With the rapid proliferation of prepaid cards, we here at MyBankTracker figured it was time to figure out exactly who might benefit from using them. Turns out that if you’re in a tough spot — kinda broke, say — they’re for you. It also turns out that one of the more reviled products, Suze Orman’s Approved Card, may be the best deal available to the working poor.
The growth in prepaid debit cards shows no sign of slowing down. In fact, the cards are becoming mainstream. Russell and Kimora Lee Simmons aren’t the only famous people hawking prepaid cards these days: George Lopez just partnered with the Mango Card, famous financial advice-giver Suze Orman released her own card recently (although it was pilloried by personal-finance bloggers for its apparently steep fees and spurious claims about credit scores.) Even Capital One — which historically dealt with the subprime market — and American Express — which did not — have prepaid cards on offer.
Just what and whom are they for?
While a checking account is a checking account with little variation across the board, save for fees and perks, prepaid cards are all over the place. Some have savings accounts, and some do not. Some charge for swipes, and some do not. Some, like the cards from Account Now, are flagrant rip-offs, and some are not.
Because of the wide variety in services and fee schedules, prepaid cards can be difficult to compare. Despite all this, we’re going to try our best to evaluate some of the more notable cards. Check out the chart below:
Prepaid Cards Compared
Account Now (Gold w/o Direct Deposit)
Account Now (Classic)
American Express Prepaid
Approved Card from Suze Orman
Capital One Prepaid
|Activation||-||$4.95||-||$3||-||$4.95 ($6.95 for NASCAR branded card)|
|Monthly Fee||$9.95||-||-||$3||Free with $500 in loads/ $4.95 otherwise||Free with $1,000 in loads or 30 purchases per month/$5.95 otherwise|
|ATM Withdrawal||$2.50||$2.50||1 free per month, after $2||$2 (Allpoint ATM fees waived with direct deposit > $20)||1 free per month/$1.95 after||Free in network/$2.50 otherwise|
|ATM Balance Inquiry||$1||$1||-||$1 (Allpoint ATM fees waived with direct deposit > $20)||-||$0.50|
|Transaction Fee||-||$1 (PIN or no PIN)||-||-||-||-|
|Customer Service Call||$1||$1||-||1 free per month/$2 after||-||-|
|90 Day Inactivity Fee||-||-||-||-||-||-|
|Int'l Currency Conversion Fee||2.95%||2.95%||-||-||1%||3%|
|Perks?||Merchant based rewards program||Merchant based rewards program||AmEx discounts, roadside assistance, advance tickets, etc.||Free access to TransUnion credit score||-||-|
|Estimated Monthly Usage Cost*||$29.90||$31.95||$14.95||$19.95||$14.70||$18.40|
Prepaid Cards Compared, Cont.
Net Spend Pay As You Go
Net Spend Fee Advantage
Net Spend Premier Fee Advantage
RushCard (Monthly Plan)
RushCard (Pay As You Go)
|Activation||-||-||-||-||$3.95 - $14.95 (depends on card)||$3.95 - $14.95 (depends on card)|
|Monthly Fee||Waived with $500 in loads/$5 otherwise||-||$9.95||$5||$9.95||-|
|ATM Withdrawal||$2||$2.50||$2.50||$2.50||2 free per month/$2.50 after||$1.95|
|ATM Balance Inquiry||$0.50||$0.50||$0.50||$0.50||$0.50||$0.50|
|Transaction||-||$1 PIN/$2 no PIN||-||-||$1 PIN/$0 no PIN||$1 (capped at $10 per month)|
|Customer Service Call||-||-||-||-||-||-|
|90 Day Inactivity Fee||-||$5.95||$5.95||$5.95||-||$1.95|
|Int'l Currency Conversion Fee||2%||3.5%||3.5%||3.5%||2%||2%|
|Perks?||5% APY savings account||Merchant based rewards program||Merchant based rewards program||Merchant based rewards program||Discounted health plans||Discounted health plans|
|Estimated Monthly Usage Cost*||$14.95||$37.95||$29.90||$24.95||$30.90||$26.65|
*Estimated Monthly Usage Costs calculated thusly: One $500 MoneyPak load ($4.95), six ATM withdrawals (half in-network, half out-of-network), and 12 purchases (six PIN, six signature). Does not include activation fee.
CapOne, Amex take the lead
Established players like Capital One and American Express offer excellent deals on prepaid products. Those cards have strong competition from Mango, Green Dot and Suze Orman’s Approved Card, however. The Mango card is likely the fiercest competitor among the new players, with similarly low fees and something that even major banks don’t offer anymore: a high-yield savings account.
There is no argument to be made in favor of products like NetSpend, Account Now or the RushCard. The fees are simply exorbitant.
Checking looks better…unless you’re broke
Compared to a checking account, many prepaid cards look attractive, at a glance. On average, checking account have $15.05 in monthly maintenance fees, and an average of $2.20 in fees for out-of-network ATM swipes. Assuming customers use an out-of-network ATM three times a month (that’s the same criteria we used for the prepaid cards), it costs $21.65 a month to use a checking account. The American Express, Capital One, Mango, Green Dot and even Suze Orman’s card are cheaper than that!
However, this doesn’t take fee waivers into account. According to our averages, banks won’t charge you monthly fees if you keep around $1,600 in your checking account. Should you find yourself comfortably above that line, you’ll never spend more than a few bucks a month on out-of-network ATM fees. So add a little bit of a cushion and there’s no reason to think about prepaid cards if you can keep about $2,000 in your checking account.
But, for those who are teetering on the brink, some of the better prepaid cards actually make sense. Used wisely, they might be substantially cheaper than checking accounts for those who can’t meet monthly minimums.
A word on direct deposit and Suze Orman
One thing that may surprise is that Orman’s Approved Card, which I personally trashed on this website months back, is an attractive option for the working poor — the most attractive of all, in fact.
If you work at some low-skill retail job, earning minimum wage, and are limited to part-time hours, you might get a paycheck of, say, $400 every two weeks that could be paid through direct deposit. The Approved Card waives its in-network ATM fees for those who use direct deposit, making it potentially cost only $3 a month for access to electronic cash. That’s substantially cheaper than check cashing or a checking account for someone with less than $2,000 to their name.
It’s a small niche, but Orman nailed it. Why didn’t she just come out and say her card is for the working poor?