Netspend lets cardholders overdraw their accounts, but only if they have previously enrolled in its overdraft protection service. Otherwise, Netspend does not allow you to go over the amount authorized on your card.

Netspend cards are prepaid debit cards that allow cardholders to make purchases worldwide using the pre-funded money deposited into their accounts.

Key Takeaways

  • Netspend offers prepaid debit card users overdraft protection when their account balance goes under -$10.01.
  • Customers must enroll and have at least one direct deposit of $200 or more every 30 days.
  • Netspend charges $15 per overdraft transaction up to a maximum of three transactions each month.
  • The service is canceled if the customer has a negative balance for more than 30 days three times or for more than 60 days at one time.

How Netspend's Overdraft Protection Service Works

Netspend offers a free purchase cushion or overdraft buffer of $10. That means the cardholder will not immediately incur the typical overdraft charge of $15 if he goes over the amount on his card.

It's not a permanent free pass, however. The cardholder has a grace period of 24 hours to repay the negative balance before incurring an overdraft fee. For overdraft amounts over $10, the cardholder would incur a charge of $15 per occurrence, but that's capped to a maximum number of three fees in a calendar month.

This does not mean that Netspend will authorize every overdraft. Netspend's terms and conditions indicate that the company only pays overdrafts at its own discretion and does not guarantee payment of every overdraft transaction. Unauthorized overdraft transactions are declined and Netspend may charge fees for these declined transactions.

Activation and Eligibility

To activate Netspend overdraft protection, a customer must provide a valid email address and agree to Netspend's electronic delivery of disclosures and amended terms to the contract associated with signing up for overdraft protection. Additionally, a Netspend customer must receive deposits of $200 or more every 30 days to qualify for overdraft protection.

If a customer overdraws his account balance by more than $10, Netspend sends a notification about the overdraft. The customer has 24 hours to replenish the account to restore its balance to more than $10. If a customer fails to act on the notice, Netspend charges an overdraft protection service fee of $15.

Overdraft Protection Deactivation

If a customer fails to receive deposits of at least $200 every 30 days, Netspend cancels the overdraft protection, meaning the customer must go through the application steps again. However, if a card account has a negative balance for more than 30 days three times or for more than 60 days at one time, the overdraft protection will be permanently canceled.

Netspend customers should be careful not delete their email addresses or withdraw consent to receive electronic disclosures because their Netspend overdraft protection is automatically deactivated.

How Netspend Cards Work

Founded in 1999, Netspend offers reloadable prepaid cards: Mastercard and Visa. The company does not do a credit check on applicants, but it does require them to furnish proof of identity.

Netspend cards have no activation fees or require minimum balances. Because they are not a credit card that allows you to carry a balance, there are no interest charges or late fees

The company offers three plans, two of which charge monthly fees. The basic Pay-as-You-Go Plan does not, but cardholders are then charged transaction fees on individual purchases; the other two plans allow for fee-free purchases.

There is also a premier plan that charges no monthly account fee and allows for unlimited purchases, but it requires a minimum amount in monthly direct deposits.

Funds can be added to Netspend accounts through direct deposit, bank account transfers, Netspend card account transfers, or through NetSpend reload network locations. Paychecks, Social Security benefits and even Internal Revenue Service (IRS) income tax refunds can be deposited directly into Netspend accounts and onto cards.

Netspend card accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to the current coverage limit and the cards can be used at any site or locale that accepts MasterCard and Visa debit cards for transactions, including ATMs. (For related reading, see "How Netspend Works and Makes Money")