How do prepaid Visa debit cards work, and should I get one?

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If you want the convenience of a debit card without a checking account, a prepaid Visa debit card could be a good option.

If you don’t have a bank account, it can be a real challenge to buy things online or pay your bills. Prepaid Visa debit cards give you the ability to swipe your card or make purchases online without the need for a credit check or opening a traditional account.

But prepaid debit cards can come with significant fees, so it’s important to understand how they work and how much you’ll pay to use them before you commit. Understanding the pros and cons can help you decide if a prepaid Visa debit card is right for you.



How do prepaid debit cards work?

You can buy a prepaid debit card online, over the phone or at retailers like grocery stores and drug stores. If you’re looking for a prepaid debit card from a bank or credit union, you may be able to get one either at your local branch or online.

Depending on where you get your prepaid debit card, you may need to deposit the initial balance, plus pay a small fee for the cost of the card. For example, if you want to start with $500 loaded on the card and it comes with a $2.50 fee, you would need to pay $502.50 total. Opening and reload fees vary between cards, so be sure to read the fine print before loading.

Some card issuers require you to register your prepaid card with personal information like your name, address and Social Security number. This adds a layer of security for accessing features like reloading the card or using an ATM.

Once the card is fully activated, you can use your prepaid debit card much like any other credit or debit card. You can generally swipe or use the EMV chip of your prepaid card at any location that accepts debit cards.

What are the pros and cons of prepaid debit cards?

Pros Cons
Ability to bank without a checking account Prepaid debit cards give you the ability to make purchases online and perform some other banking functions without needing a traditional bank account. Fees can be significant — Fees on prepaid debit cards vary, but common ones include monthly fees, transaction fees, ATM fees, reload fees and inactivity fees. Be sure to shop around.
No credit check required — You can use a prepaid debit card without good credit, or if you have a negative history with ChexSystems or Early Warning Services.   Payments could be refused — If you try to buy something but don’t have enough cash on your card, the transaction will likely be declined. If this happens, you might have to pay a fee with some cards.
Harder to overdraft or run up a balance — With a prepaid debit card, you can only spend the money you put on your card balance. In most cases, you can’t overspend and incur an overdraft fee, and you’re not racking up debt as you can with a credit card. You’re not building credit — If you’re drawn to a prepaid debit card because of bad credit, keep in mind that your prepaid debit card won’t help you build a credit history. Spending on a prepaid debit card is not reported to credit bureaus.

There are several ways you can choose to reload a prepaid debit card with more money — online, by direct deposit, with mobile check deposit or at certain retail locations or bank branches. Again, some cards may charge fees depending on how you choose to add money, so be sure to check with your provider to find the best way.

What is a prepaid Visa debit card?

A prepaid Visa debit card is a card that is preloaded with a set amount of money. You can use it to pay bills, withdraw cash or make purchases. Prepaid Visa debit cards aren’t linked to a checking account like a traditional debit card — you can only spend the balance connected to the card.

Prepaid Visa debit cards come from a variety of issuers — like Green Dot and Walmart, as well as certain banks and credit unions — but all are connected to the Visa network and accepted wherever Visa debit cards can be used. You can reload your prepaid Visa card with more money through direct deposit, at some ATMs and bank branches, or by online check deposit if offered by the card issuer’s mobile app.

Where can I get a prepaid Visa debit card?

Prepaid Visa debit cards come from a variety of issuers, ranging from financial technology companies like Green Dot and Netspend to traditional banks and credit unions. These issuers handle the money that’s loaded onto your card.

Some issuers may sell their prepaid cards online or at retailers like drug stores and grocery stores. Prepaid Visa debit cards from banks or credit unions are often available either in branch or online.

Where can I use a prepaid Visa debit card?

Prepaid Visa debit cards can be used anywhere traditional Visa debit cards are accepted. This includes …

  • Online retailers
  • Brick-and-mortar stores
  • Gas stations
  • Grocery stores
  • Restaurants
  • ATMs

Is my prepaid Visa debit card protected?

Prepaid Visa debit cards come with a “Zero Liability Policy,” meaning you won’t be held responsible for certain fraudulent or unauthorized transactions. But you’ll need to notify your card issuer immediately if your prepaid card is lost or stolen and use care in protecting your card.

Like other prepaid debit cards, Visa prepaid debit cards are generally considered secure. But there are some scams associated with them. For example, fraudsters may ask for you to send them money on a prepaid card to settle an account or make a payment. Never give out your prepaid debit card number to anyone you don’t know.

What are some prepaid Visa debit cards to consider?

Prepaid Visa debit cards come with a variety of features and fees, depending on the issuer. Here are a few you may want to explore. Terms and conditions apply, so be sure to read the fine print. 

  • MyVanilla Prepaid Visa Card® This card doesn’t charge a monthly fee and allows you to have your paycheck direct deposited into your balance.
  • Walmart MoneyCard These cards allow you to load up your balance with cash at any Walmart store and earn cash back rewards when shopping at the store. You’ll also earn 2% annual interest on up to $1,000 in your savings account.
  • Starbucks® Rewards Visa® Prepaid Card You can earn food and drink rewards and won’t have to pay any monthly fees or activation fees.
  • Green Dot® Reloadable Prepaid Visa® Card The $7.95 monthly fee can be waived if you load $1,000 or more in the previously monthly period.

Next steps: Consider your alternatives

Prepaid cards can be a useful tool, but the fees involved can make them much more expensive than a traditional bank account. Even if you don’t have a rock-solid credit history, you have some alternatives if you’re currently unbanked.

  • Second-chance checking account. A second-chance checking account can be an option if your bank has closed your traditional account. These accounts may have restrictions but offer a way to start rebuilding a credit history.
  • Secured credit card. These cards work similarly to a prepaid card but generally have lower fees. You deposit money with a bank and can then spend that amount. This is a good way to build a credit history.
  • Money order. A money order may be a good option for a one-time purchase. Fees are typically between $1 and $2, and you can send up to $1,000 prepaid.

About the author: Andrew Dunn is a veteran journalist with more than a decade of experience as a reporter and editor at North Carolina news organizations, including the Charlotte Observer and the StarNews… Read more.