A reloadable prepaid card is a must-have financial tool if you're looking to control your spending and keep your disposable income separate from your main transaction account. Simply put, a reloadable prepaid card is like your checking or savings account debit card, but its balance is separate from a bank account.
When searching for prepaid cards, three options tend to pop up:
- A prepaid credit card — This requires a credit application and isn't classified as a debit card
- A gift card — You would gift this card type to someone else. It has limited options in terms of where you can use it, and you can't reload these cards
- A reloadable prepaid card — Banks and card companies issue these cards. This is a flexible, standalone debit card solution and also the one we're covering in this guide
You can purchase reloadable prepaid cards at major retailers such as CVS, Walgreens, and Walmart. While banks offer these for free, they tie these free cards to your bank account and may have a minimum balance requirement. Prepaid cards also tend to have fees for the following transactions:
- Activations
- Reloading
- ATM withdrawal
- Overdraft fees
Where to buy a reloadable prepaid card
Retailers and banks partner with major card companies such as Visa®, Mastercard, and American Express to offer their customers prepaid cards. These are some of the more popular ones:
Bluebird by American Express
Bluebird by American Express offers several ways for users to save on fees. The card doesn't have monthly fees, and users don't pay ATM fees when they withdraw from ATMs in the partner network. They can also bypass the cash deposit fee when depositing at Family Dollar locations. It's also a great travel option thanks to its $0 foreign transaction fees.
CashApp Debit Card
The CashApp Debit Card works off CashApp and not a checking or savings account. The card itself is free, and there are no hidden monthly costs. However, there is a $1 deposit fee when you deposit cash at retailers and a $2.50 fee for out-of-network ATM withdrawals.
Netspend® Visa® Prepaid Card
The Netspend® Visa® Prepaid Card1 is $9.95 to purchase at certain retailers, and the online Visa® prepaid card is free. It requires no minimum balance, and there's no activation fee2. There are three fee structures to choose from:
- $1.95 pay-as-you-go plan3 — This option costs $1.95 for each card transaction, and additional charges apply to certain loads and withdrawals.
- $5 reduced monthly plan3 — This plan is available to cardholders who receive at least $500 in payroll or government benefit direct deposits in a calendar month. To receive the reduced $5 monthly fee, you must actively enroll in the Reduced Monthly Plan — it is not automatically applied. If you are on the Pay-As-You-Go plan, you will also need to enroll to take advantage of this rate.
- $9.95 standard account plan3 — This plan applies to regular prepaid cards that receive direct deposits of less than $500 per month, and enroll to take advantage of this rate.
Serve American Express Prepaid Card
While Serve offers a variety of reloadable Visa® prepaid card options, the Serve American Express Reloadable Prepaid Card offers benefits worth looking into. There are three options:
- Free direct deposits — No charges on direct deposits if you maintain a minimum threshold of $500 per month. Otherwise, $6.95 per month and $3.95 cash reload fees. There are no transaction fees, and ATM fees are waived when using one of 45,000 partner ATMs.
- Free reloads — There are no reload fees when done at one of the 45,000 locations. There is a monthly fee of $6.95.
- Cash-back option — Users can earn up to 1% unlimited cash back on their spending with this prepaid card. There's a monthly fee of $7.95 and a cash reload fee of $3.95 per transaction.
Walmart MoneyCard
The Walmart MoneyCard is available online and has a one-off card purchase card fee of $1. To avoid the monthly fee of $5.94, simply meet the minimum monthly deposit requirement of $500 via direct deposit. Expect other fees such as ATM and teller withdrawal, deposit, and overdraft fees.
7-Eleven Trans@ct Card
7-Eleven Trans@ct Card offers a pay-as-you-go plan that charges $1 to $2 per transaction but carries no monthly fee or a $5 monthly plan that waives the transaction costs.
Famzoo Prepaid Cards
FamZoo Prepaid Card includes a subscription for the whole family and includes up to four cards. Users can pay $5.99 per month, $25.99 for six months, $39.99 for 12 months, or $59.99 for 24 months. It's especially convenient for parents who want to use the cards for kids' allowances.
Advantages of buying a reloadable prepaid card
Apart from their flexible nature, there are several other reasons you may want to buy reloadable prepaid cards:
- Control your budget — You decide how much to load on the card, which ensures you remain within your budget. Many prepaid options also offer pay-as-you-go or monthly fees to suit your spending habits and needs.
- No lengthy credit applications or credit risk — Prepaid cards don't require a credit application or credit check. There's also no debt and debt-related costs, such as interest and overdraft fees.
- Security — Keep your fun money separate from your regular transaction account. This reduces the chance of accidentally overspending or giving would-be criminals access to your checking or savings accounts.
- Convenience — You can use most prepaid cards anywhere you use your regular debit cards. Some even offer travel advantages such as zero foreign transaction fees.
- Teaching tool —Prepaid cards are ideal to teach children and teens about money in a safe, cash-free way.
Disadvantages of buying a reloadable prepaid card
While they have their benefits, it's important to be aware of some of the drawbacks before you buy prepaid cards.
- Pricey — Pricing has a lot to do with which prepaid card is suitable. Some can be pricey with monthly fees, transaction fees, reload and deposit fees, and even balance check fees. Other fees to be aware of include overdraft or account inactivity fees, or cash withdrawals.
- Reduced consumer protection —Credit cards offer consumers many incentives, such as buyer protection and insurance. This isn't always available on prepaid cards.
- Cumbersome processes —Some prepaid cards only work at certain retailers. Also, reloading, withdrawals, and deposits are often restricted to certain processes and may require the user to go to one of the partner locations to complete.
Fees to watch out for with prepaid cards
There are several fees to look out for before deciding on a prepaid card:
- Card purchase
- Monthly account
- Transaction
- ATM and teller withdrawals
- Direct deposits and cash deposits
- Account inactivity
- Overdraft protection
- Customer service, such as live agent
- Check capture
- Deposit readiness
- Money transfers
- Bill payments
- Declined transactions
- Cash pickup
- Foreign transactions
- Card replacements
Is a prepaid card the only option?
While a prepaid card is a convenient addition to your wallet, it's important to consider the options. Other transaction options include:
- Checking and savings debit cards — if you want to reduce costs and don't mind access to your bank account
- Prepaid credit card — if you want to build your credit score
- Online bank accounts — such as the Netspend® Debit Mobile Account
When you're in the market for a fresh way to manage your budget, keep your teen's spending within limits, or simply want to create an effective way to keep your main account secure, we can help you find a prepaid card solution tailored to your unique needs.
