Prepaid debit cards are a great tool for sticking to a budget or as an alternative to carrying cash. You can use these reloadable debit cards in multiple ways, just like other payment methods.
If you have a hard time qualifying for a traditional bank account or prefer to keep your money outside of banks, a prepaid debit card might be a good option. They are also a great way to give kids some spending money if you don't want them carrying cash all the time.
What are Prepaid Debit Cards?
A prepaid debit card is a payment card that isn't linked to a bank account, like a checking account. Instead, the card is preloaded with funds and used like a debit card until the funds run out.
Prepaid cards are sometimes referred to as pay-as-you-go cards because you can refill the card and continue to use it long-term.
How Prepaid Debit Cards Work?
With prepaid debit cards, users load funds onto the card in advance, often with cash or from another financial account. But they aren't attached to a checking account, so there's no need for a bank account if you don't want one.
Spending on the card is limited to whatever you've loaded onto the card, acting as a built-in safeguard you don't find with credit cards.
Once loaded with funds, you can use the card to pay for transactions online and in-person at stores the same way you would a credit or debit card. People typically don't realize you're using a prepaid card because they look like other payment cards and feature the same card issuer logos as other cards.
Prepaid cards don't require a credit check to obtain but don't do anything to improve your credit.
Prepaid debit cards are also great for kids since the spending is limited to what you put on the card. And it is not tied to your checking account so all of your money is not at risk if the card is lost.
Common Prepaid Debit Card Fees
One of the drawbacks to prepaid debit cards is the fees you could potentially pay. While many banks offer no-fee bank accounts and debit cards, it's rare to find prepaid cards without fees attached.
Some of the fees you may incur with a prepaid debit card include:
ATM withdrawal fee
Balance inquiry fee
Paper statement fee
Foreign transaction fee
Prepaid card fees can add up quickly depending on the card you choose. Always look at the fees associated with a card before selecting the best prepaid debit card for you.
Best Prepaid Debit Cards
Not all prepaid debit cards are created equal. Here's a look at some of the best prepaid debit cards for consumers right now.
Bluebird by American Express: Best for no Monthly Fees
Bluebird is an American Express-issued prepaid card issued through a partnership with Walmart. The card features no monthly fees and access to 30,000+ ATMs across the U.S. The card is reloadable at any Walmart checkout register or MoneyCenter for free. You can also add money at thousands of other retail locations, like CVS and Walgreens, for a fee.
The Bluebird card is not only good for shopping, but you can also use it to pay bills online and send money to other people who can then pick it up at their neighborhood Walmart. As an Amex card, you also get access to extra perks like purchase protection and roadside and emergency assistance. This card is great for individuals who frequent Walmart, but you could end up paying fees if you plan to reload it elsewhere or use out-of-network ATMs.
American Express Serve FREE Reloads: Best for Cash Reloads
Serve is another Amex prepaid card. Similar to Bluebird, the card comes with extra Amex benefits, including fraud protection and FDIC insurance. The card carries a $6.95 monthly fee but also comes with free cash reloads at over 45,000 retailers across the U.S.
You can also transfer money to the card from an existing bank account for free. There's also no fee for direct deposits or online bill pay features.
Netspend Prepaid Card; Best for Direct Deposits
Netspend Prepaid cards are available through Visa and Mastercard. Cardholders can receive direct deposits up to two days faster with the Netspend card. The card also earns cash back on select spending.
Adding funds to your Netspend card is easy with over 130,000 reload locations across the country. Load fees vary from zero to $3.95, depending on where you reload the card. You can also load checks to your card from your phone through the mobile app.
The card features a unique fee structure with two payment options. You can opt for a monthly plan, which charges $9.95 a month but doesn't charge anything on purchases. You can also choose the pay-as-you-go plan with no monthly fees but a $1.50 charge per purchase using the card.
Walmart MoneyCard: Best for Walmart Shoppers
Another prepaid card for Walmart shoppers is the Walmart MoneyCard. This prepaid debit card comes with a $5.94 monthly fee waivable with direct deposits of $500 or more the previous month. It's also one of the few prepaid cards to offer overdraft protection and earn interest.
The Walmart MoneyCard also earns cash back on select Walmart purchases. The card earns
3% cash back at Walmart.com, 2% cash back at Walmart gas stations, & 1% cash back at Walmart stores (up to $75 annually). You can add money to the MoneyCard at Walmart stores, through the MoneyCard app, and MoneyPak. Keep an eye out for fees, as some reload methods may charge an extra fee.
If you regularly receive enough direct deposits to avoid the monthly fee, this card could be an excellent tool for shopping and paying bills without a bank account.
Greenlight: Best for Kids
Greenlight is a debit card for kids. It's more like a traditional bank account than a prepaid card, but parents can add money at any time. They can also set up the account to allow or limit usage as needed. This includes blocking specific spending categories, setting ATM guidelines, and enabling third-party payment apps like Apple Pay and Google Pay.
Parents control the account but can give their kids access to specific features to help them manage their money. Parents and kids use the Greenlight app to access the account. With Greenlight, kids can view balances, set savings goals, and more. Greenlight accounts cost $4.99 per month.
Beyond the debit card, Greenlight accounts also come with unique extra features to maximize savings like round-ups on purchases, parent-paid interest, and chore management.
Where to Get a Prepaid Debit Card
You can buy prepaid debit cards online and from local retailers. You can also find prepaid debit cards at your local bank branch. Some employers use prepaid debit cards to pay employees instead of paychecks or direct deposits.
Retailers, like Walmart, allow you to reload funds onto your card in-store.