Over 6% of households in the United States, totaling about 14.1 million Americans are unbanked, which means they do not have a bank account. This can be a result of many factors – lack of access to banks, monthly cash flow problems, lack of social security number and/or ID, or simple distrust of banking institutions. It can also cause many problems. Those who don’t have bank accounts face higher fees, lack of credit, and lack of methods to save money, which can stifle financial growth, and cause some to fall victim to predatory lenders with interest rates as high as 500%. For many the pandemic, also meant difficulties receiving government aid.
While this number is declining and access to fair and equal banking is growing with awareness and technology, it is still important for those who are unbanked to have the safest and most inexpensive options possible. One such option is a prepaid debit card.
Prepaid Debit Card vs. Regular Debit Card?
A prepaid debit card is different from a regular debit card because it is not linked to a checking or savings account, and doesn’t require a bank account at all. Basically, you load money onto the card via cash, check, or another bank account, and then the card functions like a normal debit card. All of the big providers-Visa, MasterCard, and American Express- offer at least one prepaid option, and many even allow you to get direct deposits onto your prepaid card.
Prepaid credit cards offer more freedom than cash because you can make online bill payments or online shopping purchases and they are safer than carrying around a wad of cash all the time.
Secured Credit Card and Gift Cards
Prepaid debit cards are a little more sophisticated than the gift cards you can buy in the grocery line (though many prepaid cards are also available to purchase at stores like Walmart). Unlike a gift card, many prepaid cards offer an account associated with a specific refillable card (though it’s not a traditional bank account or checking account) that comes with a mobile app and online bill payment options. Gift cards can be refilled, but are usually viewed as a one-use thing, whereas prepaid debit cards are meant to be reused, and can even be loaded via direct deposit.
Prepaid debit cards are also different than secured credit cards because they are not lines of credit. Like a debit card, prepaid cards allow you to spend the exact amount of money that you have, and that’s it. If you deposit $200, you have that to spend before you need to reload more.
Secured credit cards offer a revolving amount you secure with an initial deposit, and then you can spend up to that amount as many times as you want to assume you pay it off. If you secure a line of $200, you can spend $200, pay it off, and spend it again as many times as you want.
Why Do People Get Prepaid Debit Cards?
As we mentioned above, some people have trouble getting access to traditional bank accounts for various reasons, and some people don’t trust banks. Another reason to use a prepaid card is for budgeting. They can be handy if you want to control your spending, or just dedicate a budget for a specific event or purpose, like holiday shopping or a wedding. You also won’t have to worry about an overdraft fee, annual fee, or credit check.
Prepaid cards can also be good for those who are too young to open a traditional bank account, but earn their own money, and for those who are new to managing money.
Related: Why Are Millennials Using Prepaid Credit Cards?
The Best Prepaid Debit Cards
If you are in the market for a new prepaid debit card, we have compiled a list of the best prepaid debit cards including free or low-fee cards below.
PNC Bank SmartAccess Prepaid Visa Card
The PNC Bank SmartAccess Prepaid Visa is one that makes sense because of the ubiquity of PNC locations, low fees, and family options. PNC charges a $5 monthly fee, which isn’t bad as far as prepaid cards go, and is significantly lower than what the bank charges to maintain a checking account if you can’t meet the qualifying waivers. There is no opening fee, no transaction fee, and no direct deposit fee. There are no reload fees at PNC locations; however, they do charge $4.95 to reload with cash. There are no ATM withdrawal fees at PNC branch locations (no teller withdrawal fees at PNC branches either), and up to $2.95 ATM withdrawal fees at out-of-network ATMs (typical for most banks).
One of the great things about the PNC Prepaid Visa is that they allow you to add up to five affiliated accounts if you have children or family members who want their own cards at no additional cost. Teens and/or students with their own accounts can even set up their own direct deposits if they work. Additionally, if you are eligible for the Child Tax Credit, you can have payments deposited onto the card.
This is a very solid option, especially for families, because you get a lot of features for the $5 monthly fee. PNC Bank is well-established and for most people conveniently located, and they offer a good mobile app and email/text alerts. Other than location, the biggest drawback for you might be the $4.95 cash reload fee, so if you get paid primarily in cash, steer clear of this card.
American Express Bluebird Prepaid Debit Card
The Bluebird Prepaid Debit Card from American Express is popular among prepaid options, probably because it is one of the most affordable prepaid cards. You pay a one-time $5 fee for the price of the card if you purchase it in person ($0 to sign up online). There is no reload fee to reload your card at any Walmart as long as you are reloading with a minimum of $20. You may pay up to $3.95 to reload at other, non-Walmart retailers (full schedule of fees here). There’s also no reload fee if you are loading from a bank account, and no in-network ATM fee ($2.95 for out of network).
