If you're reading this because you're searching for the best prepaid debit card, you're in plenty of good company. The popularity of prepaid debit cards has grown in the past several years according to a study from the Federal Reserve. In fact, they say that prepaid cards are "the fastest growing non-cash payment type."
Perhaps consumers are moving to an option that is as quick as other cards without high interest rates, penalty fees or risks of debt. A large population who cannot qualify for traditional bank accounts also uses this card as a bank account alternative.
Whatever your reason for seeking out this financial instrument, my review of the top rated prepaid debit cards should give you a good jumping off point.
There is a common misperception that the top prepaid debit cards can help you rebuild a positive credit rating, or initiate your credit history.
The Best Prepaid Debit Card: What to Consider
Before you sign up for a card you should be aware of their advantages and disadvantages. Since you are using money that you have already paid, there is no risk of accumulating interest on money you owe, which is a big advantage over credit cards. However, these cards often come with fees, which discourage some card users.
Also, prepaid cards may take some time to register money that you put on them. For instance, if you load a card in the morning you may not be able to use that money on your date that same night. However, since prepaid cards are becoming more and more popular, there are several cards to choose from and some are better than others.
Here are a few things to consider:
- Look for cards with low fees. Monthly maintenance fees are common but there may also be fees associated with loading the card, contacting support and viewing your balance. Ask about these fees and choose the card that won't nickel and dime you to use your own money.
- Take a look at some of the extras and specific uses for each card. There are savings cards, bill paying cards and even allowance cards for teens. There are several cards with specific uses; choose one that will allow you the flexibility you are looking for.
- Ask about the time it takes for the money you put on a card to be usable. Try to find a card with the least amount of wait time.
Who Needs the Best Prepaid Debit Card?
Prepaid debit cards have come a long way since they were first introduced. Initially, they were just another form of a gift card. Now, however, many providers have added features to them, making them very similar to a checking account. Here are some reasons why you might consider using a prepaid debit card for your cash management needs.
A great benefit of using the prepaid debit card versus a bank account is that you typically avoid paying extra fees that banks charge for basic checking accounts.
1. You Do Not Have a Bank Account
It is estimated that at least 1 in 4 households or 25% of U.S. households do not have bank accounts. There are a number of reasons for this fact; however, more and more companies insist on paying their employees via Direct Deposit. If you do not have a bank account, this makes it difficult for your employer to pay you electronically.
Prepaid debit cards, though, allow your employer to pay you via the card. Just as a company would send your Direct Deposit payment directly to your bank account, they could send it just as easily to the card. From there, you can use the card wherever it's accepted or withdraw cash via ATMs. There are a number of prepaid cards that have added the ability to write checks from the card as well. That way you can pay other bills that require check payment, using your funds on the prepaid card.
A great benefit of using the prepaid debit card versus a bank account is that you typically avoid paying extra fees that banks charge for basic checking accounts. There are some cards that may charge you fees, though, so you want to make sure you pick the right one before you move forward.
2. You Need to Monitor Your Spending
One of the main reasons I advocate prepaid debit cards is that they are a great tool to help you control your spending and manage your budget. When you are looking at your monthly budget numbers, after you determine the amount that you can afford to spend on basic items like groceries, gas, eating out etc., you can set up a monthly transfer of this amount from your checking account to your prepaid debit card.
You will not need to worry about overdraft fees if you try to spend more than you put on the card, you will just be declined when you try to use this. It may be embarrassing to have your card declined in a public place, however, a small embarrassment is much better than overspending and breaking your budget.
3. You Don't Like to Carry Cash
Despite the fact that cards are accepted most places, cash is still king when it comes to paying for goods and services; however, it is not always convenient to carry cash. It may also be difficult for you to find an ATM that will not charge you fees. With a prepaid debit card, it is similar to carrying cash, however you don't have to worry about carrying it on your person or running the risk of losing it or having it stolen while you are out.
Which Prepaid Debit Card Is the Best?
I know you're eager to hear the answer to that question, however first I'd like to answer some basic questions you may have.
How is a prepaid debit card different than a credit card? A prepaid debit differs from a credit card in that you are not borrowing money from a line of credit, and then repaying it. You are using money that already belongs to you, which you have deposited into your prepaid account.
How is a prepaid card different from a regular debit card? A typical debit card is tied to your checking or savings account. A prepaid debit is not tied to a traditional bank account.
