What are the advantages of prepaid debit cards? Work and Are They Right for You? Advertiser disclosure You’re our first priority. Every time. We believe everyone should be able to make sound financial decisions with confidence. While our website doesn’t feature every company or financial product in the marketplace, we’re proud that the advice we provide as well as the advice we provide and the tools we develop are objective, independent, straightforward — and free. How do we earn money? Our partners compensate us. This can influence the products we write about (and the places they are featured on our site) however it in no way affects our advice or suggestions that are based on thousands of hours of study. Our partners do not pay us to guarantee favorable reviews of their products or services. . How Do Prepaid Debit Cards Function and Are They the Right Choice For You? Pay in advance for money on an prepaid debit card and then utilize it at ATMs, or for purchases. The card can be reloaded using a variety of ways. Written by Spencer Tierney Senior Writer | Certificates of Deposit ethical banking, ethical banking, bank deposits Spencer Tierney is a consumer bank writer at NerdWallet. He has written about personal finance since 2013, with a focus on certificates of deposit and other banking-related topics. He has had his work featured on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He’s based at Berkeley, California. Mar 18 2022 Edited By Yuliya Goldshteyn Assistant Assigning editor Banking Yuliya Goldshteyn works as a banking editor with NerdWallet. She has previously worked as editor, writer, and research analyst in a variety of industries which range from health care as well as market research. She received a bachelor’s level degree in history from University of California, Berkeley. University of California, Berkeley and a master’s degree in sociology from the University of Chicago. You can reach her by email at

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This impacts the types of products we feature and the location and manner in which the product is featured on the page. However, it does not influence our opinions. Our views are our own. Here is a list of and . A prepaid debit card acts as the alternative to bank accounts and allows you to use the funds you deposit into the card. Similar to debit cards, prepaid debit cards work at any merchant that accepts their payment system, which is typically Visa or Mastercard. They’re safer and more convenient as opposed to cash. A lot of prepaid debit cards don’t require credit checks, so they’re not difficult to obtain. If you’re in one of the seven million U.S. households without access to an account at a bank They can be an option to spend money without the need of the bank. Here’s how you can get an prepaid debit card and how they work. How do I buy an pre-paid debit card? It is possible to purchase an prepaid debit card at banks, a retail store, credit card company or another financial services company. When you purchase one, the funds are usually part of an account held by a credit or bank union. It is important to note that they may be called stored-value cards pay-as you-go cards or, more formally, general-purpose reloadable prepaid cards. Are you interested in comparing the different types of prepaid cards? Look through our list of nerdy Tip If you’re looking to build credit or are rejected by a bank, a prepaid debit card might not be the best option: , and if you can’t get a regular checking account, consider . These accounts provide another shot at banking that is mainstream and offers benefits. Saves Cash Managed CD Checking Market A savings account is a place that allows you to store your money securely while earning interest. A savings account is a place where you can keep money safe and earn interest. Members FDIC SoFi Savings and Checking APY 3.75 percent SoFi customers with direct deposit are eligible to earn up to 3.75% per year in annual percentage yield (APY) for savings accounts (including Vaults) and 2.50 percent APY on their checking balances. There is no minimum amount of direct deposit required to qualify for the 3.75 percent APY on savings, and 2.50% APY on checking balances. Direct deposit members will earn 1.20% interest on balances of savings and checking (including vaults). Interest rates are variable and can change at any point. These rates are current as of 01/04/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet Min. balance for APY: $0 Member FDIC Marcus Goldman Sachs Online Savings account APR 3.50 35% 3.50% APY (annual per cent yield) with a minimum balance of $0 to earn the APY stated. Accounts must be in positive balance in order to be open. APY valid as of 02/07/2023. Min. balance for APY Cash accounts are $0 and provide a range of services and features similar to checking, savings and/or investment accounts in one. The cash management account is generally offered by non-bank financial institutions. These accounts offer features and