid cards that top our list in various categories.
Best overall prepaid debit card
BLUEBIRD BY AMERICAN EXPRESS AND WAL-MART
The Bluebird card has purchase and fraud protections and works wherever merchants accept American Express. To get the card, register for a Bluebird account online or by mobile for free, or buy a setup kit at a local Wal-Mart store for $5. No credit check is required, and there’s no monthly fee.
Best prepaid card for cash reloading
AMERICAN EXPRESS SERVE FREE RELOADS
Although similar in its features and protections to the Bluebird, the American Express Serve Free Reloads prepaid card stands out as more cash-friendly. You can load your card with cash for free at more than 45,000 locations nationwide, including Rite Aid, Wal-Mart and participating 7-Eleven stores. The trade-off is a $4.95 monthly fee, except in Texas, New York and Vermont, where there is no fee. This prepaid card also has mobile check deposit and bill pay services and allows for up to four “subaccounts” linked to a master account for individuals 18 or older (19 in some states). You can buy this card at select retailers for up to $3.95 or order it online for free. As with other American Express prepaid cards, no credit check is required.
Best prepaid cards for cash access
AMERICAN EXPRESS SERVE
American Express’ basic Serve card has low fees and offers free use of the MoneyPass ATM network. It costs $2.50 to withdraw money or check a balance at other ATMs. There’s a $1 monthly service charge, which can be waived if you set up a direct deposit of $500 or more each month. Despite this cheap monthly fee, cash reloading costs up to $3.95 at participating stores. Fraud and purchase protection come with this card, and no credit check is required.
KAIKU BY THE BANCORP BANK
The fees are straightforward and low compared with most prepaid debit cards. You’ll get hit with a monthly fee of $3 unless you load at least $750 on the card each month. Two other notable costs are a $1.45 out-of-network ATM fee and a charge ranging from $2.95 to $4.95 for loading cash at Visa ReadyLink and MoneyGram locations. There’s no purchase fee and no credit check when you apply for the card.
Best prepaid cards for customers with bank accounts
While the prepaid debit cards above are great both for people with bank accounts and those without, people who have bank accounts have more resources. They can make online transfers from their accounts, relying less on cash reloading and thus avoiding fees. Because prepaid debit card customers who have bank accounts tend to be in a higher income bracket, according to a 2015 Pew Charitable Trusts report, they may also be in a better position to consider rewards in addition to basic features and fees.
Despite its perks, the card may not be the right choice for everyone. For one, you either have to link a Chase checking account or pay a monthly service fee of $4.95. Plus, if you’re not near one of the bank’s 5,400 branches or more than 15,500 ATMs in the 25 states where it operates, it may be difficult to avoid ATM fees. You need to visit a Chase branch to open this card, and there is a credit check when you apply, meaning that approval is not guaranteed.
AMERICAN EXPRESS SERVE CASH BACK
As one of the first prepaid debit cards with rewards, this American Express Serve card lets you earn 1% cash back when you make purchases online or in stores. Coupled with the protections and features it shares with other Serve cards, such as online bill pay and mobile check deposits, the Cash Back can be a good choice for someone who wants a bit more out of a prepaid card.
The rewards might not always outweigh the costs, though. There’s a monthly fee of $5.95 in most states, which comes to $71.40 per year. Plus, if you need to deposit cash and don’t have a checking account, putting cash on this card can cost you up to $3.95 each time. Customers who have a bank account can link the Cash Back card to a debit card and transfer money for free.
» MORE: See our guide on prepaid debit cards
What about the others?
As you consider the best prepaid card for you, some factors may be more important than others. Our list excludes some popular prepaid cards such as ACE Elite, Mango, RushCard and some Green Dot prepaid cards, including the Walmart MoneyCard. Although these cards generally have nationwide availability and don’t require credit checks, they tend to offer fewer free reload options and protections. They also generally charge at least one regular transaction fee that you can’t avoid, such as fees for ATM withdrawals, cash reloads or cashing checks.
This article was updated. It was originally published in November 2015.
Image via iStock.