The best prepaid cards of 2017

Young girls shopping with one of the best prepaid cards Young girls shopping with one of the best prepaid cards Image:

In a Nutshell

If you want to avoid overspending with credit cards or you can’t qualify for a checking account, these prepaid cards are an appealing alternative.

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At a glance: The best prepaid cards of 2017

Best rewards American Express Serve® Cash Back
Lowest fees Bluebird® by American Express
Best savings account Mango Visa® Prepaid Card

What are prepaid cards and who should use them?

Prepaid cards are cards that you load money onto, typically through direct deposit, cash or check deposits, and online transfers from a checking account.

There’s no line of credit, so you can’t run up debt on the card.

But it’s important to be aware that these cards won’t help you build credit. Since you’re not borrowing money from a credit card issuer, your account activity isn’t sent to the credit bureaus. If you want to build your credit, consider applying for a secured credit card.

How to build your credit from scratch

“Prepaid cards give consumers the freedom to make purchases in store, over the phone, or online without needing a bank account,” says Mike Olafson, vice president of Capital Prepaid Services, which offers the BlazePays℠ Visa® Prepaid Card.

A prepaid card is a good choice if you can’t qualify for a checking account or credit card. But even if you can, prepaid cards can help you avoid the temptation of overspending with a credit card.

You can also use them to improve your budgeting, as they can function as a plastic envelope budgeting system.

Olafson also notes that the cards can be great for travel because they’re not tied to a checking account. If someone steals your card, the thief only has access to the balance on the card, not your full checking balance.

If a prepaid card sounds right for you, here are the top choices.

Best rewards: American Express Serve® Cash Back

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American Express Serve® Cash Back

From cardholders in the last year

See Details, Rates & Fees

Who’s it for?

Big spenders who can generate enough rewards to make up for the card’s fees.

Why we like it

According to American Express, the American Express Serve® Cash Back is the only prepaid card that offers unlimited 1 percent cash back on all the purchases you make .

You can also set up subaccounts for your family members (which means your family members can be members of your account and access money on your prepaid card), although their purchases don’t generate cash back.

The card also has some features that you might be hard-pressed to find anywhere else. For example, you’ll get purchase protection  in case an item you buy with the card gets damaged or stolen .

Watch out for

While the card’s rewards are appealing, its fees can eat into your earnings. Here are a few fees you might see with your everyday use:

  • Monthly maintenance: $5.95 (No fee in TX, NY or VT)
  • Cash reloads: Up to $3.95, depending on the retailer
  • ATM withdrawals: $0 at MoneyPass® ATMs, $2.50 at non-MoneyPass ATMs. ATM operator fees may also apply.
  • Foreign transactions: 2.7 percent after conversion to U.S. dollars

If you make a mobile check deposit, be ready to wait 10 days to get access to the funds if you don’t pay a fee. You can get the money faster (Amex claims within minutes), but you’ll pay a fee of 1 percent or 5 percent, depending on the check type.

How to use it

To make the most out of the American Express Serve® Cash Back card, you’ll need to use a calculator.

For example, you need to spend at least $595 per month just to earn enough cash back to pay for the card’s monthly fee. If you choose to do cash reloads on the card, you need to spend an additional $395 per reload to break even.

Cash reloads aren’t your only option to get money on the card, though. You can add money through direct deposit, bank account transfers and check deposits for free.

Know what incurs fees and what doesn’t. The fewer fees you pay, the more value you’ll get when you use the card.

Lowest fees: Bluebird® by American Express

Who’s it for?

Fee-averse folks who don’t want to worry about whether they’re getting enough value to cover the costs.

Why we like it

For most of your everyday activities, the  Bluebird® by American Express is largely fee-free. There’s no monthly fee, no cash reload fee if you add funds at Walmart and no fee for cash withdrawals at MoneyPass® ATMs .

You can also create up to four accounts for family members. Bluebird® allows you to control their spending limits and ATM access.

