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NetSpend Prepaid Debit Card Review: Fees Sting, but Interest Rate Is a Plus

Banking, Banking Basics, Prepaid Debit Cards
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netspend prepaid debit card

NetSpend Prepaid Debit Card
NerdWallet’s rating: 2.0 / 5.0

2.0 stars out of 5

NetSpend
Learn more
at NetSpend
With the NetSpend prepaid debit card, you can deposit checks, make purchases, pay bills, and get and reload cash. But the associated fees can add up quickly.

On the plus side, like competitors Green Dot and Bluebird, NetSpend doesn’t require a credit check or a spotless ChexSystems record. And if you have $1,000, NetSpend’s promotional 5% savings interest rate could cover some of your fees. However, you likely will have better choices than a prepaid debit card.

Consumers should note that the Federal Trade Commission filed a complaint against NetSpend on Nov. 10, saying the company had claimed in marketing materials that consumers would have immediate access to money loaded on cards, but some customers couldn’t access funds for weeks — or not at all. NetSpend said in a statement that it intended to “vigorously contest” the FTC complaint with its “substantial defenses.”

» MORE: NerdWallet’s list of best prepaid debit cards

The bottom line

  • Basic monthly plan costs $9.95 a month. With a $500 direct deposit, the fee drops to $5 a month.
  • Pay-as-you-go plan costs $1 to $2 per transaction.
  • No free ATM network. It costs $2.50 each time you use an ATM to make a withdrawal, in addition to any fee the ATM operator may charge.

» MORE: What you should know about prepaid debit cards

Our Ratings
General fees2.5 stars out of 5
Purchases and withdrawals1.0 stars out of 5
Reloads3.5 stars out of 5
Other services4.0 stars out of 5
Overall
2.0 stars out of 5
NerdWallet’s overall rating is a weighted average of the four categories listed.

Here are more details about NetSpend’s fees and services.

General fees and features

2.5 stars out of 5
2.5 / 5.0

There’s no fee to order the card online. You also can buy it at locations such as CVS and Wal-Mart stores. The cost varies by retailer; CVS, for example, charges $4.95.

To use the card you must choose between two plans. The default is a pay-as-you-go plan that charges $1 to $2 per transaction. You can opt for a monthly plan, instead, that costs $9.95. But if you have $500 in monthly direct deposits on the card, you would be upgraded automatically to the NetSpend Premier FeeAdvantage plan, which drops the fee to $5 a month.

Unlike some prepaid card companies, NetSpend charges an inactivity fee of $5.95 if the card isn’t used for 90 days.

To close the account, you can request a refund check to be sent by mail. This takes three to four weeks, and a fee of $5.95 will be deducted from the balance. Or you can withdraw your balance at a bank for a fee of $2.50.

ProsCons
  • Free to order online.
  • Must pay a monthly fee or a per-transaction fee.
  • Inactivity fee of $5.95.
  • Fee of $5.95 to get refund by check when account is closed.

Purchases and withdrawals

1.0 stars out of 5
1.0 / 5.0

NetSpend’s MasterCard or Visa prepaid card is widely accepted by merchants. It doesn’t have a free ATM network, so your best bet to withdraw money is to get cash back during a purchase — which doesn’t incur a fee. But it costs $2.50 to withdraw cash at an ATM (in addition to any ATM operator fees) or to make an over-the-counter withdrawal at a financial institution.

To load checks on the card, you can use free mobile check deposits, but there’s a waiting period of up to 10 days to access the funds.

You can sign up for an overdraft service, but the fee is $15 per overdraft, capped at three times per month. Additional overdrafts would be covered with no fee. Still, if you want to avoid the risk of incurring overdraft fees, it might be better to skip the overdraft service and let transactions be declined in the event that there’s not enough money in your account.

ProsCons
  • MasterCard and Visa are widely accepted by merchants.
  • No fee to get cash back with purchases.
  • Fee of $2.50 for ATM withdrawals or over-the-counter withdrawals at a bank or credit union.
  • Expensive overdraft service.

Reloads

3.5 stars out of 5
3.5 / 5.0

There are several free ways to reload money to the card: direct deposit, transfers from a bank account, transfers from a PayPal account and mobile check deposits. It’s also free to transfer money to another NetSpend account, such as that of a friend or relative. Remember that mobile check deposits can take up to 10 days to clear.

Cash can be loaded at more than 130,000 retailers for a fee of $2 to $3.95. Type in your ZIP code at the NetSpend site to see a list of addresses near you along with the fee charged. The company says the amount of the fee is “determined by location partners.” It also says that “select partners,” mainly in Texas, offer free reloads.

ProsCons
  • Free direct deposit.
  • Free mobile check deposits.
  • Free transfers from a bank account.
  • Free transfers from a PayPal account.
  • Free transfers between NetSpend cards.


  • Loading cash at retailers costs up to $3.95.

Other services

4.0 stars out of 5
4.0 / 5.0

You can’t write checks with NetSpend. To pay bills, cardholders can set up payments using ACH transfer with no NetSpend fee, or use the card to make a debit or credit payment.

Another option is to use MoneyGram bill payment, a third-party service that you can access directly after logging in to your NetSpend account. MoneyGram charges a fee of $1.49 to $10.99, but there’s no NetSpend fee.

Cardholders can open a NetSpend savings account that pays a variable interest rate — currently a high promotional rate of 5% annual percentage yield on deposits of up to $1,000. For balances above that, the rate drops to 0.5% APY, still well above the national average for savings accounts.

ProsCons
  • High-yield savings account pays 5% APY on balances up to $1,000.


  • No check writing.

» MORE: NerdWallet’s top high-yield savings accounts

Pricey, unless you have $1,000 to save

With NetSpend’s fee structure, the interest earned on its savings account might just cancel out the fees paid on the card. If you kept $1,000 in a NetSpend savings account for a year, for example, you would earn just above $50 in interest. But keep in mind that with the $9.95 monthly plan, you’d pay almost $120 in fees.

NetSpend
Learn more
at NetSpend
That top-of-market savings yield may alleviate the sting of the unavoidable fees. But if you want to avoid paying fees, try a no-fee checking account instead.

Jeanne Lee is a staff writer at NerdWallet, a personal finance website. Email: jlee@nerdwallet.com. Twitter: @jlee_jeanne.

Updated Nov. 21, 2016.


Ratings methodology

NerdWallet’s overall rating is a weighted average of these four categories: general fees and features (40%), purchases and withdrawals (35%), reloads (15%) and other services (10%). Factors we consider, depending on the category, include fees, ATM access, reload options, breadth of merchant acceptance, account features and limits, consumer-facing tech and customer service. Because prepaid debit cards help to manage money without using credit, any overdraft program gets penalized under the “purchases and withdrawals” category. Several Nerds contribute to prepaid debit card ratings to ensure consistency and accuracy.

What the ratings mean:
5 stars out of 5 — Among the very best
4.5 stars out of 5 — Very good; only minor caveats for most customers
4 stars out of 5 — Good; issues that might make a difference to some customers
3.5 stars out of 5 — Fair; make sure strengths and weaknesses are a good match for you
3 stars out of 5 — Poor; proceed with great caution
2.5 stars out of 5 (or below) — Best to avoid