To reload with cash or a check, you have to go in-person to a Walmart MoneyCenter or register. Other locations subject to fees include convenience stores like CVS or Duane Reed, so if you are in a pinch, you will usually be able to find somewhere to reload your card. The Bluebird2Walmart Money Transfer Powered by Ria also allows you to transfer money online to any recipient over the age of 18 (no Bluebird account required), nearly instantly. The recipient must be able to pick up the money in person at a Walmart, and transfers are subject to fees up to $16.
The Bluebird card also offers online bill pay, which allows you to pay bills and view the status of your payment once you have set up your card and account online (to be clear, this does not mean you will be setting up a bank account). You can also set up automatic reminders, not payments, to help you never miss a payment.
This card is a great option if you are conveniently located near a Walmart, or are a frequent Walmart shopper already. With the lack of fees generally, the only drawback is it doesn’t offer the convenience of some other prepaid cards since you will likely have to go to a Walmart to reload your card.
ONE VIP Visa
If you would like to support a good cause with your money and business, check out the ONE VIP Visa from Urban One, the largest Black-owned media company in the U.S. The card is $4.95/per month with no minimums, no overdraft fees, and no reload fees unless you are using cash. The full schedule of fees can be found here.
They also reward you for spending pretty heavily and pretty uniquely for a prepaid card. You earn 1 point per $2 spent on everyday purchases, and 1.5 points per dollar at select brands like Netflix, Uber, Sephora, and certain Black-owned businesses (list found here). Your points don’t expire, and they can be applied to your account, or donated to Urban One Community Works, Urban One’s non-profit that supports charities like The Innocence Project, The National Black Justice Coalition, and more. ONE VIP has a mobile app that allows you to set up alerts, automatic transfers from a bank account, track balances, and locate ATMs where you can deposit cash.
All in all, the rewards for this card stack up against some of the best credit card rewards, and they give you the option to support Black-owned companies. Plus the $5 monthly fee isn’t bad for unlimited transactions.
Netspend offers several prepaid Visas and Mastercards that share the same features. There is no credit check, no activation fee, no minimum balance, and two plan options for a prepaid Mastercard or prepaid Visa card – the only difference being either paying per transaction or paying monthly. For the monthly plan the fee is $9.95/month, whereas, without it, you pay $1.50 for each purchase you make on the card. There is also a Premier option that you may qualify for if you are a government employee and receive your government payroll directly into your account. You get a 50% discount on the monthly price of a regular account. You can read the full schedule of fees here.
The reload process and cash withdrawal are on the convenient end of the spectrum: you can reload via direct deposit, checks, IRS refunds, unemployment, social security income, pension, and cash. They do have a mobile check reload with their app that allows you to scan a picture of a check and deposit it onto your card, much like many regular banking apps nowadays. If you need to deposit cash or prefer to reload in person, their list of reload locations can be found here (login information required).
The Netspend suite of cards comes with pretty decent rewards, the details of which aren’t really available until you have the card, mainly because they are in categories that change month to month. Once you have a Netspend account you can log in and check out their rewards page. Rewards can be redeemed directly to your account.
As far as spending convenience, Netspend offers both Visa and Mastercard which are accepted virtually everywhere between the two of them. They also have affiliates like WWE and MLB that allow you to customize with your favorite star or MLB team.
Check out DoughRoller’s review of the MLB Netspend Prepaid Card.
The Netspend prepaid card isn’t the best in terms of fees, but I am including it on the list because of the relative flexibility in options and different cards. It may be a good option if you don’t plan to use the card as your primary card. You can forego the monthly fee and pay per transaction if you are only going to make a few per month.
Visa and Mastercard
Additionally, Visa and Mastercard offer a whole fleet of prepaid options that vary inconvenience and fees.
|Bluebird American Express||$0||No fees, frequent Walmart shoppers|
|PNC Bank SmartAccess Prepaid Visa||$5 a month||Families, not a lot of cash reloads|
|One VIP Visa||$4.95 a month||Rewards/Do Good|
|Netspend||$9.95/month OR $1.50/transaction||Flexibility|
Best Prepaid Cards for Traveling
How to Transfer Money from a Bank Account to a Prepaid Debit Card
Pros of a Prepaid Debit Card
It’s safer than carrying cash
Generally speaking, having a load of cash is not the safest method of carrying money for numerous reasons (i.e. robbery, losing bills, etc.). If you are someone who gets paid primarily in cash, it could be much safer to have a card to deposit it on.
More convenient than checks and cash
In addition to safety, cash is not the most convenient method of payment. Loading your cash onto a debit card will allow you to make faster transactions and even online purchases.
