How to Choose a Reloadable Prepaid Debit Card

Getting a prepaid debit card that meets your financial needs and offers low fees can be a chore. With this guide, we walk you through the key factors and considerations on how to choose a prepaid debit card.

The number of prepaid debit cards has grown considerably over the past few years. That’s great for consumers. New lower-fee options are now available, and the number of features have increased. But if you’re looking to get a new prepaid card or to replace the one you have, the options can be daunting to say the least.

That’s why we created this guide. The guide will help you find the best prepaid debit card for your specific needs. It will also provide guidance on how to use the free tools on PrepaidCards123 to make your search easier.

Cutting Through the Marketing

Some of the benefits touted by prepaid cards are available with virtually all cards. So starting with an understanding of which items are the same for all cards can help you focus on the differences that will be important to you.

First, the application and qualifying process are generally the same for all cards. No prepaid card requires a credit check. The prepaid card issuers are not extending credit, so no credit check is necessary.

Similarly, no prepaid card requires a ChexSystems® or similar report. All cards require only a valid address and social security number to get the card.

Second, every card has free web access showing the available balance.

Third, virtually every card has free direct deposit, although cards differ on the additional benefits offered to members maintaining direct deposit–such as a lower or waived monthly fee.

Fourth, all cards provide free transfers from a bank account.

Fifth, no prepaid card has overdraft fees. While one of the benefits of prepaid cards, it’s a benefit that they all share.

Finally, all prepaid cards can be used like credit cards for purchases wherever the payment network (Visa, MasterCard, American Express, or Discover) is accepted. A transaction is processed as a debit when you enter your 4-digit PIN. All other transactions are processed as credit.

Identify Your Must-Haves

Getting your lowest cost card is important. You also have to make sure your prepaid card meets your needs. After all, if you plan to pay your bills with your prepaid card, then getting an inexpensive card that doesn’t offer bill pay just doesn’t make sense. So before looking at fees, consider how you’ll use the card and determine what’s critical versus what’s not.

For example, are you going to use your prepaid card for everyday purchases? Or will you use it mainly just to pay bills? Will your prepaid card be a complete substitute for a traditional checking account? Do plan to use an ATM frequently to withdraw cash? Do you want a card that can help you budget your money?

Answering these questions will help you narrow the search.

When you’ve determined how you’ll use your prepaid card, focus on these specifics:

Network

There are four major processing networks: Visa, MasterCard, American Express and Discover. For prepaid cards, the primary difference between the networks comes down to acceptance for purchases.

If you intend to use your prepaid card as your primary card for everyday purchases, then we recommend narrowing your search to Visa and MasterCard. While American Express is widely accepted, fewer retailers accept American Express than Visa and MasterCard. Fewer still accept Discover cards.

Limits

Every prepaid card has limits–maximum amounts for spending, ATM withdrawals, cash reloads, and the overall balance of the card. The amount of the limits differs substantially among prepaid cards.

In determining which limits are critical to you, consider the following:

  • If you’ll be using direct deposit for your regular paycheck or government benefits, the card limit should accommodate your net paycheck and any unused funds previously added to the card.
  • If you’re an independent contractor, the card limit should accommodate the amount you’re paid for your work. The cash reload limit may also be important if you cash your check before adding funds.
  • The limits for ATM withdrawals and spending depend on your spending habits. Consider whether you occasionally make larger purchases or have higher cash needs.

Features

Prepaid Cards offer a number of different features and benefits. When deciding which card to choose, separate the critical from the nice-to-haves. Consider the following core features to limit your search:

Bill Pay. Not every prepaid card offers it. If you’re planning to use your card to pay your bills, there’s no point in considering cards that don’t.

Mobile App/Text Alerts. More and more prepaid cards offer mobile apps for iPhone and Android, and most (but not all) of them have text alerts. Having at least one of these features is critical if you’ll need to check your balance before making a purchase or to find an ATM while you’re out. Mobile apps provide access to more features and information on the go than text alerts and will allow you to avoid potential charges from your mobile provider for text messaging.

Free In-Network ATM Transactions. While free ATM transactions are more of an issue of fees than features, we’ve included this as a potential must-have feature for one reason. If you intend to withdraw cash frequently from your prepaid card, an otherwise low-cost card will quickly become a high-cost one if it doesn’t offer free ATM transactions.

You can easily search for prepaid cards that meet your network, limits, and features criteria using our prepaid card search tool. The search tool provides filters for each selection and returns all prepaid cards that meet your selected criteria.

Calculate the Total Cost of the Card

Now that you’ve decided on your must-have features, the next step is to find which cards have the lowest cost. Rather than focusing on individual fees, calculate your total monthly cost based on your intended usage, which will give you a more useful basis for comparison.

The fees that will most likely make up most of the cost of using a prepaid card are the following:

  • Activation Fee: a one-time charge when the card is activated
  • Monthly Fee: a fixed amount charged by the card issuer each month for having the card
  • Reload Fee: the fee charged when you load cash on the card. This fee is typically charged by the retailer providing the reload service.
  • Purchase Fees: fees charged for each purchase. The fees may be different for purchases using your PIN (a debit transaction) and purchases where you don’t enter your PIN (a credit transaction).
  • ATM fees: fees incurred when withdrawing cash or checking your balance at an ATM. These fees can include a fee charged both by the prepaid card issuer and the ATM owner.

Compare Other Features and Benefits and Less Common Fees

Once you’ve narrowed your search and estimated your usage, you can choose a few of the lower cost cards to compare features and benefits that may not be critical but are nice to have–such as a high-interest companion savings account or a direct-deposit bonus. You can also compare less common fees that may not factor into your regular monthly cost of using the card but that you may incur sometime during the life of your prepaid card account–such as an inactivity fee if your account is dormant for a few months or a foreign transaction fee for purchases abroad.

You can easily compare all prepaid card fees, limits, and features side-by-side on PrepaidCards123. On the search page, click the compare button under the card image in your search results to add the card to your saved list. Then click the Compare Cards button to open the comparison page. Here you’ll see all of the features, limits, and fees of the cards you selected.

Making a Final Selection

If you follow this process, you will have identified the critical features that you’re looking for in a prepaid card, chosen a lower cost card based on your usage, and considered other features or fees that may help you choose among a few competing cards. From here, you can make your final selection by clicking the Apply Now button under the image of the prepaid card, which will take you to a secure application page for your choice.