![]() However, unlike credit cards where you’ll accrue interest charges if you carry a balance, prepaid debit cards can prevent you from overspending, said Jones. You can add funds to a card online or at many retail locations like grocery stores and gas stations - though you’ll likely pay a fee. These cards are straightforward, and there’s no risk of going into debt: Funds you add are available right away, and the card will be declined if you try to spend more than you have. Prepaid cards aren’t linked to a checking account or credit line, so no credit check is required. Prepaid debit cards are often associated with major credit card networks, such as Visa, Mastercard or American Express, and can be used anywhere standard credit cards are accepted. What is a prepaid debit card and how does it work? You can’t redeem the rewards as actual cash during ATM withdrawals, but you can apply your cash-back balance to your next in-store or online purchase. Serve rewards you with 1% back on all your purchases, which hit your account as soon as the transaction settles. Not to be confused with the free reload card, the Serve American Express Prepaid Debit Account helps you earn cash back for purchases you would be making anyway - a true rarity for a prepaid card. Reload locations: Over 45,000 across the US Reward rates: 1% back on all online and store purchases Other fees: Card purchase is $1.50 at retail stores or free if ordered online Here are our top picks for the best prepaid debit cards, how they work and how to decide if this payment method may work for you.ĪTM fee: Free at MoneyPass ATMs or $2.50 elsewhere For consumers relying on paper sources, such as check cashing and money orders, a prepaid debit card is a viable solution that allows them to carry out transactions safely for goods and services, as well as make bill payments, according to Jones. ![]() “A prepaid debit card is a gateway solution for unbanked consumers when there’s little to no access to safe or low-cost banking alternatives,” said Renee Jones, vice president of product management at Georgia’s Own Credit Union. Prepaid debit cards often operate similarly to a checking account - just watch out for reloading fees, ATM withdrawal fees and monthly costs. Unlike with credit cards, you can’t overspend beyond the amount you load onto the card. Prepaid debit cards don’t require a credit check, making them a more accessible option than credit cards, and most allow you to withdraw cash from ATMs. If you don’t have access to a conventional banking service and need a payment alternative, a prepaid debit card could be an option for you. Nearly 5.9 million US households are “unbanked,” meaning no one in the home has a checking or a savings account, according to a 2021 Federal Deposit Insurance Corporation survey.
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