Prepaid debit cards are just one of many payment options consumers have available to them, but they’ve become relatively popular in recent years. According to the 2019 Federal Reserve Payments Study, prepaid debit cards made up 10.5% of all card payments in 2018.
Whether you want an alternative to a credit card, don’t want a checking account, or are having trouble getting approved for a bank account, a prepaid debit card can be a worthy alternative. But many prepaid cards charge hefty fees, which makes them difficult to justify compared to a free checking account. The best prepaid debit cards charge fewer fees, or at least provide enough value to make the costs worth it.
Let’s take a look at what a prepaid debit card is, how a prepaid debit card works, and what you should consider when you’re deciding whether a prepaid debit card is right for you.
What are prepaid debit cards?
Prepaid debit cards are a type of payment method that functions similarly to a traditional debit card. Instead of being tied to a checking account, though, a prepaid card is its own account, and you can only use money you’ve loaded onto it. In this sense, it’s similar to a reloadable gift card.
Prepaid cards can be a great alternative to credit cards if you’re worried about overspending. They can also make it easier to budget. You can load them with a set amount based on your weekly or monthly spending so you don’t accidentally spend all the money in your bank account.
Finally, a prepaid debit card doesn’t require a checking account or a credit check. So if you have a poor credit score or you’ve had some issues with bank accounts in the past and can’t get approved for a new checking account, a prepaid debit card can make it possible to still have a non-cash payment method in your wallet.
That said, many prepaid cards charge a lot of fees, including:
- Purchase fees
- Activation fees
- Reload fees (though some load options are typically free)
- Transaction fees for everyday purchases
- Balance inquiry fees
- ATM fees
- Monthly fees
The best prepaid debit cards aren’t without fees entirely, but they’re typically on the lower end, and some provide value in the form of cashback rewards for using your debit card or other benefits to make the fees worthwhile. As a result, it’s important to research your options and compare cards to make sure you’re getting the most value based on your preferences and spending habits.
Prepaid debit cards vs. regular debit cards
The primary difference between a prepaid debit card and a regular debit card is that a regular debit card is tied to a checking account with a bank or credit union. You can spend up to the amount of cash you have in your bank account, typically with an option for overdraft protection if you want it.
In contrast, prepaid debit cards typically only allow you to use money you’ve loaded onto the card. Although it’s possible to overdraft on a prepaid card account, most prepaid card issuers don’t allow it.
Prepaid debit cards also aren’t the same as secured credit cards, primarily because they don’t offer a line of credit that you can use and pay off over and over again. With a secured credit card, you’re required to submit a deposit to get approved, but that money is only used as collateral for your credit line, and it’s returned to you when you close the account, or possibly sooner than that.
That said, prepaid cards typically run on the same payment networks as credit cards and traditional debit cards, including Visa, Mastercard, and American Express.
The best prepaid debit cards
There are several financial institutions that offer prepaid debit cards, but as with credit cards and even the best checking accounts, not all of them are created equal. As you look for the right fit for you, here are our top five prepaid debit cards to help get you started on your search.
|Card name||Monthly fee||ATM access||Free reload options||Other features|
|Bluebird||None||30,000+ ATMs nationwide||Direct deposit; cash or debit card at Walmart, online with a debit card; mobile check deposits (10-day waiting period)||Purchase protection; roadside assistance; access to Amex Offers and American Express Experiences|
|American Express Serve Cash Back||$7.95 (no fee in Texas, New York, and Vermont)||30,000+ ATMs nationwide||Direct deposit; bank transfer; mobile check deposits (10-day waiting period)||Unlimited 1% cash back on all purchases; purchase protection|
|Mango Prepaid Mastercard||$5 (waivable if you have at least $800 in direct deposits monthly)||No free ATM network||Direct deposit; bank transfer; PayPal transfer||Earn up to 6.00% (as of Sept. 7, 2022) APY with a Mango Savings account|
|Movo Virtual Prepaid Visa Card||None||Thousands of ATMs nationwide||Direct deposit; bank transfer; debit card transfer; PayPal transfer||Allows cardholders to create secondary virtual cards to use online|
|Fifth Third Access 360° Reloadable Prepaid Card||$4 (waivable if you have a Fifth Third checking account or at least $500 in direct deposits monthly)||50,000+ ATMs nationwide||Direct deposit; cash deposit at Fifth Third branches and ATMs; bank account transfer from a Fifth Third account||Allows joint account owners|
Bluebird: Best for low fees
Bluebird by American Express is one of the least expensive prepaid debit cards available. The card doesn’t charge a monthly fee or a fee to get the card online or activate it. There is a fee of up to $5 to get the card if you buy it at a retail store.
