Most prepaid cards are a total ripoff. Is the new Bluebird from AmEx and Walmart any different? The answer may surprise you…
Anyone who is a regular reader of my blog will know that I absolutely hate prepaid debit cards. 99% of them feel like a scam. Over the past several years, I think there are only 2 or 3 I have spoken favorably about (one of them being from AmEx).
So how does the new Walmart BlueBird measure up? Is it the same thing? No. BlueBird is a debit account alternative. It’s a great product but unfortunately it can’t help you build credit. For that reason you may want to also consider getting a secured credit card like this one:Or if you have decent/average credit, here is a good unsecured card I like a lot:
Going back to the review of the BlueBird, there are some drawbacks, but the pros outweigh the cons.
Competitive fee structure – I created this chart to show you a quick side-by-side comparison. Now I didn’t include every fee below for every card (some of these charge for replacement cards and others things). However the fees below are the most common ones I think you would encounter during a given month…
Free cash reloads – As you see, there are two major differences between AmEx’s Bluebird debit account alternative (brought to you by AmEx and Walmart) and AmEx’s own prepaid card (brought to you from AmEx directly). The biggest differences are the number of free ATM uses – and probably more noticeable – the cost for cash reloads.
As I mentioned in my review of the AmEx Prepaid, its only Achilles heel is that cash reloads cost up to $4.95 (because you have to buy a MoneyPak to then load onto your account). That problem is solved with the Bluebird, since it gives free cash reloads at Walmart stores.
Better Benefits – On all American Express cards – yes even their prepaid debit cards – you get Purchase Protection and Roadside Assistance (note: they only arrange roadside service, they don’t pay for it). If you’re not familiar with the Purchase Protection perk, it covers eligible items against theft and some types of accidental damages for 90 days from date of purchase. Terms and restrictions apply.
Walmart logo is not prominently featured – Not to diss Walmart, but having the Walmart logo splashed across the front of your debit card (like the Walmart MoneyCard does) isn’t exactly the classiest thing, or at least that’s a common complaint I’ve heard from people. If that bothers you, then the Bluebird is a nice alternative since it doesn’t have their logo on the card’s front. Keep in mind though, that could change in the future.
Transferring to other cards – Here’s a cool feature… you can transfer money from one Bluebird account to another free or charge. They allow this for up to $2,500 per month. I’m not sure how many people will use this (I can’t think of many circumstances?) but it’s a nice option to have anyway.
Can create sub-accounts – Similar to adding authorized users on a credit card, with Bluebird you can add sub-accounts and give them specific spending limits.
Direct deposit required for free ATM use – Without it, be ready to fork over $2.00 each time you visit a MoneyPass ATM (and even more for out-of-network ATMs).
To avoid the $2 fee you will need to setup direct deposit. But if doing that is an option for you, then suddenly the other AmEx Prepaid becomes equally attractive since it offers free reloads thru direct deposit (meaning you could circumvent its nasty $4.95 expense for cash reloads).
Not an FDIC insured account – Unlike a bank’s checking of savings account, this is not FDIC insured. That being said, I think every the biggest doomsdayers would agree that the chances of AmEx going under are almost zilch. So even though I’ve listed this under the cons, I certainly wouldn’t lose any sleep over it.
This cannot help you build credit – In my opinion the #1 biggest reason you should avoid prepaid cards and debit account alternatives, because they do absolutely nothing to build your credit score. In fact, they don’t even show up on your credit report at all.
Ask yourself this… do you really want to be in the prepaid crowd your whole life? Or would you rather work your way up to bigger and better things? If the latter, I would recommend going with a secured credit card instead. Here are the benefits they offer:
- You can get one even with bad credit – A secured card is backed by your security deposit. For that reason, you can get one even if you have terrible credit.
- It shows on your report like a regular credit card – Most secured cards will show up on your report the exact same way a regular unsecured card would.
- Use it to build credit – With responsible use, it can help you build credit. This of course will help you with future goals like buying a car or getting a mortgage some day.
To learn more about secured cards, go to this section I wrote about them.
Verdict for 2013?
I haven’t heard any customer service reviews yet, so the verdict is still out on that aspect. But when it comes to the fee structures, it’s hard to complain about the Bluebird AmEx. This is the best debit account alternative if you do cash reloads. The only big drawback about it, in my opinion at least, is that you have to remember the Bluebird cannot help you build or improve your credit score. For that reason, I suggest you consider getting a good credit card, too.
Written or last updated Jan 2013