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Walmart MoneyCard: A Solid Option for Some

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The Nerds generally don’t recommend prepaid cards, but if you’re in a situation where you can’t get a credit card or a bank account, the Walmart MoneyCard is worth considering. That doesn’t mean it’s the best option, though. Let’s take a look at the three MoneyCards Walmart offers, compare MoneyCard with one of the top prepaid cards on the market and discuss better alternatives.

 MoneyCard BasicMoneyCard PlusMoneyCard Preferred
Purchase fee$0 online / $1.88 in store$3$4
Reload feeNo fee with direct deposit or Walmart Check Cashing; $3 using Rapid Reload® at Walmart stores; up to $4.95 on the Green Dot NetworkNo fee with direct deposit or Walmart Check Cashing; $3 using Rapid Reload® at Walmart stores; up to $4.95 on the Green Dot NetworkNo fee with direct deposit, Walmart Check Cashing or Rapid Reload® at Walmart stores; up to $4.95 on the Green Dot Network
Monthly fee$3$3, waived if you added at least $1,000 in the previous month$3, waived if you added at least $500 in the previous month or if you have your paycheck or government benefits direct deposited
ATM fee$0 at MoneyPass ATMs, $2 out of network$0 at MoneyPass ATMs, $2 out of network$0 at MoneyPass ATMs, $2 out of network
Foreign transaction fee2%2%2%

As you can see, the MoneyCard isn’t entirely fee-friendly, but it’s not so bad compared with many prepaid cards on the market, especially if you use it enough to get the monthly fee waived. Let’s take a look at how the MoneyCard Preferred stacks up against the best prepaid card out there, the American Express Serve Cash Back.
 MoneyCard PreferredAmerican Express Serve Cash Back
Activation fee$4$0 online, up to $3.95 in retail locations
Reload feeNo fee with direct deposit, Walmart Check Cashing or Rapid Reload® at Walmart stores; up to $3.95 on the Green Dot NetworkUp to $3.95, varies by retailer
Monthly fee$3, waived if you added at least $500 in the previous month or have direct deposit$5.95
ATM fee$0 at MoneyPass ATMs, $2 out of network$0 at MoneyPass ATMs, $2.50 out of network
Foreign transaction fee2%2.7%
RewardsNoneEarn 1% cash back per dollar spent

If you’re going to apply for a prepaid card, the Serve Cash Back is a great choice. It helps that you can reload it for free at Walmart locations, as well as at CVS Pharmacy, Family Dollar and participating 7-Eleven locations.

Both the MoneyCard Preferred and the Serve Cash Back let you use your account for online bill pay, to set aside money for savings and to send money to family and friends. But the Serve Cash Back goes further by offering a better user experience and rewards. For example, it’s convenient for families because it allows you to set up sub-accounts for family members and set spending and ATM withdrawal limits. It also features mobile check deposit, purchase protection and Amex Offers, a program that lets you save on shopping, dining and more.

However, the MoneyCard Preferred may be the better option if you’re traveling internationally. The card is issued through either Visa or MasterCard, both of which are more widely accepted than American Express. Plus, the foreign transaction fee is a little lower than with the Serve Cash Back. While it may not seem like a big difference, it adds up, especially if you’re overseas for an extended time.

Why you may not want a prepaid card

Prepaid cards can be a good option in certain cases. But before you go the prepaid route, make sure you understand what you won’t get with a prepaid card. First of all, prepaid debit cards aren’t credit cards. You can only spend what you have previously loaded on the card. This may be helpful if you worry about overspending, but because there’s no credit line, using a prepaid card won’t help you build your credit.

Prepaid cards function similarly to debit cards, but a prepaid card isn’t tied to a bank account. There’s one distinguishing feature between prepaid cards and debit cards: fees. With several banks offering limited free checking options, you may feel like a prepaid card is a better alternative than a checking account. But you should still be able to find a free checking account, especially if you can meet the minimum balance requirement. And if you’re worried about overdraft fees, you can opt out of overdraft protection.

Consider this other option to build credit

If you’re considering applying for a prepaid card because you’ve been denied for a credit card, you may still qualify for a secured credit card. Secured credit cards function much like conventional unsecured credit cards. The difference is that secured credit card issuers require a collateral deposit. For example, if you want a $3,500 credit line, you would typically need a $3,500 deposit. That way, the card issuer can draw on that collateral if you default on your payments. Also, you can get your deposit back when you close your account.

The Nerds typically recommend a secured credit card over a prepaid card if you have bad credit or no credit history and plan on borrowing again in the future. Over time, a secured credit card can help you establish or rehabilitate your credit history, so you have a better chance at qualifying for a better card or scoring a lower interest rate on a loan the next time you apply. Check out our list of the best secured credit cards.

The takeaway: As far as prepaid cards go, the Walmart MoneyCard is a decent option. But if you’re looking at prepaid cards because you have bad credit, consider applying for a secured card, instead. Using a secured card wisely can help you improve your creditworthiness for the future.

Ben Luthi is a staff writer at NerdWallet, a personal finance website. Email:[email protected]. Twitter: @benluthi.