The money on a prepaid card is added by you and in some cases, you can have a portion or all of your paycheck go directly onto the card via Direct Deposit. For you, it is sort of like a gift card that you can use anywhere and for the people behind the cash register, it is like a debit card where they are guaranteed the availability of funds.
The Best Prepaid Debit Cards
American Express Serve Review
- Free card if you sign up online
- Three different versions
- Early Direct Deposit
- $1 monthly fee waived with $500 monthly Direct Deposit
- Free withdrawal with MoneyPass ATMs
- $3.95 fee to reload
- $2.50 withdrawal fee at non-MoneyPass ATMs
- Foreign transaction fee
The American Express Serve card stacks up nicely in my prepaid debit cards comparison. Many of its already small fees are avoidable. The $1.00 monthly fee can be waived if you set up a Direct Deposit of at least $500 per month. There is a $2.50 ATM withdrawal fee which can be avoided by using a MoneyPass ATM.
The regular Serve card requires a fee of up $3.95 to reload it with cash. The unique thing about this offering, however, is that AMEX offers three versions of the Serve. There is the standard, Serve Free Reloads, and Serve Cash Back. There are a few differences among the three tiers. The standard Serve is available with a $1 or zero monthly fee, while Serve Free Reloads allows free reloading but costs $4.95/month. Serve Cash Back gives you unlimited 1% cash back on your purchases, and has a $5.95 monthly fee.
One more interesting feature of Serve is that you can move money from your card into a Reserve account, a free tool for saving money for a special occasion or purchase. Serve by American Express is a versatile card with options to fit anyone's needs, which earns it the top spot in my prepaid debit cards comparison.
- Sign-up bonus: None.
- Key fees: The monthly fee is $1 unless you set up Direct Deposit for $500 or more per month. Cash reloads cost up to $3.95 except on Serve Free Reloads. The Free Reloads card is $4.95/month, and Serve Cash Back $5.95/month. There is a 2.7% foreign transaction fee on all three versions. Mobile check capture costs 1% or 5% for instant access to your money, with a $5 minimum fee.
- Other perks: All three Serve incarnations get free early Direct Deposit (access funds up to two days sooner), free online bill pay, free deposit from a bank account, free subaccounts, free card replacement, and use of a Reserve account to save for something specific.
- Free Allpoint ATM withdrawals
- Monthly fee waived if you Direct Deposit $750/month
- Spending tracker app
- Mobile check capture
- Free unlimited transactions
- Fee for cash loading
KAIKU is an innovative entry in the top prepaid debit cards segment.This card is an excellent choice for those who tend to make a lot of small purchases because it gives you unlimited free transactions. You will pay a $3 monthly maintenance fee, but not if you Direct Deposit at least $750 each month. You get free withdrawals at over 55,000 Allpoint ATM locations. Out-of-network ATMs will cost you $3.00 plus the ATM's usage fee.
KAIKU gives you something different in its Funds-Ometer app. This mobile tracker lets you see what your last 60 days look like in terms of unessential spending categories like dining and entertainment. You can also load checks on the go, although you'll have to wait 10 days for the money to become available unless you want to pay a fee.
With all of these benefits on top of free card-to-card transfers and fee billpay, plus six cool card designs from which to choose, KAIKU has made a name for itself. It also made its way onto my list of the best prepaid debit cards of 2016.
- Sign-up bonus: None.
- Key fees: There is a $3 maintenance fee if you don't Direct Deposit at least $750 per month. Non-Allpoint ATMs cost you $3 per transaction, and cash loading costs $2.95 - $4.95. Instant access to your mobile deposits costs 1% or 4% with a $5 minimum.
- Other perks: You can pay friends or family with free card-to-card transfer, get free card replacement, and free bill payment. You also get free unlimited transactions, and your choice of six different card colors.
- Very few fees
- Free withdrawals at MoneyPass ATMs
- Expandable to four family accounts
- Five loading options
- Pre-authorized check writing
- Funding family account cards only via transfer from master card
Bluebird is a joint offering from Walmart and American Express. The companies market the card with the slogan "Benefits of banking without all the fees." This prepaid debit does seem to make good on that promise. There are almost no fees, and Bluebird is accepted anywhere you can use American Express.
Bluebird comes with a couple of benefits unique to the industry. Firstly, you can get paper checks which you can then pre-authorize as you need to use them. Secondly, you can link four family accounts to the master account, and these can be used by anyone 13 or older. This feature makes Bluebird one of the best prepaid debit cards for teenagers.
