A couple years back American Express launched a prepaid card. I’ve noticed many hailing it as their first prepaid card, but actually there’s the AmEx Pass that’s been out for a while now, although that is geared towards teens.
July 3, 2013 update
Their regular prepaid card offer is no longer available. They have launched a new version called Serve.
Go here for more info about the American Express Serve® prepaid card.
American Express now offers the Serve card — go here for the review.
Is it a debit or credit card?
American Express prepaid credit cards? Or debit cards? Actually… neither!
Since this new card doesn’t allow you to buy anything on credit, it’s definitely not a credit card. Most stories I’ve seen so far has referred to them as being prepaid AmEx debit cards. That’s a closer description but if you want to be nit-picky about it, these aren’t exactly debit cards either by definition.
But that’s all semantics, let’s get into the good, bad, and ugly aspects of this card for 2013.
Almost no fees
Let’s be honest here… most of the prepaid card issuers are famous for nickel and diming customers with fees, fees, and more fees. I’m not claiming all are rotten but a lot of them definitely are.
With AmEx’s new prepaid reloadable card you won’t be shook down with a million different fees. In fact, getting the card itself is completely free and you can order it online. There are no activation fees, no fees for calling customer service, no monthly or yearly fees, no purchase fees, and no overdraft fees.
So how is American Express making money you ask? Well, since your purchases are processed the same as a credit card, the merchant has to pay those credit card processing fees. AmEx is hoping your purchase volume brings in enough processing fees to offset the costs they have to pay to advertise, issue, and manage these prepaid accounts.
Better customer service
I don’t have any personal experience/reviews to share, so I can’t conclusively judge this card’s customer service. But given that it’s American Express, I expect it will be a heck of a lot better than the service you get with most other prepaid debit cards. According to the AmEx website, service is available 24 hours a day via 1-866-207-7970.
Several excellent benefits for free
If you have an AmEx charge or credit card, chances are you already know about these great benefits:
- Purchase Protection: Covered items which are stolen or accidentally damaged during the first 90 days will be reimbursed.
- Fraud Protection: The AmEx website says they will refund charges if your card is lost or stolen (much safer than cash, right?).
- Global Assist: In a nutshell this is a help line you can call when you are traveling more than 100 miles from home. They won’t actually pay for the help you need, but they will provide free guidance/advice in how to get that help. For example, if you need help finding an emergency dentist overseas or you lost your passport, they should be able to direct you to the right people.
- Arranging Roadside Assistance: This benefit isn’t that exciting since AmEx is not actually paying for the roadside assistance, but they will arrange the service for you without charge. You can use this up to 5x per year.
Qualifications (almost everyone will qualify)
So what AmEx Prepaid card requirements? Well since there’s no credit check, it doesn’t matter how bad your credit history is! The application says:
- You must be 18 years of age or older
- Cards cannot be shipped outside the US
- Cannot be shipped to Arkansas or Vermont
Pretty painless requirements, right? You will have to supply your Social Security/tax ID number but rest assured, this has nothing to do with your credit history. ALL prepaid cards are required by law to obtain this info from customers due to the Patriot Act.
Helps you build history with AmEx
Now this is awesome. By having and using the card, you can establish a history/reputation with American Express which may lead to you getting invited to apply for a charge card. Here’s how their website describes the “Make Your Move” program:
(Update: this benefit has been discontinued)
You get one free withdrawal per month with an AmEx Prepaid Card (which is better than almost every other prepaid card on the market) but beyond that, you will be charged $2.00 per withdrawal. Then you also need to take into account the additional fees the ATM operator may charge you on top of that, because the two bucks just goes to American Express.
Reloading with cash
If you don’t want to pay any fees to reload, then you have to transfer funds either from (a) bank account or (b) another American Express card.
The problem with this is that many people who use reloadable prepaid cards don’t have a checking account nor a credit card, let alone an American Express. I’m not claiming that’s the case with everyone who this card would appeal to but certainly a good chunk of people fall under this umbrella.
If you don’t have a bank account or an AmEx card, you will need to reload with cash using a GreenDot MoneyPak (which is used for many other prepaid cards, too). You can pick up a GreenDot MoneyPak at drugstores, convenience stores and load money onto it for a fee, which is often $4.95.
Typically the most you can load onto it is $500 so that means right off the bat, that $4.95 equals almost 1% of your money. If you load $250 on it, the $4.95 equals almost 2%. As you see the less you load, the more your fee is percentage-wise.
Verdict for 2013?
If you can reload your American Express Prepaid Card using a bank account or other AmEx card, then this is definitely a good deal compared to almost every other prepaid cards on the market. There are no application fees, no monthly fees, and no annual fees!
However if you need to use the GreenDot MoneyPak those fees definitely suck, but at the same time, they are comparable to what you would be paying on other prepaid cards. So overall, this prepaid card from AmEx isn’t perfect but it appears to be the best one out there.
By the way if the reason you are interested in a prepaid card is because you have bad credit and can’t get approved for a regular credit card, then you might want to consider applying for a secured credit card. The downside is those require deposits of $200 and up. However approval is almost guaranteed and yes, the fees are high, but at least the account will help build your credit if used responsibly.
But you might be able to get a credit card instead (even with bad credit)
Prepaid cards are not reported to the credit bureaus, so they cannot help you build credit. This is why credit cards are better, not to mention, many of them have great rewards and benefit. Even if you have bad credit and don’t think you’ll qualify for a credit card, I would advise you to try this out and see if you have any matches. It only takes a minute to do.
Written or last updated November 12, 2013