Monday, June 20, 2016

NerdWallet’s Best Prepaid Debit Cards of 2016

A prepaid debit card can take the place of a bank account or credit card if you don’t have one. Even people with bank accounts have started using these reloadable cards as budgeting tools.

When looking for the best prepaid debit card, consider a card’s protections along with its fees, features and availability. Here are the prepaid cards that top our list in various categories.

Best overall prepaid debit card

BLUEBIRD BY AMERICAN EXPRESS AND WAL-MART

Bluebird, a prepaid account offered through American Express and Wal-Mart, has few fees while offering solid features both for people who have  bank accounts and those who don’t. Two notable perks include no-bounce check writing and the ability to have a master account linked to four “family” accounts, available to anyone 13 or older. The card also has five free loading options, including cash deposits at Wal-Mart stores and mobile check deposit through the Bluebird app. Its payment options include online bill pay, checks and online transfers to others with a Bluebird card. Withdrawals cost nothing if you go to one of more than 24,000 MoneyPass ATMs, but they cost $2.50 at other ATMs and $3 to $9 at Wal-Mart.

The Bluebird card has purchase and fraud protections and works wherever merchants accept American Express. To get the card, register for a Bluebird account online or by mobile for free, or buy a setup kit at a local Wal-Mart store for $5. No credit check is required, and there’s no monthly fee.

Best prepaid card for cash reloading

AMERICAN EXPRESS SERVE FREE RELOADS

Although similar in its features and protections to the Bluebird, the American Express Serve Free Reloads prepaid card stands out as more cash-friendly. You can load your card with cash for free at more than 45,000 locations nationwide, including Rite Aid, Wal-Mart and participating 7-Eleven stores. The trade-off is a $4.95 monthly fee, except in Texas, New York and Vermont, where there is no fee. This prepaid card also has mobile check deposit and bill pay services and allows for up to four “subaccounts” linked to a master account for individuals 18 or older (19 in some states). You can buy this card at select retailers for up to $3.95 or order it online for free. As with other American Express prepaid cards, no credit check is required.

Best prepaid cards for cash access

AMERICAN EXPRESS SERVE

American Express’ basic Serve card has low fees and offers free use of the MoneyPass ATM network. It costs $2.50 to withdraw money or check a balance at other ATMs. There’s a $1 monthly service charge, which can be waived if you set up a direct deposit of $500 or more each month. Despite this cheap monthly fee, cash reloading costs up to $3.95 at participating stores. Fraud and purchase protection come with this card, and no credit check is required.

KAIKU BY THE BANCORP BANK

The Kaiku Visa Prepaid Card, provided by Kaiku Finance and issued by The Bancorp Bank, participates in the Allpoint ATM network, giving cardholders free access to 55,000 ATMs. Kaiku’s mobile app lets you find the closest ATM, and you can use the app to check your balance, pay bills, transfer money to friends and deposit government or payroll checks using a third-party service called Ingo. Mobile check deposits take 10 business days to process unless you pay a 1% fee ($5 minimum) to Ingo to speed up the funding. You can use the card wherever Visa is accepted.

The fees are straightforward and low compared with most prepaid debit cards. You’ll get hit with a monthly fee of $3 unless you load at least $750 on the card each month. Two other notable costs are a $1.45 out-of-network ATM fee and a charge ranging from $2.95 to $4.95 for loading cash at Visa ReadyLink and MoneyGram locations. There’s no purchase fee and no credit check when you apply for the card.

Best prepaid cards for customers with bank accounts

While the prepaid debit cards above are great both for people with bank accounts and those without, people who have bank accounts have more resources. They can make online transfers from their accounts, relying less on cash reloading and thus avoiding fees. Because prepaid debit card customers who have bank accounts tend to be in a higher income bracket, according to a 2015 Pew Charitable Trusts report, they may also be in a better position to consider rewards in addition to basic features and fees.

CHASE LIQUID

The Chase Liquid prepaid account has a robust suite of online and mobile services, but without the overdraft fees or minimum balance requirements that checking accounts have. This makes the Chase Liquid card a great spending and budgeting tool. The card carries no purchase fees or Chase ATM fees, lets you spend up to $3,000 daily and works wherever Visa is accepted, except for rentals of cars, equipment and furniture. You can load money in various ways, including direct deposit, cash, checks and transfers from another Chase account. When you make purchases, the card protects you from fraud. Although you can deposit checks, you can’t write them. But if you’re comfortable online, the card will let you use online bill pay and transfer funds to both Chase and non-Chase accounts.

Despite its perks, the card may not be the right choice for everyone. For one, you either have to link a Chase checking account or pay a monthly service fee of $4.95. Plus, if you’re not near one of the bank’s 5,400 branches or more than 15,500 ATMs in the 25 states where it operates, it may be difficult to avoid ATM fees. You need to visit a Chase branch to open this card, and there is a credit check when you apply, meaning that approval is not guaranteed.

AMERICAN EXPRESS SERVE CASH BACK

As one of the first prepaid debit cards with rewards, this American Express Serve card lets you earn 1% cash back when you make purchases online or in stores. Coupled with the protections and features it shares with other Serve cards, such as online bill pay and mobile check deposits, the Cash Back can be a good choice for someone who wants a bit more out of a prepaid card.

The rewards might not always outweigh the costs, though. There’s a monthly fee of $5.95 in most states, which comes to $71.40 per year. Plus, if you need to deposit cash and don’t have a checking account, putting cash on this card can cost you up to $3.95 each time. Customers who have a bank account can link the Cash Back card to a debit card and transfer money for free.

» MORE: See our guide on prepaid debit cards

What about the others?

As you consider the best prepaid card for you, some factors may be more important than others. Our list excludes some popular prepaid cards such as ACE Elite, Mango, RushCard and some Green Dot prepaid cards, including the Walmart MoneyCard. Although these cards generally have nationwide availability and don’t require credit checks, they tend to offer fewer free reload options and protections. They also generally charge at least one regular transaction fee that you can’t avoid, such as fees for ATM withdrawals, cash reloads or cashing checks.

As useful as they can be, prepaid debit cards tend to have more fees than bank debit or credit cards, and they don’t have the same strict federal regulations.

At the same time, you don’t have to worry about the interest rates that come with credit cards or the overdraft fees that can accompany bank accounts. It’s also easier to get a prepaid card since they don’t usually require a credit check. Because prepaid debit cards aren’t credit cards, though, you can’t build credit with them. For that, you’d want to consider a secured credit card.

Spencer Tierney is a staff writer at NerdWallet, a personal finance website. Email: spencer@nerdwallet.com. Twitter: @SpencerNerd.

This article was updated. It was originally published in November 2015.

METHODOLOGY

We looked at more than 40 reloadable prepaid debit cards offered by some of the biggest banks, credit unions, and credit card and prepaid debit card issuers. The cards that made this list had the best combination of low fees, features, protections, nationwide availability and flexibility in reload methods, especially for purchase and ATM transactions. All card issuers in this roundup insure customers’ money through the Federal Deposit Insurance Corp. or partner with a bank that does.

Image via iStock.

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