The Complete Guideto the Best Prepaid Debit Cards
Prepaid debit cards are an excellent option to anyone who doesn’t qualify for a credit card or if they just don’t want one. These cards are not just convenient, but they will also save you from sinking deep into debt. With prepaid debit cards, the cardholder uses cash that is already deposited into the account and not a short-term loan as is the case with credit cards. And since prepaid debit cards are not operating on loans, they are much easier to qualify for which more people can get these cards.
There are so many prepaid debit cards in the market today. The cards come with different features and perks. Some of these cards also come with fees that you need to be aware of before you even start making your application.
Here is what you need to consider if you are in the market looking for a prepaid debit card:
Prepaid debit card companies are notorious for fixing their cards with lots of fees that can become really expensive. For instance, it’s hard to comprehend the value of a card that charges a monthly fee of more than $6. Ideally, a prepaid debit card should not have any monthly fees. However, some companies offer excellent perks which make some of the monthly fees that they apply to appear reasonable. Before you consider a prepaid debit card with a monthly fee of any amount, it is vital that you ask yourself; what unique benefits does it offer over the other $0 monthly fees available in the market and are the benefits worth it? You should also look at any additional fees charged, e.g. transaction fees, cash reload fees, bill payment fees, inactivity fee, cancellation fee, paper statement fee, etc. Make sure that you do all your calculations before you settle for any one card.
- Widely accepted
The whole point of a card is to make your shopping, traveling, hotel and other expenditures more convenient. You will be limiting yourself if you get a card that is not widely accepted.
- Card loading options
The ideal prepaid card should offer multiple card loading options that are convenient to the holder.
Sending money to your family and friends should also be easy.
The ideal card shouldn’t come with direct deposit fees.
Who are Prepaid Debit Cards for?
Anyone can qualify for a prepaid debit card, but that doesn’t make them ideal for everyone. The following are some of the categories of people who are likely to get the best out of prepaid debit cards:
- Teenagers – Prepaid cards are a decent option for teenagers for various reasons. With these cards, overspending teenagers will never end up in debt because they can only spend as much as is contained in the account. A parent can also set a maximum limit for the amount that can be spent with these cards. This will be very useful in curbing overspending behaviors. Student are always going on trips whether it’s for educational or recreational purposes. The risk of losing cash on such trips very high. If they are using a prepaid card instead, the risk of losing money minimized. In the event that the card is lost or stolen, a simple phone call to the card issuer can block the card, and this should protect the money contained in the card.
- Everyone that struggles with overdrafts – A prepaid debit card will be very helpful if you tend to lose so much money through expensive overdrafts.
- Individuals with bad credit record – The difference between credit and prepaid cards is that the former operates on a loan while the later use money deposited in the account. Every time a loan is involved, it’s almost guaranteed that the card issuer will pull your credit record before approving your application. Getting a decent credit card with poor credit report is very difficult if not impossible. A prepaid debit card allows you to enjoy the convenience of cards without charging you hefty fees as is the case with most credit cards for bad credit. The card should also help you to readjust your budgeting and overall spending behaviors.
- Tourist. You may also want to consider getting a prepaid debit card if you are going on holiday abroad. This card will secure your money as you’ll no longer have to rely on cash which can get lost or stolen anywhere. Also, having a prepaid debit card and not a credit card will save you from falling into debt by spending more than you had planned to.
Top 3 Prepaid Cards
- American Express Serve Cash Back
Rarely do you come across a prepaid card that offers cash back rewards on everyday expenditure yet the American Express Serve Cash Back provides just that. If your monthly expenses that can be covered by this card are at least $595, you’ll be eligible for the 1% cash back this card offers on all purchases. This reward can easily cover the $5.95 monthly fee charged before you start racking up some profits.
The American Express Serve Cash Back is also a great choice due to the additional protection it offers to its holders. For instance, if you purchase an item and it is stolen within 90 days of the transaction, American Express will refund up to $10,000 per incident. The cardholder is also eligible for up to $50,000 purchase protection per calendar year.
All American Express Serve Cash Back cardholders will also enjoy the free ATM withdrawals in all MoneyPass ATMs. These ATMs are available in more than 32,000 locations across the country. It is also possible to open a subaccount for your spouse or a family member. You won’t be charged a thing for this!
There are also some drawbacks that you need to be aware of. For example, each transaction done at non-MoneyPass ATMs may attract a fee of $2.50. Loading cash onto the card will also cost you $3.95 unless you are doing so through a bank transfer or direct deposit.
- Chase Liquid Card
The Chase Liquid Card is up there among the most flexible cards in the market. You can load this card for free through five different ways, i.e. up to $4,000 cash reloads at Chase ATMs and branches direct deposits, transfers from savings or checking account, selected check deposits and transfers from other Chase Liquid Cards.
The card also offers additional convenience that comes with all cards operating on the visa network. This makes the card a good choice for everyone who’s in a location where most stores don’t use the American Express network. Most major cities do accommodate both American Express and Visa networks though.
Also, unlike the American Express Serve Cash Back where the cardholder can only withdraw for free through the MoneyPass ATMs, the Chase Liquid Card operates through the 16,000 Chase ATMs and 5,100 branches. This makes it an excellent alternative to people who have better access to Chase ATMs and branches and not MoneyPass ATMs.
The Chase Liquid Card charges a $4.95 monthly fee which will be waived if you link the card to certain Chase checking accounts. Transactions done in non-Chase ATMs will also attract a fee of $2.50.
- Bluebird by American Express
Bluebird from American Express is a very affordable prepaid card to have. It charges no monthly fees, and you’ll get free cash reloads at Walmart. You can also load cash to the card for free through direct deposit, mobile check deposit done with Ingo Money and online debit card transfers.
If you are a frequent traveler, you will love the fact that you can transact using Bluebird by American Express card at no fee whatsoever!
American Express allows you to open up to four family accounts through this card. You can also create a SetAside Account into which you can save money for a future purchase.
You can withdraw cash for free through MoneyPass ATMs for free. A fee of $2.50 will apply on each transaction done via non-MoneyPass ATMs.
David is a financial expert who graduated from the University of Fordham (Master in Finance) in 2001. He has 10+ years of experience in private equity and wealth management. With strong expertise in senior-level financial planning, personal financial analysis, and mortgages, David knows his way around personal finance. Before working at CCR he used to be a financial analyst at McKinsey.
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