Watch out for

While the Bluebird® card is light on fees, there are some you can run into if you’re not careful. For example, the card charges $2.50 per ATM withdrawal at non-MoneyPass ATMs. You’ll also pay up to $3.95 per cash reload if you add funds to your card at retailers besides Walmart.

Mobile check deposits can take 10 days to finalize. You can get your money faster, but you’ll pay a fee of 1 percent of 5 percent, depending on the type of check.

How to use it

Despite the Bluebird® card’s low-fee nature, it comes with a few exciting benefits. For example, Amex Offers gives you savings on shopping, dining and other purchases .

Other features you should take advantage of include:

  • Purchase protection in case an item you purchase is accidentally damaged or stolen.
  • Fraud protection in case your card is lost or stolen.
  • Roadside assistance hotline in case you need a tow truck or locksmith while you’re on the road.
  • Advance ticket sales for concerts, sporting events and other entertainment.
  • 24/7 customer service.

Best savings account: Mango Visa® Prepaid Card

Who’s it for?

People who want a high-yield savings account and already have considerable cash on hand.

Why we like it

Whether or not you’re in the market for a prepaid card, the Mango Visa® Prepaid Card might be worth getting. The card itself doesn’t come with any standout features, but the savings account tied to it is impressive.

You’ll earn up to 6 percent annual percentage yield (APY) on balances up to $5,000 . The only catch is that you have to have a net direct deposit of at least $800 and a minimum balance of $1 every month to qualify. Otherwise, you’ll earn only 2 percent.  Balances above $5,000 earn just 0.1 percent APY.

Watch out for

The term “net direct deposit” can trick you if you’re not careful. Mango defines it as the direct deposits into your account minus the transfers out of your account . So, you need to keep an eye on your transactions (maximum: 6 transfers out per month) to make sure you meet the $800 deposit requirement to qualify for the 6 percent APY.

Also be aware of the fees, some of which include:

  • Monthly fee: $3
  •  ATM withdrawals: $2
  • ATM balance inquiry: $1
  • International currency conversion: 2 percent
  • Cash reloads: Up to $4.95

How to use it

Because Mango requires at least $800 in net direct deposits each month to get the 6 percent APY on savings so you need to direct deposit at least $800 per month (and have a $1 minimum deposit at the end of the month) in order to get the 6 percent APY.

While the card’s fees aren’t ideal, you can avoid most of them if you’re careful. For example, adding money to your card via direct deposit, PayPal and bank transfer  is free. Remember that your bank may charge you a fee to transfer money.

Even if you do end up paying some fees, your savings interest should make up for them. If you maintain a $5,000 balance, for instance, and meet the net direct deposit requirement every month, you’ll earn $300 per year in interest, or $25 per month.

What to consider when choosing a prepaid card

If you’re still not sure which prepaid card is best for you, take a moment to consider the following components of each one you come across:

  • Fees: Because prepaid cards don’t make money on interest like credit cards, they make up for it in fees. Check the fees for each card you consider, and think about how those would add up with your planned usage.
  • Features: Some prepaid cards don’t come with a lot of frills, but others offer some that are extremely appealing. Rewards, special offers and savings incentives can all make your choice worthwhile.
  • Flexibility: Some prepaid cards are more flexible than others when it comes to free reloads. Others might be more flexible when it comes to merchant acceptance.

“Consumers should consider how they will use and load a prepaid card in order to select a prepaid card that is right for them,” Olafson says. More specifically, Olafson recommends favoring cards with the fewest and lowest fees, and to be sure to read the terms and conditions.

Bottom line

While prepaid cards don’t offer big sign-up bonuses and high rewards rates like some credit cards, some of the best come with some pretty impressive traits.

The best one for you will depend on how you plan to use the card. Shop around and compare several cards to make sure you get the right one for you. Your best bet is to get a card you’ll want to keep for the long run.

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