American Express Bluebird Review: Still a Good Choice?

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The Bluebird Card from American Express, a CreditCardForum advertising partner, has been the darling of rewards chasers since it was launched by AmEx and Wal-Mart in 2013. Because the account could be topped off via Vanilla Reloads, those chasing a sign-up bonus spending requirement could purchase reloads with a credit card, transfer those funds to Bluebird and then use Bluebird to pay bills.

That’s next to impossible these days, now that nearly all retailers that carry Vanilla Reloads have banned purchasing them with credit cards (including the last major holdout, CVS).

So does the Bluebird still have anything to offer? Yes – if you’re looking for an easy-to-use alternative for a checking account from a traditional bank or credit union. Like all prepaid debit cards it can function as a mobile transaction account, but without paper checks and bank branches. Here are some of the perks of this unique financial product – and some drawbacks to keep in mind:

Perk No. 1: It’s not just a prepaid card.

Bluebird is commonly referred to as the “Bluebird card,” but it’s really more of a debit card/checking account hybrid. You can get one by signing up for free online. Or, you can get a starter kit for $5 at Wal-Mart that allows you to load up to $500 (and then activate the card online to get all the Bluebird features).

The Bluebird card (which can be used at any merchant that accepts American Express) is tied to an account that you can fill via direct deposit from a paycheck, a transfer from a checking or savings account, a check (via the Bluebird mobile app or mail), cash at a Wal-Mart register or a Vanilla Reload.

In addition to using your card to make purchases, you can use the account to pay bills online (just as you would with any checking account) or with the Bluebird checks that come with the account. If you’re using a check, you just need to preauthorize it with the mobile app or online before you write it, to make sure you have the funds to cover it.

Perk No. 2: Features for families and budgeting

Once your Bluebird account is set up, you can create up to four sub-accounts for others (family members, for example). Each sub-account holder then gets a card (in their name) – but you, as the primary account holder get to control how much money gets transferred into the sub accounts, how much the sub-account holder can spend each day and whether the sub-account holder can withdraw money at ATMs.

Bluebird also has a feature called SetAside, which mimics a savings account. You can move funds from your primary account into your SetAside account anytime (or set up automatic recurring transfers). The money in your SetAside account can’t be spent until you move it back into your main account, preventing it from trickling away through everyday spending.
You can also send money for free to anyone with a Bluebird account – or request money from any Bluebird-account holder.

Perk No. 3: Minimal fees

Bluebird does have fees. However, compared to other non-bank alternatives out there, the fees aren’t so bad. And many of the fees that do exist are avoidable if you use the card a certain way. Use this chart to compare the Bluebird’s fees to the fees charged by prepaid cards and other checking-account alternatives in the industry:

American Express Bluebird Fee Comparison
BluebirdOther similar products
Set-up feeFree online; $5 for Wal-Mart starter kit$0 to $9.95
Monthly fee$0$0 to $9.95
Fee to add money$0 (third-party fees apply when using Vanilla Reloads)$0 to $2.50 (not counting third-party fees)
Customer service fee$0$0 to $2 per call
ATM withdrawal fees$0 if you use a MoneyPass ATM and have received a direct deposit in the last 30 days – otherwise $2$1.95 to $2.50 (usually free within the card's ATM network)
Check order fee (50 checks)$0 for the first order with direct deposit. After that, $26 (waived until 6/1/2014)N/A
Foreign transaction fee$02% to 3.5%

As you can see, Bluebird waives some of the fees that often make alternative financial products so expensive – set-up fees and monthly maintenance fees.

Perk No. 4: Additional protections

Checking accounts generally don’t give you purchase protections and travel assistance. Those things are usually credit card territory. But Bluebird throws a few of these benefits in for free. You get:

  • Purchase protection: If an eligible purchase is stolen or damaged within 90 days, Bluebird can reimburse you (up to $1,000 per occurrence and $50,000 per year)
  • Global Assist: If you run into trouble more than 100 miles from home, you can call a number and get legal and medical assistance. This can be very useful if you’re in a place where you don’t understand the language. Of course you’ll have to pay for the help you receive, but AmEx will help you find it.
  • Roadside assistance: Call AmEx, and it will arrange for certain emergency services, including towing, winching, jump starts and tire changes. Again, you’ll have to pay for those services.

Now, here are a couple drawbacks to consider:

Drawback No. 1: ATM fees

Avoiding ATM fees may require extra effort – even in-network ATM withdrawals will cost you $2 each if you’re not signed up for direct deposit. If you don’t have a paycheck to deposit (or if you prefer to receive your paycheck another way), the costs of Bluebird can add up. Direct deposit is free, though, so if you can sign up for it, it makes Bluebird basically free.

Drawback No. 2: Small gap in FDIC insurance

When you deposit money in a bank, you do so with the confidence that, if the bank goes under, FDIC insurance protects your money. With Bluebird, it’s a bit more complicated because American Express is not a bank and therefore not FDIC insured.

You really don’t have much to worry about, though. AmEx places your money in a custodial account with FDIC-insured partner banks within one business day after you add money to your Bluebird account. During that brief window between when you deposit your funds and when AmEx moves your money, you’re vulnerable – but the chance that AmEx will implode at all, let alone during that short limbo, isn’t very likely.

However, if you’re using the temporary card you got from Wal-Mart and haven’t registered it online yet, American Express will NOT place your funds with FDIC-insured partner banks.

Is Bluebird still a good option in 2016?

Although rewards chasers may not find Bluebird as useful, those using it for its original intent (an alternative to a checking account) have a lot to gain with this product. It’s easy to sign up for online, nearly free to maintain and comes with perks that make it a useful bill-paying and savings tool.

Just remember this if you’re trying to build credit: Activity on your Bluebird account is not reported to the credit bureaus. While it will allow you the convenience of plastic and the ability to pay bills and shop online, it will not help you build credit. If credit building is what you’re after, consider a secured card.

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