services similar to checking, savings and investment accounts into one product. These accounts for managing cash are generally offered by non-bank financial institutions. on Wealthfront’s website Wealthfront Cash account APY 4.05% Min. balance for APY $1 on the Betterment’s website. Betterment Cash Reserve – Paid Non-Client Promotion APY 4.00 Percent Annual percent yield (variable) is at 02/06/2023. Min. balance for APY $0 CDs (certificates of deposits) are a type of savings account with a fixed rate and term typically, they have higher rates of interest than regular savings accounts. CDs (certificates of deposit) are a type of savings account that has an unchanging rate and term typically, and have more interest rates than traditional savings accounts. CIT Bank CD APY 4.60% Term 1.5 Years Member FDIC Marcus by Goldman Sachs High-Yield CD APY 4.40 percent 4.40% APR (annual per cent yield) at 01/25/2023. 1 year 1 year Member FDIC SoFi Savings and Checking APY 2.50% SoFi members who have direct deposit may get up to 3.75 percent annually percentage return (APY) on savings balances (including Vaults) and 2.50% APY on checking balances. The minimum amount of direct deposit required to qualify for the 3.75% APY on savings and 2.50% APY for checking balances. Members without direct deposit will get 1.20 percent APR on all balances, including savings and checking (including vaults). Interest rates are variable and may change at any point. These rates are current as of 01/04/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet Monthly fee $0 Upgrade – Rewards Checking APY N/A Monthly fee $0 Deposits are FDIC Insured Current Account APY N/A Monthly fee $0 Deposits are FDIC Insured Chime Checking Account APY N/A Monthly fee $0 Member FDIC Axos Bank(r) Rewards Checking APY 1.25% Receive monthly direct deposits totaling $1,500 or more to earn 0.40% APY. Make use of your Axos Visa(r) Credit Card to make 10 transactions each calendar month (min three dollars per purchase) or enroll for Account Aggregation/Personal Financial Manager (PFM) within Online Banking to earn 0.30% annual percentage. Keep an average daily balance of $2,500 per month on an Axos Managed Portfolios Invest Account in order to receive 0.20% APY. Maintain a daily average balance of $2,500 per month within the Axos Self Directed Trading Investment Account for 0.20 percent APR. Use Your Rewards Checking Account for the full each month Axos consumer loan payment to earn 0.15% APR. Monthly fee of $0. Market accounts earn rates that are similar to savings accounts and include some checking features. Money market accounts have rates that are similar to savings accounts, and come with certain checking features. Member FDIC UFB’s best Money Market Rate APY 4.21 Percentage Min. balance for APY 0 FDIC Discover Bank Money Market Account APY 3.20% Min. Balance for APY $1 How prepaid debit cards function? Debit cards differ in their functionality, however, they typically include these features fees: You may need to pay to activate or getting an account, or for making deposits and making use of ATMs outside of network. There’s often a monthly fee, which sometimes can be waived — by having direct deposits, for instance. Some cards charge a fee for every purchase or ATM transaction. Options to reload: Customers are able to usually add money to a credit card in various ways, including creating direct deposits, loading cash at participating retailers and depositing checks at ATMs. Certain cards allow you to make online transfers or mobile check deposits via your smartphone. ATM access: Some prepay cards are connected to nationwide free ATM networks, such as MoneyPass and Allpoint, or to branded bank networks for bank-issued cards. Limits on amounts: Certain cards limit how much you can pay, withdraw, or reload for a specified time period like a day or month. Security: Prepay cards that can be reloaded come with the liability and fraud security required for debit cards by federal law. Certain cards provide protection against purchases, but it can be difficult to dispute transactions that were not authorized or rectify errors. A security feature that many cards offer are federal deposits insurance, meaning your money is covered if the issuer goes bankrupt. Expiration dates: Prepaid cards have expiration dates. The funds on the card shouldn’t expire but you’ll need to get another card prior to the expiration date to continue using it. In a 2016 report released by the Consumer Financial Protection Bureau, certain customers complained that they had money on their cards when they ran out of credit, but the issuer did not issue cards with these balances. If you’re experiencing this, reach out to the company that issued your prepaid cards to determine if the issue could be solved. If not, you can seek help on the CFPB website. Other features Certain prepaid cards provide checks, bill payments or multiple copies of a card for family members. There are a few that offer rewards such as cash back on purchases