How to Choose the Best Prepaid Debit Card

If you are trying to get a prepaid debit card and are confused by all the options available or are not sure about what features to look for or pay attention to, we can help. The Low Income Finance Prepaid Guide will help you choose the best prepaid debit card.

"How to Choose the Best Prepaid Debit Card"

What is a Prepaid Debit Card?

A prepaid debit card is an alternative banking card that only lets you spend the money you load onto the card.

It is essentially a pay-as-you-go card. You can typically add money to your prepaid card via direct deposit, bank transfer, mobile check deposit or cash reloads at participating retail locations, like the Walmart Money Center.

There are two main types of prepaid cards – Non-reloadable and Reloadable.

Non-reloadable prepaid cards cannot be used again after you use the initial value on the card has been spent. Reloadable prepaid cards, on the other hand, are those that you can add money to and continue using over and over.

Most prepaid cards carry a network logo (Visa, MasterCard, American Express, or Discover) and can generally be used wherever cards for that brand are accepted. Other forms of prepaid cards include payroll cards, government benefit cards, and cards used to disburse student loans.

Prepaid cards vs. debit cards:
While prepaid cards work like bank debit cards, there are important differences between the two. A bank debit card is usually linked to a bank account. When you spend money on a debit card, you are spending money from the account that is linked to the debit card.

A Prepaid card, unlike a traditional debit card, is not linked to a bank account. When you spend money on a prepaid card, you are spending money you have loaded onto the card.

In addition, whereas banks give their debit card customers the option for overdraft service (for a fee), most prepaid cards do not allow for overdrafts. This means you cannot spend more than you have loaded on your prepaid card.

Prepaid cards vs. credit cards:
Prepaid cards are very different from credit cards. When you use a credit card, you are borrowing money. Generally, when you use a prepaid card, you are spending money you loaded onto the card in advance.

Prepaid cards vs. Gift Cards:
Most prepaid cards carry a network logo (Visa, MasterCard, American Express, or Discover) and can generally be used wherever cards for that brand are accepted., on the other hand, other hand are issued by a specific merchant and can only be used to buy goods or services at that merchant.

How to get a prepaid debit card

There are many ways to get a prepaid card.

At Retail Stores
Stores like Target, Walmart, Walgreens, and CVS allow you to purchase and load money onto a new prepaid card.

Most companies that offer prepaid cards allow you to sign up for a card online via their website.

At a Bank Branch Office
Banks like Wells Fargo, BB&T, PNC, Chase, and TD Bank, offer prepaid cards that you can apply for at a local branch.

Why People Use Prepaid Cards

According to a survey by the Pew Charitable Trusts, the primary motivation for using prepaid cards is to gain control over their finances. Here are the top four specific reasons why people use prepaid cards:

  • Making purchases online and other places that don’t accept cash
  • Avoiding credit card debt
  • Controlling spending
  • Avoiding overdraft fees

How to Choose the Best Prepaid Debit Card

Here’s what to look for as you choose the best prepaid debit card that meets your needs.

Options for Adding Funds to the Card

The first feature to look into when selecting a prepaid card is the options available to add money to the card. There are several ways to add money to a prepaid card. Each prepaid card provides options on how to reload the card.

Make sure you are satisfied with the reload options available for the card you are selecting since that will be the only ways you can add money to the card. Here are the reload options for prepaid cards:

  • Transfer money from a bank account.
  • Direct-deposit your paycheck onto your card.
  • Transfer money from a PayPal account.
  • Add cash to your card at retail stores such as Wal-Mart.
  • Use a reload card such as MoneyPak.

Not all prepaid cards come with all the reload options listed above. It is therefore important to make sure the reload options provided by the card you are selecting will work for you.

Account Fees

The next factor to consider is fees. One of the biggest things to watch when choosing a prepaid card is the fees that may come with your card, including those you have to pay on a monthly basis for using the card.

Prepaid card fees can add up quickly, especially if one of the reasons you wanted a prepaid card was to avoid bank checking account fees. Here are the fees that come with prepaid cards.

  • Purchase fees
  • Monthly fees
  • Point-of-sale transaction fees
  • ATM cash-withdrawal fees
  • International ATM Withdrawal Fee
  • International Conversion Fee
  • Balance-inquiry fees
  • Fees to receive a paper statement
  • ATM transaction-decline fees
  • Fees to add, or “load,” funds
  • Dormancy fees for not using your card
  • Fees to get your remaining funds back when closing the account
  • Overdraft fees

Why You Need The Card

The next factor to keep in mind is what is motivating you to get a prepaid card? Are you getting the card to allow you to make purchases online and other places that don’t accept cash? If that’s the case, then you may not mind a card with ATM fees but you may watch out for monthly and dormancy fees.

If you are getting the card to control your spending, then you want a card that does not allow you to overdraw the account. Another reason for getting a prepaid card is because you are tired of paying fees that come with a traditional bank checking account, then a prepaid card with low fees is right for you.

When you are getting a prepaid card to manage your money and control spending, then a card with services, such as online bill pay, check writing and free cash withdrawals at in-network ATMs is your best option.


Prepaid debit cards have come a long way, and some have become real alternatives to traditional checking accounts you get from a bank or credit union.

For example, there are prepaid cards that give you check writing capabilities, mobile check deposit, cash back on purchases, option to set up additional accounts for family members, and tools for saving money and budgeting.

The good news is that some of these features are provided to cardholders free of charge. You should weigh the costs and benefits of these features and other fees that come with each card and your own reasons for wanted a prepaid card to pick the best card that meets your needs.

If you have any questions about how to find the best prepaid debit card, please ask us in the comments section below.

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