All posts tagged prepaid debit cards

US Bank Convenient Cash Card Review: Are The Fees Too High?

Fees and prepaid cards go together like bread and butter. But how high is too high?

US Bank Convenient Cash CardIn the US, the fastest growing payment method is the prepaid debit card. According to Businessweek, over 7 million were in circulation as of 2012.

That number seems somewhat low to me (relative to the 300+ million Americans) but regardless, one thing I’m confident of… there are a lot of people using them and that number just keeps getting bigger.

Lately the big banks have been hopping on the bandwagon, coming out with their own prepaid cards. The US Bank Convenient Cash Card is one of the latest entrants into the field, but how do the fees compare?

How much does it cost in 2013?

Here’s a review of the fee schedule. Starting with the most common fees which you will almost certainly encounter…

  • $3.00 – Enrollment Fee
  • $3.00 – Monthly Service Fee

Next, here are the fees which are avoidable, but you will encounter them if you’re not careful…

  • $2.00 – Non U.S. Bank ATM Withdrawal
  • $1.00 – Non U.S. Bank ATM Balance Inquiry/Decline
  • $3.00 – Monthly Paper Statements (avoid by enrolling in online statements)
  • $3.00 – Teller Withdrawal
  • $2.00 – Per Call For Live Customer Service (first 2 calls each month are free)
  • $15.00 – Card Replacement Fee

Lastly, here are the remaining fees which you are less likely to encounter, especially if you don’t travel internationally…

  • $3.00 – International ATM Withdrawal
  • $1.50 – International ATM Inquiry/Decline
  • Up to 3% – Surcharge on Foreign Transactions
  • $30 – Expedited Card Replacement

Even though there are a lot of fees, I think it’s safe to assume most won’t be applicable to you. There are no fees for non-PIN based transactions and purchases (like how you would pay with a credit card at a store). The only time you start getting in trouble with fees is when you are doing PIN-based transactions at non US Bank ATMs and the like.

So in a nutshell, if you use the Convenient Cash Card strategically and conduct all of your ATM transactions at US Bank locations, the minimum amount you pay will be $39 for the first year and $36 per year thereafter.

How does it compare?

When compared to the popular Rush Card and Mango Prepaid, the US Bank Convenient Cash Card fees are a bargain! However, the American Express Prepaid still beats it hands down:

So as you see, the American Express still reigns king of the prepaid world. But for those seeking a Visa or MasterCard, then this US Bank card offers one of the lowest fee structures around. It’s comparable to the Walmart Money Card and remains significantly cheaper than Chase’s Liquid, PNC’s SmartAccess, and Region’s Now Card.

The biggest drawback is…

…that the Convenient Cash Card won’t help you build/rebuild credit. It’s just a prepaid card; not reported to the credit bureaus and therefore won’t show up on your credit report.

So that brings us to the question… do you really want to be stuck in the prepaid rut for the rest of your life? Or would you rather be on track to rebuilding your credit?

No matter how crappy your credit score may be, you can still get approved for a secured credit card. Why? Because you are guaranteeing the risk with your own collateral (cash). It operates in a somewhat similar manner as prepaid, but has distinct differences:

  1. Security Deposit: With a secured credit card you put up a refundable deposit as collateral. This amount becomes your credit limit. For example if you add $700 to your account, your credit line will be $700.
  2. Monthly Bill: Unlike a prepaid card, you will have a monthly bill to pay. It operates like a normal credit card in that you can either pay your bill in full (to avoid interest) or over time (and be charged interest).
  3. Credit Bureau Reporting: Unlike a prepaid card, a secured card is reported to the credit bureaus each month. It shows up on your credit report just like any other credit card.

And don’t forget your security deposit is refundable. You will receive the money back whenever you choose to close out the account.

With some secured cards, the total fees you will pay per year are actually less than the US Bank Convenient Cash Card. So the obvious choice is that it makes sense to

Review written or last updated in 2013

2014 Prepaid Debit Cards With No Monthly Fees?

ready prepaid cardQ: 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 cards is that they provide the convenience of card payments, without the requirement of good credit (like you would need for a credit card). For teens and college kids they also can make sense, since they aren’t old enough to get their own credit card until age 21.

But be warned because there are a lot of shady prepaid debit card companies out there that have found a myriad of ways to stick it to the public with all kind of fees! 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. It’s also a good deal for the issuer since they generally make more money when you reload and spend on the card, which is why they typically will provide and incentive (as in waived fees) for direct deposit.

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 2014? Check out the new American Express Serve prepaid card! It does have fee structure… with a modest monthly fee, but with qualifying direct deposits or deposits each month, there’s the opportunity to have the monthly fee waived. They don’t charge all the other crazy fees that other card charge, though, so this is our number one recommended card to consider.
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 either have no other costs involved or they will waive their fees, 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 June 9, 2014

Are Free Prepaid Debit Cards For Kids a Bad Idea?

swiping credit cardA recent trend has been for parents to get their kids prepaid debit cards. While this may seem like a logical thing to do, there are some major hidden pitfalls in doing so that you should know about.

1st problem: they may not actually be free!

As you can probably guess, most prepaid debit cards have fees… and a lot of them! Activation fees, cash withdrawal fees, monthly fees, and the list goes on. But are there any that are free? Not quite.

You see, most of the “free” prepaid debit cards require a minimum reload amount each month (for example, you might have to add $500 or more every month for it to be free). While that might work for an adult’s spending, as you can see the idea of getting free prepaid debit cards for kids won’t quite work, unless you spoil your kid and he’s a big spender!

2nd problem: prepaid debit is much more risky than credit cards

Another thing to consider when it comes to prepaid debit cards for minors is what will happen if they lose the card? Or worse yet, what if your kid says he lost the card when in reality he used the money for something he doesn’t want you to know about?

With a credit card, federal law limits liability on fraudulent transactions if you lose your card. By law the most the cardholder can be held liable for is the first $50 in fraud on an account, but in actuality, that rarely happens… almost every banks nowadays just takes that hit so the cardholder has $0 liability. Unfortunately prepaid debit cards are something totally different.

If your kids’ prepaid debit PIN number was compromised and funds were stolen, you will probably be out of luck. This is a double-edged sword, because even if you decided to deposit $500+ monthly to be eligible for a free account, at the same time you would be facing higher risk with having that much money in the account.

3rd problem: offer little to no monitoring for parents

As a parent, you probably want to keep tabs on exactly where the money is going if you’re providing them the money! Unfortunately even the best prepaid cards might not be able to give you the type of oversight you were expecting.

With credit cards, it’s possible to have highly-itemized transaction information for both the primary account holder as well as any authorized user (like your kid). You’ll be able to see exactly where they’re spending money by both the store and its category. With prepaid debit, all you may be left with is information like “$40 ATM withdrawal” and the date.

What are the best low-cost options for your kid in 2013?

Just about any major credit card on the market will allow you to add an authorized user (often for free) and you will even be able to set a monthly spending limit for them. For example, even if your credit line is $10,000 you can set it so your child can only spend $200. If you would like, you even be able to add your kid’s SS# to your credit card account so it benefits their credit. Yes, believe it or not, that is possible to do even for minors.

So adding your kid as a user on your credit card account is safer, allows for greater oversight and control, and their spending will earn you rewards (if you have a rewards card) making them clearly a better option than getting prepaid debit cards.

But if you still insist on getting your kid a prepaid card, then I would recommend you check out this prepaid card instead. It is not “free” but the fees are reasonable.
Written or last updated November 16, 2013