Prepaid cards can be useful tools for young adults who have no credit history as well as consumers who have bad credit. They act in a similar fashion to a debit card, in that the card cannot be used for more than the cash amount that has been deposited ("loaded") into the account. The difference is that there is no traditional checking account associated with the card.
Prepaid cards are popular as gifts, and are useful to those who want to avoid checking accounts for some reason — for example, to eliminate the risk of paying fees or incurring overdrafts. They also offer the convenience of credit cards without the possibility of paying interest on unpaid balances.
As you compare prepaid cards, look through the terms and conditions for all associated fees and how the card is loaded. There are multiple ways to load a card, but some carry associated fees. Other potential fees include a monthly fee, dormancy fee for lack of use, initiation/activation fees, cash withdrawal or balance inquiry fees, and fees for receiving paper account statements.
Here are a few of the best prepaid cards to get you started on your comparisons.
AccountNow® Gold Visa® Prepaid Card – The AccountNow® Gold card offers a $10,000 balance limit and a $15 direct deposit bonus for meeting certain direct deposit qualifications, as well as a higher limit on withdrawals and purchases. There is no activation fee or minimum balance. Online Bill Pay services help you avoid transaction fees, and if you need to expedite a bill payment for any reason, you can do so for a $9.95 service charge.
READYdebit® Visa Prepaid Card – Even if you cannot get a traditional bank account, as long as you have valid identification, you can receive a READYdebit® card — there are no credit checks or ChexSystems requirements. You can make your money instantly available by direct deposit. Choose from a "Control" plan with no monthly fee but a one-time setup fee of $4.95, or a "Select" plan that charges a $9.95 monthly fee but removes transaction fees (and other selected fees). For even greater control, you can set up mobile text alerts to notify you of important balance and account information. Note that third-party texting charges may apply.
American Express Bluebird® – Backed by the power of an association with Walmart, the Bluebird® card offers one of the lowest fee packages with no monthly or overdraft fees, free bill paying, and free direct deposits. It also received the highest rating from Consumer Reports in their March 2016 prepaid card comparison under the category of cards substituting for a bank account. There are multiple free methods of loading the card, purchase protection benefits for purchases made with the card, no dormancy fees, and even no foreign exchange or replacement card fees.
ATM withdrawal fees generally apply with prepaid cards, but you can avoid these by simply avoiding ATMs. Many retailers allow you to get cash back along with a purchase, but you will have to select "debit" when asked what type of card you are using — and you will have to remember your assigned PIN number to use your prepaid card as a debit card.
If you want more credit, check out MoneyTips' list of credit card offers.
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