Q: My credit is shot and I do not like dealing with banks so I am looking for reloadable or prepaid debit cards with no monthly fees. What ones would you recommend?
A: The great thing about prepaid debit is they offer the convenience of card payments, without needing good credit (like you would need for a credit card or checking account). For teens they also make sense, since teens aren’t old enough to get their own credit card.
But be warned because there are a lot of shady prepaid debit card companies out there! Make sure the card you choose has the benefits you need:
Is it affiliated with a major payment network?
Some sketchy companies advertise prepaid debit cards with no monthly fees but you can only use them for ATM transactions (since they aren’t affiliated with Visa/MasterCard/AmEx/Discover). So make sure the card is associated with one of those… that way you will be able to use it for purchases anywhere.
Do you know all the fees, including the hidden ones?
There are different fees that debit cards charges. For example, some charge activation fees, transaction fees – and as outrageous as it is – customer service fees! In order to pay no monthly fees you might be required to maintain a minimum balance (otherwise they will charge you). Make sure you understand all these when comparing offers.
Is direct deposit included for free?
The best prepaid debit cards will include the direct deposit feature for free, so you can get your paycheck deposited directly onto your card (instead of paying check cashing fees). This is a good benefit if you don’t have a bank account.
Conclusion? The best prepaid cards that charge you no monthly fee will only make sense if they also provide your basic benefits. Otherwise, you will be nickle and dime’d with all the other fees!
My #1 favorite for 2013? Check out the new American Express Serve prepaid card! It has a fair fee structure… they do charge a monthly fee, but with qualifying direct deposits or deposits each month, there’s the opportunity to have the monthly fee waived.
Here are some other frequently asked questions about prepaid cards: Q: What is prepaid debit? A: It is a card that allows you to load/deposit money onto it, which you can then spend however you please. There are both Visa prepaid debit cards and MasterCard prepaid debit cards. One of the best things about these cards is they can help stop you from getting into debt, since you are only allowed to spend whatever amount of money you put on the card. Q: How is money loaded onto a card? A: The money can be added to the card account a couple different ways. You can set it up for direct deposit, so you paycheck is automatically deposited onto the card. The second way is through buying a prepaid money card at a store that allows you to add the balance to your existing account (the Visa Readylink and Green Dot Moneypak are two examples of this). The offers with no monthly fees sometimes require that you have direct deposit setup. Q: Are cards with no monthly fees common? A: No, most prepaid debit cards have monthly fees. However there are some on the market that will not charge you a monthly fee as long as you maintain a certain balance on your account. For example, a card might not charge you monthly fees as long as you keep at least $500 in the account. Q: Is there such thing as a free prepaid debit card? A: Yes, it is possible to get a card for free. Many of the no monthly fee offers have no other costs involved, as long as you maintain the minimum balance amount. Q: Can prepaid debit be used for online purchases? A: Yes, if it has a Visa or Mastercard on it, it can be used wherever Visa or Mastercard is accepted. But if you are buying someone online from an overseas store you will likely be charged a fee for using it internationally.
Written or last updated October 20, 2013