What are the best prepaid debit cards?
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For making purchases, prepaid debit cards are an alternative to credit cards and traditional debit cards. They allow you to spend up to the amount loaded on your card and can be reloaded multiple times.
Because the prepaid debit card market is fragmented, no single company has a large enough market share to dominate it. However, according to Allied Marketing Research, the market will grow at a compound annual growth rate of 18.2 percent from 2021 to 2030.
If you haven’t been able to open a regular bank account or obtain a traditional debit card, prepaid debit cards may be a good option. If you’re concerned about going into debt with a credit card, you might want to think about getting one. Prepaid cards can also be used as a budgeting tool when used in conjunction with the other two options—after all, you can only spend what’s on the card.
Who Is a Prepaid Debit Card Good For?
People who are unbanked or underbanked, whether by choice or circumstance, are the primary target market for prepaid debit cards. If you don’t have a Social Security number or have had problems with previous bank accounts, such as unpaid negative balances or forced closures, it can be difficult to qualify for a bank account.
When you apply for a prepaid debit card, the issuer does not run a credit check. While a Social Security number may be required for some prepaid cards, it is not required for all.
If you’re having trouble budgeting, a prepaid debit card might be a good option. You can transfer money to your prepaid debit card and use that payment method exclusively for the expense category if you want to limit how much you spend on certain expenses for a given period. You can even set up multiple prepaid cards for different budget categories with some prepaid cards.
Lastly, as an alternative to a credit card, some people might consider a prepaid card. While a prepaid card won’t help you build credit, it can help you avoid interest and stay out of debt. While you won’t get the same level of rewards and benefits as you would with the best credit cards, some of the best-prepaid cards do offer cash back or other rewards.
What are Some Prepaid Debit Card Alternatives?
Of course, prepaid debit cards are just one method of payment.
If you don’t want to deal with the hassle of opening an account or managing a card, paying with cash is a good option. However, cash is inconvenient for online transactions, and there is no protection if you misplace or lose your cash.
If you pay your bills on time and in full every month, want to take advantage of rewards and other perks, or need to build your credit, a credit card, if you’re eligible, can be an excellent choice. Credit cards, on the other hand, make it easy to get into too much debt if you’re not careful.
Finally, if you can qualify for a checking account and don’t require any additional budgeting tools, a typical debit card is a convenient option. Otherwise, the user might want to consider getting a prepaid debit card.
Here are some of the best prepaid debit cards to consider if you want to better manage your money.
- Best All-Around, Best for Not Having to Pay a Monthly Fee: American Express’s Bluebird.
- American Express Reloads are the best for cash reloads because they are completely free.
- Walmart MoneyCard is the best option for shoppers at Walmart.
- American Express Serve Cash Back is the best option for earning rewards.
- FamZoo Prepaid Debit Card: Best for Tweens/Teens
American Express’s Bluebird
Bluebird has lower fees than most prepaid debit cards, so it’s a good option if you’re on a limited budget but do not want to pay for debit card access. Users can make posts for family members, who will each receive their own card linked to the main account.
Advantages of American express bluebird
- Monthly maintenance, activation, online card purchases, and other services are all free of charge.
- Purchase protection, roadside assistance, and Amex Offers are just a few of the perks that come with this card.
- Over 30,000 no-fee ATMs are available.
- Direct deposit, debit card transfers, and mobile check deposits are all free at Walmart locations, as are cash reloads.
Disadvantages of American express bluebird
- There will be no bonuses.
- Other retailers may charge you a fee if you reload your card with cash.
- If you don’t pay a fee, your mobile check deposit will take ten days.
American Express Reloads
Cash reloads maybe your best option if you don’t have a checking account, making Amex Serve Free Reloads a top pick. Sub-accounts for family members can be created for free.
Each Card has different eligibility and benefit levels. There are some restrictions and terms that apply. For additional information, go to americanexpress.com/benefitsguide. AMEX Assurance Company underwrites the risk.
Advantages of American Express Reloads
- When you load money onto your card at over 45,000 Walmart, 7-Eleven, CVS, Rite Aid, Dollar General, and Family Dollar locations, there is no fee.
- Direct deposit and bank account transfers are two other ways to reload.
- Over 30,000 no-fee ATMs are available.
- Purchase protection is available on eligible purchases.
Disadvantages of American Express Reloads
- A monthly fee of $6.95 is charged (no fee in New York, Texas, or Vermont)
- Unless you pay a fee, mobile check deposits take ten days.
