Millions of Americans now use prepaid cards to manage their money. Unlike regular bank cards, you don’t need to link these to an account.
And you don’t need to go through a credit check to get them. You simply load prepaid cards with cash and then pay bills or make purchases.
Not everyone uses prepaid cards as a substitute for a bank account. Many use them as a tool to keep themselves on a budget, by loading a certain amount for say food or entertainment.
Consumer Reports analyzed 23 cards and found some are not as good deals as others.
For example the netSpend Prepaid Visa Pay as You Go plan charges $1 to $2 every time you make a purchase. And there’s no cap on those fees.
And the netSpend Prepaid Visa Fee Advantage plan charged $9.95 per month. So does the AccountNow Gold Visa Prepaid Card and its fees can be hard to figure out.
NBC 5 reached out to MetaBank the company behind netSpend, the company made the following points about its cards:
- A core principle is the concept of providing choice for our customers.
- Consumer Reports has cited only a couple of examples of the fee plans NetSpend offers. In fact, NetSpend actively coaches customers on the best plan to suit their individual needs, educating them on ways to avoid fees.
- NetSpend also gives money back through rewards to the tune of $1.5 million returned to cardholders plus $6 million in redeemable value in 2013.
- NetSpend also offers free features, including direct deposit, configurable email and text alerts, free online access, free mobile app, 5 percent APY savings and live customer support, to name a few examples.
- Pointing consumers to low-cost ways to use the products is a NetSpend hallmark – NetSpend offers multiple fee plans, requires customers to choose one and actively coach them if another choice would work better for them.
- The report findings seem to be in conflict with consumer ratings on sites like ConsumerAffairs.com, which show consumers are pleased with the options provided by NetSpend.
Also a problem is the American Express for Target prepaid card, because it’s not insured by the FDIC.
The latest news from Consumer Reports magazine.
Top ratings went to Bluebird, a prepaid card issued by American Express and Walmart.
There’s no monthly fee, no activation fee, no fee for making purchases or paying bills and no charge to load money either by direct deposit or at Walmart. Bluebird also has a wide network of MoneyPass ATMs that are free to use.
NBC 5 reached out to American Express about the findings, this was the company's response:
"We're pleased to see both Bluebird and Serve at the top of both rankings by Consumer Reports. We strive to offer great value to consumers.
Regarding American Express for Target’s ranking, Target and American Express have listened to guest feedback about the American Express for Target prepaid card and are using those insights to build a new product designed with the Target guest in mind.
We are now testing a new, full-service prepaid card with Target in select markets across the U.S. The test will help us identify the feature set that best meets the needs of Target guests before determining final product features. The new Target Prepaid REDcard is FDIC insured and features a full suite of financial tools as well as Target REDcard loyalty benefits such as 5% off purchases at Target stores in the U.S. and Target.com, free shipping on Target.com and 30-day extended returns for Target purchases in the U.S. We look forward to learning from the test before expanding the new product’s availability."
For more information, visit Target.com/prepaidredcard.
Consumer Reports gave several other prepaid cards high ratings including: Chase Liquid Visa, H&R Block Emerald Prepaid MasterCard and Prepaid Visa Rush Card with the Rush unlimited plan.
You can get more information on how to evaluate prepaid cards at DefendYourDollars.org.
Complete Ratings and recommendations on all kinds of products, including appliances, cars & trucks, and electronic gear, are available on Consumer Reports’ website.