The prepaid card business is booming now that banks are ratcheting up the fees on checking accounts to all-time highs. Should you get a prepaid Discover card instead? Consider these 3 things…
1. Acceptance of Discover
When it comes to Discover credit cards, I know the #1 hesitation people have in applying is that they worry it won’t be accepted in many places. But nowadays, nothing could be further from the truth.
Did you know that Discover cards are accepted at over 90% of places that take Visa/MasterCard? So if you live in the US, over 90% of merchants that allow credit card payments will accept Discover.
For ATM transactions (like getting cash) there are over 675,000 locations:
PULSE is one of the largest ATM networks, so you shouldn’t have any problem finding one where you can use a Discover prepaid debit card. For example, I searched on their site and found 41 locations for a rural zip code in Michigan. When I searched Los Angeles, I got 1,468 results.
Conclusion? Acceptance at over 90% of retailers + tons of ATMs = plenty of places!
The benefits can vary by card, but here are the basics you can expect:
- fraud protection for unauthorized charges
- cash access through ATMs or at stores that will do cash back
- account monitoring through Discover’s website or the issuer’s website
- reload options
Conclusion? Pretty basic. These are on par with what Visa and MasterCard offers. The best benefits are on the prepaid card from American Express because it gives you free protection against eligible items that are stolen or accidentally damaged during the first 90 days from date of purchase.
As we all know, prepaid cards are notorious for charging outrageous fees. Will you get that with Discover?
The answer isn’t black and white.
You see most Discover prepaid cards are actually issued by another bank… and that bank is the one who decides the fees. To give you an idea of what’s out there, here are a couple:
Young Money Prepaid Card – Launched back in 2011, this is branded by Lil’ Wayne and issued by MetaBank. Review the fees for yourself:
So basically you’re paying a one-time fee of $6.95 to get the card, then an on-going monthly fee of $3.95. The reload fee can be avoided if you do direct deposit instead to load your funds.
It’s not the worst prepaid card on the market, but it’s not the best either. The biggest drawback is that you don’t get any free ATM withdrawals (they’ll always cost $2 a pop).
nFinanSe – Issued by First California Bank, I’ve heard of employers using this for payroll. A couple years ago there was someone on the forum complaining about them. Here are the fees:
It looks like you would be paying a lower amount than the Young Money card, but it’s still not exactly what I would call a bargain.
Worth getting for 2013 or not?
So should you apply for a prepaid Discover card? Well they’re somewhat better than the average prepaid card. However even with that said, personally my vote would be a “no” and I say this for a few reasons:
- If you’re going to get a prepaid card, then the one from American Express is probably the best deal. It has the most benefits and in my opinion, the most reasonable fee structure.
- Prepaid cards don’t build credit. If you don’t mind that, then go ahead and get one. But if you want to build credit, I recommend checking out secured cards. Even with a bad credit history may be, you still might have a chance with them.
- Keep in mind that due to the Patriot Law, your Social Security number is a requirement for all prepaid cards. So if you’re going to go through all that hassle of verifying your identity, then why not just go for a secured card instead?