By now you may have heard of Chime, a no-fee bank account and debit card that helps you manage your money and save automatically.
But, perhaps you’re wondering how a debit card can help you save money. If you’re a shopaholic, you’re also probably thinking that a prepaid card is a better way to curb your spending habit.
Before you decide which type of account is best for you, it’s important to understand the differences between debit and prepaid cards. From there, you can compare card options and make an informed decision. Read on to learn more.
What’s the difference between a debit and prepaid card?
In a nutshell: A debit card is linked to your checking account and a prepaid card is not.
So, if you use a debit card, your purchases are deducted from your checking account. In many cases – especially if your debit card is linked to a checking account at a large bank – you will get charged a fee if you spend more than you have available and have “opted in” to the overdraft program at your bank (most people don’t even realize they are “opted in”.)
A prepaid card, on the other hand, is not connected to a bank account and it’s up to you to load money onto it, according to the Consumer Financial Protection Bureau (CFPB).
For some people, a prepaid card is a great way to curb spending. At the same time, debit cards currently have more consumer protections – offering you recourse if your card is stolen or used fraudulently. Come April 2019, however, the CFPB will offer new rules for prepaid card users, including protections against theft and errors.
Let’s compare cards
Now that you understand the main difference between debit and prepaid cards, it’s time to take a look at 5 of the most popular cards on the market.
It’s simple to sign up for a Netspend prepaid card. If you order a card today, you’ll receive it in seven to 10 days.
You can load funds onto the card by adding money or checks, and you can also deposit your paycheck and tax refund onto your card via direct deposit. Here are some of the benefits of a prepaid Netspend Visa or Mastercard:
- Get paid faster. If you enroll in direct deposit, your paycheck can be in your Card Account up to two days faster.
- Mobile money management. You can deposit checks right from your phone or mobile device simply by downloading the Netspend Mobile App. You can also send and receive money, get account information, and receive email and text alerts about your transactions.
- Transfer and receive funds to and from friends who also have Netspend cards.
- Earn cash back. Netspend offers a Payback Rewards program that helps you earn cash back for your purchases.
- Save money. With Netspend, you can open a Savings Account and set up AutoSave to automatically transfer a designated amount every time you put funds onto your card.
So, are there fees associated with Netspend? Yes and no. There are no fees to use direct deposit or check your balance. However, there are fees for other services, like a one dollar fee per purchase transaction and varying ATM cash withdrawal fees. Check out the full list of fees here.
RushCard is a prepaid Visa debit card and it only takes five to seven days to get your card once you sign up online. With RushCard, you can choose from several different designs to suit your style, and you can have up to four cards at a time.
You can load money onto your card and deposit your paycheck directly into your account. Here are some of the other benefits of a RushCard.
- Get paid faster. Just like Netspend, you can get paid two days faster with Early Direct Deposit.
- Mobile money management. You can use the RushCard to cash checks, move money, view your transaction history and pay bills. Learn more about the mobile app here.
- One Touch Access. For more convenience and security, you can use your fingerprint to access your account.
- Rewards. The RushCard offers a rewards program with various perks, including discounts at participating retailers and the Refer-A-Friend Program. For each friend that you refer, you can earn $30 when that friend sets up an account. You can earn up to $600 annually.
RushCard is similar to Netspend in that there are fees. For example, you’ll be charged one dollar per purchase transaction with the Pay As You Go Plan. This plan, by the way, comes with a fee of $3.95 or $9.95 when you first fund the card. While direct deposit, in-network ATM withdrawals, and bill pay services are free, you’ll have to pay $2.50 to use an out-of-network ATM and 99 cents to transfer funds to another RushCard member. Here’s the full list of fees.
The Brink’s Prepaid Mastercard is brought to you by Brink’s, a global leader in secure transportation and cash management services for financial institutions. In partnership with Netspend, Brink’s entered the prepaid market with its own card in 2015.
