5 Best Prepaid Debit Cards


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In a world where consumers are increasingly wary of credit even as they want the convenience of plastic, the idea of prepaid debit cards is catching on. Prepaid debit cards (also known as "prepaid credit cards") are branded with the logo of well-known credit companies, and they are accepted where credit cards are used.

What Is a Prepaid Debit Card, and How Does It Work?

A prepaid debit card is not the same as a credit card. It is also not the same as a regular debit card. In some cases, a prepaid card is even used as an alternative to regular checking (and sometimes savings) accounts.

Looks Like a Credit Card...

A prepaid card carries a credit card brand logo (often carrying the Visa or MasterCard logo), so at the cash register, it acts the same as a credit card. However, a prepaid card is not a credit card. A credit card offers you a line of credit that you can draw on. You borrow every time you use a “regular” credit card. When you use a prepaid debit card, though, you are drawing on money that you already have. In order to use a prepaid card, there already has to be money, deposited up front, associated with the card.

...Acts Like a Checking or Savings Account

Prepaid cards are also sometimes used as alternatives to bank accounts. Because they work like a credit card or a debit card, it’s possible to use them as forms of payment at the store, as well as to pay bills (including online bill pay and automatic withdrawal). You can add money to the card, including having it automatically deposited from your paycheck.

In some cases (but not all), it is also possible to designate some money as “savings” and earn interest on it. A credit card charges you interest; a prepaid debit card gives you a chance to earn interest.

Prepaid cards are very straightforward. You purchase the card, and you “load” a certain amount of money on it. You designate how much money you want to access with the card, and deposit the money.

How to Put Money on a Prepaid Debit Card

There are different ways to deposit the money on the card:

  • Purchase the card at a retail store, using cash, credit, or debit. You can purchase a card “preloaded” for a certain amount, or you can specify how much you want on the card at the register.
     
  • Buy the card online, using credit or funds transfer, and have it shipped to you.
     
  • Direct deposit from your employer or bank onto the prepaid card after it has been purchased. Some prepaid cards allow you to designate direct deposit, allowing you to use the card in a way similar to a bank account.

Once the money is loaded onto the card, you can use the card just as you would a credit card. Additionally, it is often possible to use your prepaid card as a method of bill pay (including online bill pay), as well as withdraw cash from an ATM. 

Prepaid Cards Are Not Credit Cards

While a prepaid debit card has the look and feel of a credit card, there cannot be enough emphasis on the fact that a prepaid card is not a credit card. You can’t charge more money than you have, so once you have used the money on your card, you need to add more funds if you want the card to keep working.

Additionally, your prepaid card will not impact your credit score in any way, no matter how often you add money to your card.

Pros and Cons of Prepaid Cards

Prepaid cards are not for everyone. Here are some things to consider.

Cons of Prepaid Cards

Prepaid cards have been disparaged quite a bit recently due to the number of fees usually charged by issuers. Even though there are advantages to prepaid cards, including the fact that you get the convenience of plastic without worrying about high interest rates, the fees charged can be a big turn off for many consumers.

One of the most common fees amongst prepaid cards is the monthly maintenance fee. On top of that, many prepaid cards charge you for calling customer service, inquiring about your balance, reloading the card, activating the card, and engaging in other actions. Just using a prepaid card in a way that many consumers consider “normal” can lead to fees. As the fees add up, they erode the actual amount of money you have access to.

Another drawback, at least for those hoping to rebuild their credit, is that prepaid cards don’t usually report to the credit bureaus. Because you aren’t actually receiving a line of credit, the use of a prepaid card won’t help your credit score.

Pros of Prepaid Cards

The main advantage offered by prepaid cards is that they can often offer banking-type services to those who don’t have bank accounts. If you can’t qualify for a bank account for whatever reason, a prepaid card can offer an alternative, especially since many cards are expanding their offerings to include savings accounts and bill pay.

Another advantage with some cards is that you can earn a yield if there is a savings option. Not all prepaid cards offer a savings option, though. And, among cards that do offer a savings option, not all of them will pay you an interest yield.

What to Look for in a Prepaid Card

One of the first things to look for as you choose a prepaid card is the fee schedule. Pay attention to the number of fees charged and the actions that incur them. Try to find a card that charges minimal fees, or that offers a way to waive certain fees.

