The 5 Best Prepaid Debit Cards of 2020

Best Prepaid Debit Cards for July 2020

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Prepaid debit cards are an alternative to credit cards and traditional debit cards for making purchases. They let you spend up to the amount of money you’ve loaded onto your card and can be reloaded repeatedly.

The prepaid debit card market is fragmented, which means that no single company carries enough market share to dominate it. But the market is growing, with Allied Marketing Research estimating a compound annual growth rate of 14.9% from 2020 through 2027.

Prepaid debit cards can be an excellent choice if you’ve been unable to get a regular bank account with a conventional debit card. You might also consider one if you’re worried about going into debt with a credit card. Prepaid cards can also be useful in combination with the other two as a budgeting tool—after all, you can only spend what’s loaded onto the card.

If you’re looking for a prepaid debit card to help manage your money, here are our top options to consider.

The Best Prepaid Debit Cards of July 2020

Best Overall, Best for No Monthly Fee: Bluebird by American Express

Bluebird by American Express

Bluebird by American Express 

Pros
  • No fee for monthly maintenance, activation, online card purchases, overdrafts, and more

  • Provides several perks, including purchase protection, roadside assistance, and Amex Offers

  • Access to more than 30,000 fee-free ATMs

  • Cash reloads at Walmart locations are free, as are direct deposit, debit card transfers, and mobile check deposits

Cons
  • No rewards

  • Cash reloads at other retailers may incur a fee

  • Mobile check deposits take 10 days unless you pay a fee

Bluebird charges fewer fees than most prepaid debit cards, making it a solid choice if you’re on a tight budget or you simply don’t want to pay for debit card access. You can create sub-accounts for family members—they’ll get their own card tied to the main account—and a Set Aside account for savings, but you won’t earn interest on the balance.

Best for Cash Reloads: American Express Serve FREE Reloads

American Express Serve FREE Reloads

American Express Serve FREE Reloads

Pros
  • No fee when you load cash onto your card at more than 45,000 Walmart, 7-Eleven, CVS, Rite Aid, Dollar General, and Family Dollar locations

  • Other free reload options include direct deposit and bank account transfers

  • Access to more than 30,000 fee-free ATMs

  • Eligible purchases get purchase protection

Cons
  • There’s a $6.95 monthly fee (no fee in New York, Texas, or Vermont)

  • Mobile check deposits take 10 days unless you pay a fee

  • No rewards or other major benefits

If you don’t have a checking account, cash reloads maybe your best option, making the Amex Serve FREE Reloads a top choice. You can also create free sub-accounts for family members and a savings account, albeit with no interest.

Best for Walmart Shoppers: Walmart MoneyCard

Walmart MoneyCard

Walmart MoneyCard 

Pros
  • Earn 3% cashback at Walmart.com, 2% back at Walmart fuel stations, and 1% back at Walmart stores

  • Earn 2% annual interest on a linked savings account

  • No monthly fee if you load $1,000 or more each month

  • Free cash reloads via the Walmart MoneyCard App, direct deposit, mobile check deposit, and bank transfer

  • No overdraft fees

Cons
  • Cash back is capped at $75 per year

  • The standard monthly fee is $5.94 if you don’t load $1,000 or more each month

  • All ATM withdrawals will incur a $2.50 fee

  • Mobile check deposit takes five days

The Walmart MoneyCard is one of the few prepaid cards that offer rewards, although there is an annual cap on them. Even if you can’t get the monthly fee waived, the annual rewards are enough to pay for it. The major downside is the fees you’ll have to pay if you need to use ATMs to get access to your cash.

Best for Rewards: American Express Serve Cash Back

American Express Serve Cash Back

American Express Serve Cash Back 

Pros
  • Offers unlimited 1% cash back on all purchases

  • Access to more than 30,000 fee-free ATMs

  • Free reload options include direct deposit, bank transfers, and mobile check deposit

  • Eligible purchases will receive purchase protection

Cons
  • You’ll pay a $7.95 monthly fee (no fee in New York, Texas, or Vermont)

  • Cash reloads cost up to $3.95

  • Mobile check deposits take 10 days unless you want to pay a fee

Unlimited 1% cashback isn’t too impressive among credit cards, but it’s the gold standard for prepaid debit cards. The American Express Serve Cash Back charges a $7.95 monthly fee, but you can make up for it if you spend at least $795 per month with the card.