Card users can load cash and conveniently transfer money. Here are some of the other Brink’s benefits.
- Get paid faster. By enrolling in direct deposit, you’ll get paid two days earlier and have instant access to your paycheck.
- Mobile money management. Once you download the app, you can manage your money from just about anywhere. This includes paying bills and person-to-person transfers to other Brink’s or Netspend members.
- Mobile refills. This is a pretty cool benefit as you can use your Brink’s card to add minutes to almost any prepaid mobile phone.
- Rewards. This card also comes with its share of rewards, like credits for transactions at certain retailers, and Refer A Friend. For every referral who gets a Brink’s card and loads it with at least $40, both of you will get $20.
- Security. You’d expect this from Brink’s, right? To give you an added layer of security, you can add your picture to your card.
While Brink’s has a multitude of benefits, it also comes with fees. There are three plan options and the lowest tier Pay-As-You-Go plan has no fees for direct deposit. But, you will be charged one dollar per purchase transaction and $2.50 per domestic ATM cash withdrawal. See this full list of fees.
Bluebird by American Express offers a prepaid card that comes with a host of perks and money management tools.
You can load your card with cash and enroll in direct deposit to get paid early. You can also add funds for free at any Walmart checkout register, and link your debit card to Bluebird to transfer money. Take a look at some other Bluebird perks.
- Access cash for free. With your Bluebird card, you can get cash for no fees at more than 24,000 MoneyPass ATMs and 4,500 plus Walmart stores.
- Mobile money management. You can pay your bills via online Bill Pay or Bluebird Checks, or easily manage your account using the Bluebird Mobile App.
- Family Accounts. You can give cards to up to four family members and manage all the accounts in one place. This includes setting spending limits.
- SetAside Accounts. This is Bluebird’s way of helping you save money. Using a SetAside account, you can transfer funds into a designated account and even set up automatic transfers.
- Added benefits from American Express. Because Bluebird is part of the Amex family, you’ll have purchase and fraud protection, as well as roadside assistance.
This Amex prepaid card states that “virtually all Bluebird features are free. See for yourself.” Whereas almost everything, including bill pay and direct deposit, is free, there are some minimal fees. For example, you’ll be charged $3.95 for getting cash at some retailers other than Walmart, and you’ll get dinged $2.50 for withdrawing funds at an ATM outside the expansive MoneyPass network. However, the Bluebird card has significantly fewer fees than the rest of the prepaid cards listed here. A fee chart is on the company home page.
Okay, so now you know that Chime is not a prepaid card. It’s a bank account, complete with a linked debit card.
Want to know the best part about the Chime debit card? You can actually save money every time you make a purchase. How? Your transaction is rounded up to the nearest dollar and that round up amount is deposited into your Chime Savings account. The more you spend, the more you save.
Check out some other awesome Chime benefits:
- Get paid early with direct deposit. When you receive direct deposit into your Chime Spending Account, you get your funds two days early. This means you have your hard-earned cash almost instantly.
- The best mobile banking experience. Chime’s award-winning mobile app makes banking a breeze. From tracking your spending and savings to paying friends and relatives, you can do it all from any smartphone. You can even transfer money, send and deposit checks, and pay bills.
- Debit card security. With Chime, you can block or disable debit card transactions with an instant swipe on your phone, and shut off international transactions. You can also get instant alerts every time your debit card is used.
- Easy access to money. While Chime is an online-only bank account, you can withdraw cash at over 38,000 ATMs.
- Save automatically. We already discussed debit card round ups that help you save when you spend. But Chime also helps you save when you get paid. How? You can automatically transfer 10% of every paycheck directly into your Savings Account.
With all these perks, you may be wondering if there are any hidden fees, right? Well, the answer is “no.” No account maintenance fees. No overdraft fees. No ATM fees. No foreign transaction fees. No minimum balance fees. No exceptions. How’s that for fee-free banking?