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Best Prepaid Debit Cards of April 2020

| Money Rates Columnist.
min read

woman-home-credit-laptopThe best prepaid debit cards help you avoid getting into debt because you're never spending money you don't have.

They are safer than carrying cash and have the worldwide acceptance that comes with Visa and Mastercard.

Prepaid debit cards are also a useful budgeting tool that can help you learn to allocate your money responsibly.

Best Prepaid Debit Card with Low Fees - Kroger REWARDS Prepaid Visa Card

At first blush, the Kroger REWARDS Prepaid Visa Card might seem to cater only to the niche market of Kroger shoppers. And while it's true that the benefits of the card are maximized if you are a loyal Kroger customer, it's a serviceable card for any consumer and has reasonable fees.

The card is issued by U.S. Bank and is available at any Kroger store. There is a $1.50 fee to purchase the card in the store, on top of whatever amount you load onto it. However, that fee is waived if you sign up for the card online.

Beyond that, there is a $4.95 monthly fee and a $2.50 fee to get cash off the card using an ATM. There is also a $3.00 fee to reload the card with cash and a 5% ($5 minimum) to reload using a check. However, it's free to reload card-to-card and free to reload using direct deposit.

Direct deposit is certainly your best choice if it is available to you. Not only is it free and convenient, but you also earn a $10 bonus when you make your first successful direct deposit. That offsets two monthly fees.

Kroger Rewards Prepaid Visa Debit Card brings with it many of the same benefits as the Kroger REWARDS World Mastercard®, and is a great choice if you don't qualify for that credit card. This includes the Kroger REWARDS program - You earn:

  • Three points for every dollar spent on Kroger Family of Companies Own Brand Products
  • Two points for every dollar spent in the Kroger Family of Companies (excluding fuel centers)
  • One point for every dollar spent on all other purchases.

Points can be redeemed for free groceries at Kroger. You earn $5 in groceries for every 1,000 points you accumulate.

Pro Tip: You can request a Mastercard Debit Card instead of a Visa, if you prefer.

Kroger REWARDS Prepaid Visa Card

Best Features: The fees are reasonable and many can be avoided. In addition, the Kroger REWARDS program gives you the chanced to earn free groceries. The more you use your card, the more free groceries you earn.

Bonus: You earn a $10 bonus when you reload your card for the first time using direct deposit.

Rewards: The Kroger REWARDS program lets you earn points every time you use your card. The points can be redeemed for free groceries. 1000 points is worth $5 I groceries.

  • Three points for every dollar spent on Kroger Family of Companies Own Brand Products
  • Two points for every dollar spent in the Kroger Family of Companies (excluding fuel centers)
  • One point for every dollar spent on all other purchases.

Credit Needed: N/A

NetSpend® Visa Prepaid Card

Best Feature: The NetSpend® Visa Prepaid Card offers a unique feature that encourages you to keep your card loaded. Your account acts as a savings account with a 5.00% APR yield on balances up to $1,000 and 0.5% on anything above $1,000.
This feature helps offset rather high fees.

You are offered a choice when you sign up of paying a fee per purchase ($1-$2 each) or a flat $9.95 monthly account fee. If you choose the flat fee, it can be dropped to $5 if you use direct deposit to load at least $500 a month onto the card. You get tagged with a $5.95 fee if you don't use the card for 90 days. And if you close your account, you get charged a fee of $9.95 to return unused funds to you.

NetSpend® Visa Prepaid Card

NetSpend® Visa Prepaid Card

Bonus: No sign-up bonus. But using direct deposit to load your card can cut the monthly fee in half and will give you access to your paycheck funds up to two days in advance.

Rewards: No rewards program. However, your card account acts as an interest-bearing savings account and pays 5% APR on balances up to $1,000 and .5% on any balance above $1,000.

Credit Needed: None


What is a Prepaid Debit Card and How Does It Work?

A prepaid debit card gives you the access and convenience of a credit card but without the danger of going into debt. Rather than paying a credit card bill after you have made your purchases, you load the prepaid debit card with money beforehand and are able to spend only up to the amount loaded onto the card.

A prepaid debit card is accepted anywhere Visa or Mastercard is accepted. This means you can use it for such things as online bill-paying and other E-commerce.


How to Choose A Prepaid Debit Card

The useful nature of prepaid debit cards is pretty standard. So the factors you should keep in mind for choosing a card are fees and rewards.

Prepaid debit card fees

Most all prepaid debit cards have some type of monthly account fee. The amount of the fee can vary widely.

There can also be fees associated with purchasing the card, reloading the card, making purchases, getting funds off the card at an ATM, even fees for not using the card for extended period or for closing your account.

Some of these fees can be avoided. For example, you can avoid the purchase fee by signing up for a prepaid debit card online and can avoid the reload fee by using direct deposit. It's important to read the fine print before making a decision.

Prepaid debit card rewards programs

Some cards, such as Kroger, offer a rewards program similar to those offered by credit cards. But most prepaid debit cards do not. Again, you'll want to read the fine print to see if the rewards are easily achievable, given your personal spending habits.


Best Practices for Using a Prepaid Debit Card

It's important to know that a prepaid debit card will not help you improve your credit rating or help you establish credit. For that, you would need a secured credit card.

However, for a young person with no credit, or someone with a poor credit history, a prepaid debit card can be an excellent tool to help you manage your money in a responsible way. Using a prepaid debit card will help you learn to allocate your funds and track your spending. It can also help you create a structured monthly budget.

To use a prepaid card effectively, and to avoid as many fees as possible, you will want to load with your regular paycheck, using direct deposit. It's simple, free and ensures you won't forget to reload your card which can lead to an embarrassing situation.

Credit Score You Need for a Prepaid Card

One of the best parts about using a prepaid debit card is that credit score is completely irrelevant. There is no baseline qualification to obtain one, as you are only able to spend the money that is loaded onto the card.


Methodology

In evaluating the Kroger REWARDS and Netspend Visa prepaid debit cards, the primary factor was fees. When you opt to use a prepaid debt card, the chances are you have had trouble handling money in the past, or you are just starting out and you are on a limited budget. In either case, you don't have extra cash to throw away on fees. Both cards have fees but Kroger REWARDS are significantly less.

We also took a look at benefits. Both cards carry the global acceptance of Visa and Mastercard. But Kroger REWARDS offers a $10 bonus for using direct deposit and encourages frequent use of the card with a rewards program that pays off in free groceries. Netspend offers a unique "savings account" approach to their prepaid debit card but the interest payouts don't match up with the Kroger rewards.

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