Another consideration is the variety of offerings. Think about what you plan to use the prepaid card for:

  • If you want a way to set aside money, choose a card with a savings option.
     
  • If you primarily want to pay bills, find a card that offers you the option of free online bill pay.
     
  • If you plan to give the prepaid card to your teen for allowance, focus on a card that is easy to reload regularly — and that doesn’t charge a fee each time you load the card.

The 5 Best Prepaid Debit Cards

Here are a few good options when choosing a prepaid card.

1. Card.com Visa® Prepaid Card

Click here to apply nowThe fun thing about Card.com is you can choose from thousands of cool designs. There are no overdraft fees, no late fees, no minimum balance, $0 sign up fee and no credit check. The fees you do have to pay attention to include a $5.95 monthly fee (which is waived if you load at least $800 in the prior thirty days via direct deposit), $3.00 ATM or over-the-counter withdrawal fee, and a $1 balance inquiry fee. They also have a feature where you can share money with your friends and family through their CARD-2-CARD feature.

Click here to apply for a Card.com Visa® Prepaid Card

2. Mango Money

Click here to apply nowHere’s a prepaid card for serious savers. The Mango Money prepaid card allows for you to save money, and it offers an APY of up to 6% (best results are for those signed up for direct deposit and have less than $5,000 in their accounts). Even the 2% APY offered for those who don't do direct deposit beats many “high yield” accounts.

There is a monthly fee of $5. However, the fee is waived if you load at least $500 each calendar month. There are ATM fees, but they aren’t out of the ordinary, and you can check your balance online for free. There are no sign up/activation fee, bank transfer/load fee, or customer service fees.

3. Green Dot Card

Click here to apply nowThe Green Dot Card has long been known as a leader amongst prepaid cards. You can avoid the $4.95 activation fee by purchasing the Green Dot card online, and there are no ATM charges (if you use a MoneyPass ATM). The monthly fee is $5.95, but it’s waived if you load at least $1,000 to the card each month, or have at least 30 qualifying purchases during the period.

4. American Express Serve®

The Serve has many features, including no fees for activation, cash reloads, and using ATMs in its network. The monthly fee is just $1, which is waived if you use direct deposit or add $500 during each statement period. It's also easy to load money via 19,500 CVS, Walmart, and participating 7-Eleven locations.

5. Approved Card From Suze Orman

Click here to apply nowEven though Suze Orman received a lot of flack for this card, it does have something that not every prepaid card has — a savings option. You can set aside money with this card, eliminating the need for a bank account.

There is a $3 monthly fee, and a $3 activation fee, but there are no charges for a secondary card. If you aren't signed up with direct deposit or bank to card deposit, you'll get charged a fee even for using their in network Allpoint ATMs. If you are signed up, then there's no fee for ATM withdrawals. There's also an over the counter cash withdrawal fee.

Why Use a Prepaid Card

For the most part, prepaid cards should be used by those who can’t qualify for a bank account, for whatever reason. There are still plenty of free checking and saving accounts available, and you should turn to those before deciding that a prepaid card is the way to go. The only exception is the Mango Money card, which offers better yields than normal checking or savings accounts.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Guest's picture
Charlie

Among the 5 Prepaid Debit Cards, I prefer the American Express Prepaid Card most. The fact that it doesn't have much fees edges it out compared to the other prepaid debit cards. Although the rewards program of Wired Plastic Visa is enticing, the accompanying fees aren't.

I don't have any thoughts yet about getting one but this article has given me great insights on these kind of cards. Thanks a lot Miranda.

P.S. Personally, what would you prefer, a prepaid debit card or a credit card? :)

Guest's picture
Miranda

Hey Charlie,

Thanks for dropping by. I personally don't use prepaid debit cards. I prefer credit cards. But mainly because I like to rack up the rewards -- without paying interest. So many prepaid cards come with fees and hassles. If I were to choose a prepaid card, though, I would probably use the Mango card, and deposit money regularly to avoid the fee. The yield is pretty solid. I would use it as a savings tool.