Cons of a Prepaid Debit Card
As we explored above, there are some options that don’t require fees; however, some prepaid cards are designed to exploit those who don’t have the capital or means to get a checking and savings account. Fees are something to watch out for – you don’t want to pay just to be able to spend your hard-earned money or to keep it safe.
Don’t get credit for spending on a prepaid card all the time
As an alternative to a traditional credit card, you will not build credit, or get any credit, for using a prepaid debit card as your primary spending choice. While it seems less risky to avoid going into too much debt, it can be just as risky living without any credit at all.
No Savings Attached
Most prepaid cards do not have a savings account attached to it or any account options at all. While this is a reason people might choose a prepaid card over a checking or savings account, in the long term it can be detrimental not to have a savings account.
Best Alternatives to Prepaid Debit Cards
Venmo Mastercard Debit Card
Technically this is a prepaid debit card, but I’m not going to consider it a true prepaid card because you still have to have a bank account to load and reload it. As of now, there is no way to get a check or cash directly into your Venmo balance without the use of a bank account.
It’s still a pretty good option if you can make it work. Plus chances are if you do have a bank account you already have an experience with Venmo, the popular app used to send cash between friends and family. If you haven’t used it before, Venmo allows you to pull money directly from your linked bank account and send it to other Venmo users where it’s stored in their Venmo app as a balance. The Venmo debit card basically takes the step out of the middle, allowing you to spend money directly from your Venmo balance. The only drawback is that you have to load the Venmo balance in the first place. With the debit card, you can spend it as soon as it’s there.
There are no fees to open or maintain a Venmo account/debit card, and no fees to use the card for purchases either. The Venmo debit card allows you to withdraw cash at one of their affiliated ATMs for free, which can be located here. You can use your same Venmo app to track and manage spending, and quickly shut off your card if you lose it.
All in all, it serves as a good, low-cost alternative to prepaid debit cards if you are willing to open or already have a bank account. Applying for a card is easy once you have a Venmo account. You just have to visit the “cards” tab in the app to get started, and answer a few personal and financial questions.
Chime Spending Account and Visa Debit Card
Chime is a financial technology company whose mission is to provide basic financial services that are “helpful, easy, and free”. It offers a financial app and debit card that can be another good alternative to prepaid cards. Basically, you will not be penalized if you can’t maintain a certain balance month to month. You will also not face overdraft fees and can get paid up to two days early with direct deposit, which can help you stay on top of bills and other payments.
The Chime Spending Account is one of three different types of accounts they offer, along with the credit builder and the savings account, which would be easy and beneficial to integrate with your spending account. You are able to deposit through mobile and direct deposits like any other bank account. You can also withdraw cash fee-free at a number of locations like Target, CVS, and Seven-Eleven.
Chime is gaining attention and users and may be worth looking into as an alternative to a prepaid card or a traditional bank.
Chime Disclosure - Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A.; Members FDIC.
1Chime cannot guarantee when files are sent by the IRS and funds can be made available.
^Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.
Do I need a bank account to get a prepaid debit card?
Nope! While you can have a bank account in addition to your prepaid card, the whole point of a reloadable prepaid card is that it does not require a bank account
Where can I use a prepaid debit card?
You can use your prepaid debit card just like a regular debit card, wherever your card provider (Visa, Mastercard, American Express) is accepted.
Can I boost my credit score by using a prepaid debit card?
Unfortunately, no. You can only earn credit by getting loans or lines of credit that report your payments and spending to one of the three major credit bureaus. However, a prepaid debit card may indirectly help you improve your credit by boosting your overall financial health.
How We Came up With This List
When considering this list we surveyed which cards get the most attention and why. Ultimately though, we tried to encompass the features you would look for in a regular credit or debit card – rewards, convenience, and customer satisfaction. Additionally, we tried to include affiliates of banks or bigger financial institutions for several reasons: they have more resources backed by more money, they have bigger networks for reloading and withdrawing cash, and they may provide an easier transition if you do decide you want to make the leap to a traditional checking or savings account.
Bottom Line: Prepaid Debit Cards Are a Safe Option
Generally, prepaid debit cards are a safe option for spending and managing money. When it comes to selecting the best option for you, consider things like convenience, how you get paid, how often you get paid, and where you are located in relation to the branches you need access to. It is also worth noting that while they won’t hurt you financially, prepaid debit cards don’t necessarily help you grow your finances. If you are starting out with, or have been using a prepaid debit card, you may want to consider opening a bank account if it’s plausible for you. A traditional checking and savings account can help you manage and grow your money and put it away for large asset purchases. They can even help you gain access to loans and credit cards that will help you build credit and boost your financial freedom even further.