similar to what rewards credit cards do. >> Think that a debit card could be what you need? Find out more about the limitations for prepaid debit cards. Prepaid debit cards are a bit limited compared with banking credit and accounts. Although they usually offer online services, a lot of prepay cards don’t have standard banking options, like an option to withdraw or transfer cash for free. The cash you deposit onto a card is likely not to generate interest either. If you’re looking to store cash in a safe place and don’t expect to take many withdrawals, it may be better to find a high-rate savings account for your funds. The debit cards you purchase with prepaid cards won’t impact your credit score, and therefore won’t help build it, neither. No effect on credit: Because they aren’t credit cards, you cannot build credit using them. To do that, you’ll need to . The absence of banking services: Prepaid cards don’t automatically have the same features that you’d think of with a checking account, including accessibility to the ATM as well as branch or ATM networks. online or mobile banking, as well as bank services like wire transfers, as well as the capability to stop payments. Past horror stories: Several prepay cards have been affected by technology outages that last for weeks or days. The parent company of RushCard switched their payment processing provider to Mastercard in 2015, a glitch in the technology caused the accounts of tens of thousands of users from their RushCard accounts for days. The Walmart MoneyCard experienced an outage in 2016. Netspend reached a settlement against a Federal regulator on allegations that customers were prevented from accessing their accounts, providing refunds to customers who were eligible. If you are looking for a checking account without monthly fees, take a look at our list of . There are also for people with bad credit or banking history. Whether used for budgeting or an alternative method to make a bank deposit, prepaid debit cards can assist you in storing and spending money. Prepaid debit cards are different from. credit and debit cards. Here’s a brief overview of the distinctions: Prepaid debit cards — pay before you load funds onto the card via cash or direct deposit or a transfer from a different account prior to paying for transactions. There is no need for a checking account. Debit cards – pay right now: You can use funds directly from a checking account when paying for purchases or withdrawing funds at an ATM. Credit cards — pay later: You borrow money from a bank when you use your card. You pay the money back later. >> Ready to see your options? Look through our selections of the Prepaid debit cards. If a prepaid debit card isn’t the right choice for you, then you could choose a more suitable alternative using an account that is free of charge. Though certain checking accounts are subject to monthly fees, a growing number of institutions online offer accounts that don’t have monthly fees or minimum balance requirements and they have options for those who have had issues with your bank account in the past. Take a look at these three accounts and one of them doesn’t need your (ChexSystems is the reporting agency banks use to follow those who’ve had issues with the accounts of previous banks). The NerdWallet ratings are made by the editorial staff. The scoring formulas consider many data points for every financial service and product. at Chime deposits are FDIC Insured Monthly Fee: $0. Free ATM access: Over 60,000 ATMs. Bonus benefits including: No fees for overdrafts. No ChexSystems records check. More info from Chime Chime states: “Cash withdrawal and third-party fees can be charged. Chime is a technology-based financial business, not a banking institution. Banking services offered through debit cards issued by the Bancorp Bank or Stride Bank, N.A. and Members of the FDIC.” NerdWallet’s ratings are determined by our editorial team. The scoring formulas consider many data points for every financial product or service. Monthly cost: $0. Free ATM access: Over 43,000 ATMs. Bonus features: Account pays interest. The ratings of NerdWallet are compiled by our editorial team. The scoring formulas take into account multiple data points for each financial service and product. Monthly cost: $0. Access to ATMs free of charge: Over 70k ATMs. Bonus features: Account pays interest. The author’s name: Spencer Tierney is an expert on deposits and certificates at NerdWallet. The work of Spencer Tierney has been featured by USA Today and the Los Angeles Times. In a similar vein… Find a better checking account View NerdWallet’s recommendations for the top checking accounts. Go deeper into Banking Get more smart money-making strategies delivered straight to your inbox Sign up and we’ll send you Nerdy posts on the topics in finance that matter most to you as well as other methods to help you make the most out of your money. Make all the right money moves

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