Guest's picture
SongtressBMWRedheadBella

I agree.
IMO the Wired Plastic VISA, look great,and always sustain reasonable fee(s)for per upload,still has not risen,at all. i love it. the yes benefit(s)quite enticing is true.and that is a reason why i always shall utilize when warranted,wired plastic.i know it has some bemoaning over it,not me, and i've been with wired for years.
I LOVE-VISA WIRED PLASTIC DEBIT.I.E. if i cancel a purchase etc.awaiting my store refund within usually 1 to 2 days they say it will arrive on my VISA debit card and it usually is on there same/next day! I check on net it appear on mi card so fast!
I love that. no problem there at all.(as other cards i.e. NET SPEND is the worst debit where,you have to literally mail in info,just to sign up at times,yet is not even a real credit card,stupid imo. Wired circumvent my mailing address,and everything so fast,no big deal to them,as far as that goes. AMERICAN EXPRESS Is ok but not as great as wired.
...
I used to love more the WESTERN UNION MONEY WISE DEBIT, no more. (they used to allow pymt.to be added up to ten times a day! IF your expectig wired pymt.from w.u.
now they cut it out,and really change way too much. I rarely use it anymore,
only mi wired plastic,when i m not using mi bank account(s) at wells fargo.
I love that wells is letting me now make pymt. directly(as a payee) to W.Plastic no fee
at all! i love this card.I really hope Wired Plastic VISA remain longer than the few years i have remain a loyal happy satified VISA DEBIT customer.
adios.

Bell

Guest's picture
Shari

I know that not everyone can get it, but for those who can, I highly recommend the USAA Prepaid card. It's intended especially for tweens & teens as a way to learn to handle their money. There are no fees & it's really simple to setup online.

https://www.usaa.com/inet/pages/youth_prepaid_spending_card_main

Guest's picture
Robb

I'm thinking of getting one of these to use for purchasing gas, right now the way I budget is the envelope system, but I think this would be more convenient since I could use pay at the pump.

Guest's picture
Guest

I use the Rush prepaid debit card. There is free direct deposit and you can use it to pay bills online with no cost.
Now there are some costs involved. There is an activation fee. If you add money to the card (Walmart) there is a fee. Every time you use the card for a swipe purchase there is a fee but there is no limit to the amount you an use or take as cashback. I would take out all the money I could when I needed it.
But I found that I could manage my money easily. The fact there was a fee on each swipe stopped many of my impulse buys, saving me money.

Guest's picture
Grace

Someone has stolen my debit card information and has been using it for online purchases. This card was used primarily for bill pay and online prchases. My brother recommended that I stop using my debit card online and suggested that I buy amazon or itune gift cards instead. Which would be more advantageous - A prepaid credit card or amazon/itune gift cards? Thank you in advance for your insight.

Guest's picture
Miranda

I agree that you should not use a debit card attached to your checking account online. The protections with a branded debit card, while similar to those offered by credit cards, are not quite the same. And it pulls from your checking account, so that can be a serious problem. A prepaid DEBIT card can be an option. You can also use PayPal at many merchants. Also, a regular credit card can be a good choice.

Guest's picture
Nat

I'd be more in favour of giving people common sense advice that help them to become financially savvy. As a product, Prepaid Debit Cards are simply not a good idea!

Guest's picture
Guest

how do you recommend the american express, especially for a teen, when it is accepted, like, NOWHERE????

Guest's picture
Ziah

I would use any of these cards except Greendot. Greendot card has the worst customer service ever and they have fee's for everything. I was using the card outside of the USA and they charged double fee's for using the card at ATM's with a foreign transaction fee + an ATM fee. They charged a fee for every single time I used the card. Then they decided that their card could not be used outside of the USA. First they restricted its use to ATM's which was frustrating and then just about 6-8 months later, they restricted the card completely from being used outside the USA. Furthermore, they didn't give any warning and I was using this card as a primary card. They didn't email these changes to anyone, they just stopped their use which left me in Ukraine without any way to get money, even from a bank which left me stranded in a foreign country with no money. If it wasn't for the ability to take the money off my card using PayPal and then having a family member Western Union the cash to me, I would have had no money and stuck in a foreign country. What's more is that Greendot customer service reps are some of the nastiest people to ever deal with. They don't care at all about the customer and have a whole set of 'canned responses' so they don't have to actually 'talk' to you. They don't care about anything. They just charge their fee's and kick you when you are down. Want to be treated like total dirt? Buy a Greendot card. As for me, I switched to AMEX Bluebird. It's not accepted everywhere but I know they wont leave me stranded somewhere and use their card agreement as an excuse. Bottom line: Greendot is the worst.