Free reload options include direct deposit; cash or debit card at Walmart; and online with a debit card and mobile paper check deposits. Keep in mind that there’s a 10-day waiting period with mobile deposits. If you want your money faster (within minutes), there’s a fee of 1% or 5% of the check amount (with a $5 minimum), depending on the type of check.
You can also add cash at select retail stores, but there’s a fee of up to $3.95 for this option. The card’s ATM fee is $2.50 for out-of-network ATMs, but there are more than 30,000 free locations in the MoneyPass ATM network.
In addition to low fees, the card offers a lot of perks, including purchase protection and roadside assistance. You’ll also get access to Amex Offers, which provides opportunities for savings on shopping and dining, as well as to American Express Experiences, which provides access to sports and entertainment events.
American Express Serve Cash Back: Best for rewards
If you’re afraid of missing out on credit card rewards, look no further than the American Express Serve Cash Back. The card offers unlimited 1% cash back rewards on every purchase you make.
There is a $7.95 monthly fee in most states, but if you spend at least $795 every month on the card, you’ll earn that money back. There’s no fee to get the card online, but you may pay up to $3.95 to get it at a retail location.
You can load money onto your card for free via direct deposit, bank transfer, and mobile check deposits. Like the Bluebird card, there’s a 10-day waiting period for mobile deposits, but you can get the money faster if you pay a fee of 1% or 5% of the check amount (with the minimum fee being $5).
You can also add cash at select retail stores, but there’s a fee of up to $3.95 for this option. In addition to cash back, the card also offers purchase protection.
Mango Prepaid Mastercard: Best for saving
The Mango Prepaid Mastercard doesn’t offer a lot of benefits on its own. There’s no free ATM network, and ATM withdrawal fees start at $3. However, once you have this card, you can then add a Mango Savings account and earn an amazing interest rate of up to 6.00% (as of Sept. 7, 2022) APY on your savings.
To qualify, open a Mango Savings account with $25 or more, make at least $1,500 in signature purchases monthly (purchases that require a signature, not a PIN) and maintain a balance of at least $25 at the end of each month. If you make more than $750 in signature purchases in a month but don’t meet the $1,500 requirement, your APY will be 2.00% (as of Sept. 7, 2022). These rates apply to the first $2,500 in savings. Beyond that, the APY is 0.10% (as of Sept. 7, 2022).
Free reloading options include direct deposit and transfers from your bank or PayPal accounts. You can also load cash at Moneygram, Greendot, and Readylink locations, but a fee may apply. The card charges a $5 monthly fee, but you can get that waived if you have at least $800 directly deposited into your account every month.
Other fees to watch out for include an $8 inactivity fee, a $2.50 bank teller withdrawal fee and a $10 closing fee when you close your account.
Movo Virtual Prepaid Visa Card: Best for online shopping
This Visa debit card is primarily a virtual card to use online. Although you can order a physical card, there’s a charge of $5.95. Other than that, the card is relatively light on fees with no monthly fee, no transaction fee, and no ATM fees if you stick to the Visa Plus Alliance network.
You can also load cash onto your card for free via direct deposit, transfers from your bank account, debit card and PayPal account, and cash reloads at GreenDot locations (GreenDot may charge a fee). You can also load cash at Visa ReadyLink locations, but there may be a fee.
One of the biggest perks of the card is that you can create virtual secondary cards to use online. You can create these cards with exact denominations. That makes it possible for you to make purchases online or take advantage of online bill pay options, and if someone gains access to your virtual card number, they won’t be able to access all the money in your primary account. That makes this card a great fit for someone worried about protecting their personal identity and finances.
Fifth Third Access 360° Reloadable Prepaid Card: Best for free reloads
If you’re a Fifth Third Bank customer, this prepaid card can be an excellent option. The card’s $4 monthly fee is waivable if you have a checking account with the bank or $500 or more in direct deposits every month.