You also get all the standard features available with the best prepaid debit cards. These include free ATM withdrawals at MoneyPass machines, free Direct Deposit, free billpay, and free replacement cards. Best of all you can reload the card for free at Walmart, online with a debit card, from a bank account, or via mobile check capture
The lack of fees along with the fraud and purchase protection provided by American Express make this one of the best overall offerings on my list.
- Sign-up bonus: None.
- Key fees: The fees associated with Bluebird are the $5 cost of buying the card in the store, a 1% or 5% fee for instant access to your check when using mobile deposit, and a $3, $6, or $9 fee for using Cash Pickup at Walmart. You'll also pay $2.50 if you use an out-of-network ATM.
- Other perks: Free card-to-card money transfer to anyone with a Bluebird account, free checks, free stop payment, free Direct Deposit, secure online shopping, and no foreign transaction fees.
Chase Liquid Review
- Free to open at a Chase branch
- Low initial deposit
- High daily spending limit
- Access to Chase QuickPay
- Free cash loading at Chase branches or ATMs
- Chase only available in 25 states
- No additional cards
- Credit check required
Chase Liquid is the best prepaid debit card with no monthly fee - if you have a Chase checking account. Otherwise you will pay $4.95 monthly. Even with the maintenance fee, however, the simplicity of the card's terms may make it worth it if you live near a Chase branch.
There aren't a bunch of complicated fees and loading processes associated with Chase Liquid. You access your money for free via Chase ATM or a branch teller, and you load it for free through Direct Deposit, cash loaded via ATM or teller, or with the mobile app. You also get access to Chase QuickPay which allows you to send money from your Liquid card to anyone with an email or phone number.
Along with all of these benefits, there are a couple of catches. You must apply for Chase Liquid in person at a branch location. And unlike most of the top prepaid debit cards, there is a credit check.This means approval is not guaranteed. You open your account with a minimum initial deposit of $25, and there is a daily spending limit of $3000, with a cash withdrawal limit of $500 per day.
- Sign-up bonus: None.
- Key fees: If you don't have a Chase checking account, you will pay $4.95 per month. Non-Chase ATM use incurs a $2.50 fee, and returned deposited checks cost you $12 each.
- Other perks: Chase QuickPay allows you more flexibility in paying other people than most cards offer. Because Liquid is provided by a bank, your money is FDIC insured and you get zero liability protection. You also get easy online billpay.
- No overdraft fees
- No minimum balance
- Monthly fee can be waived with $500 deposit
- No fee money transfers to other Mango subscribers
- Great savings account with high APY
- ATM withdrawal fee
- Fee for checking balance at ATMs
Master Card's Mango money prepaid card is a great card with a money saving focus. A Mango Money savings account boasts high APY, as much as 6% which is, as they say, "45% higher than the industry average." The best interest rates are reserved for those who set up direct deposit, if you don't, you can still get a 2% APY which is still pretty high. If saving money is your goal this is a great card to consider.
There are no sign up fees, no customer support fees and no overdraft fees. There is a $3.00 monthly subscription fee but it can be waived if you have $500 deposit each month. There is a $1 fee when you check your balance at ATMs but it is free to look up online or on Mango's handy mobile app. There is a $2 ATM withdrawal fee if you need cash off the card.
Do the Best Prepaid Debit Cards Help Build Credit?
A prepaid account can definitely be a useful tool in managing your money, particularly if you don't have a checking or savings account. As with any one fiscal instrument, however, this type of card does come with minor limitations.
There is a common misperception that the top prepaid debit cards can help you rebuild a positive credit rating, or initiate your credit history. Prepaid card issuers do not report to credit bureaus, so this tool has no effect one way or the other on your credit score.
Renting a Car with the Best Prepaid Card
You've probably asked yourself the question - "Can I rent a car using a prepaid debit card?" The answer is - possibly.
You probably won't be able to use your prepaid account for the deposit, however, you may be able to pay your actual charges with it. You will likely still need a traditional debit or credit card to present at the time of rental so that the deposit can be guaranteed. According to USAToday Travel Tips, you may have better luck with a prepaid card at smaller, independent rental agencies.
Prepaid debit cards are a good payment option, especially for those who don't qualify for bank accounts. Fees and monthly costs are a problem, especially considering the fact that you are paying to use your own money. However, cheap options are available so the under-banked can find a card that works for them.
If you find, after reading my prepaid credit card reviews, that this option isn't the right one for you, you may want to check out the best secured credit cards instead. The best credit repair companies can also be a useful resource to help you on your quest for financial solvency.