Prepaid debit cards provide an alternative to traditional checking accounts. For some, prepaid debit cards provide the best option when a checking account is not available because of a negative ChexSystems report or other negative banking history. For others, prepaid debit cards provide a checking account alternative without the risk of overdraft or minimum balance fees.
But what about savings accounts? Savings accounts provide the simplest and safest way to earn interest on your money. But, the same limitations on checking accounts usually apply to savings accounts. Most banks use ChexSystems or similar checks for savings accounts as well as checking accounts. And many savings accounts have fees when the account balance falls below minimum balances or when the account is overdrawn. That's why several prepaid debit card providers offer savings accounts as a companion to their prepaid debit cards.
The benefits of a savings account are simple--interest on your money with virtually no risk of loss. In the context of prepaid debit cards, here are the unique benefits of combining the two.
Since one of the obstacles to getting a savings account is qualifying for one, savings accounts offered by prepaid cards have the benefit of no qualifying or separate application. If you have the prepaid debit card, you can get the savings account.
Most prepaid cards that offer savings accounts offer high yields--as much as 5% APY--up to a maximum account balance. That represents a much higher return than the traditional savings account yields that currently average less that .25%.
Because the savings account is linked to the prepaid debit card, most cards allow no-fee transfers from the savings account to the prepaid debit card.
Many traditional savings accounts require minimum balances and charge fees if you fail to meet that balance. Although there are fees associated with the prepaid debit card, the savings accounts offered by those cards are generally without separate fees.
The whole idea of a savings account is to earn interest on money that you don't need for immediate spending. With any prepaid debit card, besides not earning interest on the card balance, you're limited by how much money you can load on the card. With a savings account associated with your prepaid card, you can safely keep additional cash secure (and available for transfer if you need it) in excess of the maximum limit on the card itself.
Here are some of the prepaid debit cards that offer companion high-interest savings accounts. To see all prepaid cards with a savings account, try our Prepaid Card Search Tool.