Best for Tweens/Teens: FamZoo Prepaid Debit Card

FamZoo Prepaid Debit Card

FamZoo Prepaid Debit Card

Pros
  • You can order up to four prepaid cards for free and set up automatic recurring transfers (additional cards cost $2 apiece)

  • Parents can lock and unlock cards and encourage kids to save with interest paid from the parent’s account

  • You can also tie transfers to allowances and chores or even create a non-monetary rewards system

    Access to more than 30,000 fee-free ATMs


Cons
  • You’ll pay a $5.99 monthly fee, though you can reduce it to as low as $2.50 if you pay in advance

  • The only free reload options are direct deposit and transfers from Apple Pay, PayPal, and Square Cash

  • Other options, including bank transfers, PopMoney, and cash reloads, may incur a fee

The FamZoo Prepaid Debit Card isn’t the only prepaid card that offers sub-accounts. But it provides a whole suite of features that can help parents teach their children how to manage their money.

What is a Prepaid Debit Card?

A prepaid debit card is a means of payment. As with a traditional debit card, you can use a prepaid card to make purchases online and in-person wherever the card is accepted. Prepaid cards are typically issued on the same payment networks as regular debit and credit cards, including Visa, Mastercard, American Express, and Discover.

The difference between a prepaid debit card and a regular debit card is that the former isn’t tied to a checking account with a bank or credit union. Also, you can only use the funds that you’ve loaded onto the card. While some prepaid cards offer overdraft protection, that’s not as universal as with traditional bank accounts.

Prepaid debit cards are sometimes compared to secured credit cards, but the two are very different. With a prepaid debit card, you simply use the money you load onto your card. By contrast, a secured credit card requires that you make an upfront deposit, which becomes your credit line. You can use that credit line, pay it off, and continue to use it over and over again. You never actually use the deposit money, and you can get the deposit back when you close the account or potentially even sooner. Also, a secured credit card can help you build credit, which won’t happen with a debit card.

Many prepaid debit cards allow you to create sub-accounts, so you can provide cards to other members of your family, all of which are tied to the same main account. However, many prepaid cards charge a variety of fees, including monthly fees, transaction fees, reload fees, ATM fees, and others.

For that reason, it’s important to shop around and compare several cards before you choose one.

Who Should Get a Prepaid Debit Card?

The biggest target market for prepaid debit cards is people who are unbanked or underbanked, either by choice or circumstance. It can be challenging to qualify for a bank account if you don’t have a Social Security number or if you’ve had issues with previous bank accounts, such as unpaid negative balances or involuntary closures.

Prepaid debit card issuers don’t check your banking history when you apply. And while you may be asked for a Social Security number, it’s not a requirement for all prepaid cards.

You might also consider a prepaid debit card if you need some help with your budgeting. If you want to limit how much you spend for a given period on certain expenses, you can transfer money to your prepaid debit card and only use that payment method for the expense category. Some prepaid cards even allow you to set up multiple cards for different budget categories.

Finally, some people might consider a prepaid card as an alternative to a credit card. While a prepaid card won’t help you build credit, it can be a good way to avoid interest charges and stay out of credit card debt. And while you won’t get standout rewards and benefits compared with the best credit cards, you can still earn cash back or other rewards with some of the top prepaid cards.

What to Look for in a Prepaid Debit Card

There are several different factors to consider as you compare different prepaid debit cards. Some of the most important ones are:

  • Fees (including monthly fee waiver options)
  • Free ATM access
  • Free reload options
  • Rewards
  • Fraud and purchase protection
  • Flexibility with sub-accounts
  • Savings options
  • Mobile app accessibility

Which of those features will be most important to you depends on your personal situation and how you plan to use your card. 

Alternatives to Prepaid Debit Cards

Prepaid debit cards are just one way to pay, of course.

Paying with cash is a good option if you don’t want to be bothered with opening an account or managing a card. But cash isn’t conducive to online transactions, and there’s no protection if you lose your cash or someone steals it. Cash has also become less widely accepted during the COVID-19 pandemic out of fears that it might carry the virus.

A credit card, if you’re eligible for one, can be an excellent choice if you pay your bill on time and in full every month, want to take advantage of rewards and other perks, or need to build your credit. However, credit cards make it easy to accumulate too much debt if you’re not careful.

Finally, a traditional debit card is a convenient option if you can qualify for a checking account and don’t need additional tools to help you budget. Otherwise, you may want to get a prepaid debit card instead.