The card has a wide network of free ATMs, and all of its reload options are free, including direct deposit, cash deposits at Fifth Third branches and ATMs, and bank account transfers from a Fifth Third bank account. There are also no overdraft fees.
The drawback is that the card is available only in the 10 states in which Fifth Third Bank operates. The states where Fifth Third Bank operates are Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, and West Virginia.
There are a lot of prepaid debit cards on the market, and we did a lot of research to find the best prepaid cards based on a variety of factors.
For starters, we focused on cards that either don’t have a monthly fee, make it possible to waive the monthly fee, or offer enough value to make up for it. We also left out all prepaid cards that charge fees when you use them to make purchases.
We also looked at the benefits some of these cards offer, including several free reloading options, multiple ways to transfer money, spending rewards, savings options, and more.
Alternatives to prepaid debit cards
Although prepaid debit cards offer some benefits you may not be able to get with a credit card or traditional debit card, they’re not the right fit for everyone. Here are some potential alternatives to consider.
Second-chance bank accounts
If you’re looking at prepaid cards because you can’t get approved for a checking account, consider second-chance bank accounts. Banks and credit unions that offer these accounts understand it can be tough to get approved if you have negative marks on your ChexSystems report. This system chronicles your banking history like the credit bureaus keep track of your credit history.
A few of the best banks that offer these types of accounts include Green Dot Bank, Radius Bank, and Wells Fargo. Also, look at community banks and credit unions in your area for more options.
Chime is a financial services app that operates primarily online, and it offers some great account options that differ from traditional bank accounts. 3
A Chime account doesn’t charge a monthly fee, overdraft fee, or foreign transaction fee. You may be able to receive your paycheck up to two days early, 2 and you’ll also have the option to save more by automatically setting aside a percentage of your paychecks into your Chime savings account. You can also round up every purchase you make on your debit card to the nearest dollar, with the difference deposited into your savings account. 1
How to choose the best prepaid debit card for you
As you compare our list of the best prepaid debit cards against other prepaid card offers, it’s important to consider a few things, including your spending habits, personal finance goals, and general preferences. This can help you understand how you’d plan to use the card, which can help you narrow down your list of options.
Also, look at how fees might impact you and reduce the value of a certain card. If a card offers enough value to make up for the fees, it may still be worth it. But if you can’t find a good way to make up for a card’s fees, it may not be the right fit.
The good news is that there’s no harm in applying for multiple prepaid debit cards. So if you use one for a while and decide it’s not a good fit, you can always switch to another one.
FAQs about prepaid debit cards
Are prepaid debit cards safe?
Before 2019, there were a lot of concerns about safety and fraud protection with prepaid debit cards. However, the Consumer Financial Protection Bureau enacted regulations in April 2019 that provide consumers with many of the same protections as credit and debit cards.
For example, you’re not liable for more than $50 if someone uses your card without your permission, as long as you report it promptly after you discover the fraud. Prepaid cards may also be insured by the FDIC in certain circumstances.
In general, the best way to stay safe with a prepaid debit card is to take the same fraud prevention precautions as you would with any other payment method.
How much money can you put on a prepaid card?
Prepaid cards typically limit how much you can load onto them each day and overall, and you may also be limited on how much you can spend each day. However, these limits can vary from card to card, so check with the card issuer to find out if that’s a top priority for you.
Do all prepaid cards require a Social Security number?
In most cases, you’ll need to provide a Social Security number when you apply for a prepaid debit card. Although this information won’t be used to run a credit check, card issuers may check your banking history. There are some prepaid debit cards that don’t require a Social Security number, but they’re few and far between.
Are prepaid debit cards traceable?
Yes. Because your name is on the prepaid debit card account, transactions can be traced back to you, as with a credit or regular debit card.
The best prepaid debit cards can provide an excellent alternative to credit cards and bank accounts. You won’t be subject to annual fees or credit card interest charges with a prepaid debit card. And although you won’t find any truly fee-free prepaid cards, there are some that charge fewer fees than others, and some also provide benefits that can make those fees worth it.
As you try to determine which prepaid card is right for you, consider our top options and also do your own research to compare and contrast. This process will help you find the right fit for you.
Disclaimer: All rates and fees are accurate as of Sept. 7, 2022.