A closer look at American Express’s Serve Cash Back

American Express’s card offerings range from top-tier charge cards for prime customers, to prepaid cards (which often appeal to customers with thin or poor credit). Now it’s offering a new product that combines the appeal of prepaid with the cash-back rewards traditionally associated with credit cards: the Serve Cash Back.Amex serve cash back

However, this card is good fit only for a specific type of consumer. Our review will help you decide if it’s for you.

American Express is a CreditCardForum advertising partner.

The card

Just like the regular Serve card, the Serve Cash Back allows you to add money via cash reloads at retailers, direct deposit, mobile check deposit or a bank account. The cost of reloading depends on the method. For example, cash reloads AmEx’s retail partners is free, while using a third-party reload (widely available at many chain stores) would entail paying that third party’s fee. There are no fees for direct deposit or reloads from a bank account.

The fees

As with the whole Serve line of prepaid cards, the fee schedule on the Serve Cash Back is pretty simple. The only fees you need to worry about are:

  • $2.50 ATM fee per withdrawal at non-network ATMs. American Express charges no ATM fees within the MoneyPass ATM network.
  • Any third-party fees for retail cash reloads.
  • $5.95 monthly fee (no fee in New York, Vermont or Texas). That’s $71.40 per year.
  • 2.7 percent foreign transaction fee

This card’s fees are transparent, but note that annual fee. The regular Serve’s monthly fee is $1 ($0 if you direct-deposit at least $500 that month). That $5.95 monthly fee becomes important when it comes to analyzing the rewards value of the Serve Cash Back.

The rewards

You get 1 percent cash back on all purchases made with the card. To redeem, you’ll log in and apply your rewards balance toward future purchases.

Prepaid cards that offer rewards are rare, and ones that are this flexible are non-existent. PayPal’s prepaid card offers cash back, but only on certain purchases, and you have to opt in to offers to claim be eligible. The Serve Cash back is therefore a unique product.

However, as with all rewards cards, number crunching is advised. The biggest question is usually, “Will this card’s rewards make up for the annual fee?” To that end, we ran the numbers:

  • You will need to spend $595 a month on the card ($7,140 a year) to cancel out the annual fee.
  • You will need to spend at least $495 a month on the card ($5,940 a year) for it to come out ahead of the regular Serve card (with the $1 monthly fee).

Is this card a good choice?

The answer depends on your spending habits — and on less-quantifiable factors. In general, though, the consumers best suited for this card are those who:

  • Can spend enough money on the card: If you put enough spending on this card, you could make up for the annual fee. Say you spend $1,000 a month. You’d earn $45.90 a year in rewards after subtracting out the annual fee.
  • Want a prepaid card and have absolutely no interest in a credit card or bank account: There are plenty of no-annual-fee credit cards that offer more rewards than the Serve Cash Back does. They also offer additional perks, such as extended warranty, rental car insurance coverage and purchase protection that prepaid cards don’t.

    If you’re considering a prepaid card, though, you’ve probably got your reasons. Perhaps you have really bad credit and want the convenience of plastic without the need for a credit check. Prepaid cards also often appeal to those who can’t get — or don’t want — bank accounts or the debit cards tied to them. However, if you spend less than $495 a month (or conduct most of your transactions in cash), consider the regular Serve over the Serve Cash Back. It offers no rewards, but its lower monthly fee could cost you less in the long run.

Trying to build credit? This card won’t help

If your ultimate goal is to build good credit, you’re going to need to think beyond prepaid cards. While a Serve card can serve as a stopgap for convenience and online shopping until you qualify for a good credit card, prepaid cards don’t report to the credit bureaus and therefore won’t help your credit.

To begin bolstering your less-than-perfect credit, check out our listing of credit cards for fair credit. If you’re a student, an issuer may be willing to give you a leg up with a student credit card, even if you have no credit history.

Not a student and have less-than-fair credit? Consider getting a secured card. Your limit will be low, there may be an annual fee (and no rewards), and the perks are, shall we say, streamlined – but secured cards have been the first rung on the credit ladder for many. Check out our list of secured cards.

Updated August 24, 2015

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