- There are no monetary rewards or other significant advantages.
Although there is an annual cap on rewards, the Walmart MoneyCard is one of the few prepaid cards that offer them. However, if the monthly fee isn’t waived, the annual rewards are sufficient to cover the cost. The biggest disadvantage is the fees you’ll have to pay if you need to withdraw money from an ATM.
Advantages of Walmart MoneyCard
- Get 3% cashback on Walmart.com, 2% cashback at Walmart gas stations, and 1% cashback in Walmart stores.
- A linked savings account pays 2% interest per year.
- If you load $500 or more each month, you will be charged a monthly fee.
- Free cash reloads, direct deposit, mobile check deposit, and bank transfers are all available through the Walmart MoneyCard App.
Disadvantages of Walmart MoneyCard
- Cashback is capped at $75 per year
- The standard monthly fee is $5.94 if you don’t load $500 or more each month
- All ATM withdrawals will incur a $2.50 fee
American Express Serve Cash Back
Although unlimited 1% cashback on credit cards isn’t particularly impressive, it is the gold standard for prepaid debit cards. The American Express Serve Cash Back card has a monthly fee of $7.95, and you can offset it by spending at least $795 on the card each month.
Eligibility and benefit levels differ depending on the card. There are some restrictions and terms that apply. For additional information, go to americanexpress.com/benefitsguide. AMEX Assurance Company underwrites the risk.
Advantages of American Express Serve Cash Back
- Offers 1% cashback on all purchases indefinitely.
- Over 30,000 no-fee ATMs are available.
- Purchase protection* is available on eligible purchases.
Disadvantages of American Express Serve Cash Back
- You’ll have to pay a monthly fee of $7.95. (no fee in New York, Texas, or Vermont)
- Reloading with cash can cost up to $3.95.
- If you don’t want to pay a fee, check deposits take 10 days.
FamZoo Prepaid Debit Card
Sub-accounts aren’t only available on the FamZoo Prepaid Debit Card. However, it includes a number of tools that can assist parents in teaching their children about money management.
Advantages of FamZoo Prepaid Debit Card
- Up to four prepaid cards can be ordered for free, and automatic recurring transfers can be set up (additional cards cost $3 each).
- Parents can lock and unlock cards, as well as encourage their children to save by paying interest from their accounts.
- You can also tie transfers to chores and allowances, or even come up with a non-monetary incentive system.
- ATMs that do not charge a fee are available to you.
Disadvantages of FamZoo Prepaid Debit Card
- You’ll be charged $5.99 per month, but if you pay in advance, you can save money.
- Direct deposit and Apple Pay, PayPal, Square Cash, and Venmo transfers are the only free reload options.
- Fees may apply to other options such as bank transfers and cash reloads.
What is the difference between a Prepaid Debit Card and a Regular Debit Card?
A prepaid debit card is a type of debit card that can be used to make purchases. You can use a prepaid card to make purchases online and in person wherever the card is accepted, just like a regular debit card. Prepaid cards are typically issued through other payment networks such as debit and credit cards, such as Visa, Mastercard, American Express, and Discover.
A prepaid debit card differs from a regular debit card in that it is not linked to a bank or credit union checking account. You can also only use the funds on the card that you have loaded. Overdraft protection is available on some prepaid cards, but it isn’t as common as it is with traditional bank accounts.
Secured credit cards and prepaid debit cards are sometimes compared, but the two are very different. You simply use the money that you load onto your prepaid debit card. A secured credit card, on the other hand, requires you to make an upfront deposit that becomes your credit line.
You are free to use that credit line, pay it off, and use it again and again. You never use the money you deposit, and you can get your money back when you close the account, or even sooner. A secured credit card can also help you build credit, which is something you won’t be able to do with a debit card.
Most prepaid debit cards allow users to create sub-accounts, allowing you to give cards to other members of your family while keeping everything connected to the same main account. Many prepaid cards, on the other hand, charge monthly fees, transaction fees, reload fees, ATM fees, and other fees.
As a result, it’s critical to shop around and compare several cards before making a decision.
What Should a Prepaid Debit Card Have?
When comparing various prepaid debit cards, there are several factors to consider. The following are a few of the most vital:
- Amounts charged (including monthly fee waiver options)
- ATM use is free.
- Options for free reload
- Protection from fraud and purchases
- Sub-accounts offer flexibility.
- Optional financial savings
- Access to mobile apps
Which of those features is most important to you is determined by your personal circumstances and how you intend to use your card.
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