At the same time as the Consumer Financial Protection Bureau (CFPB) is proposing new protections for consumers who use prepaid cards, Consumer Reports has issued their findings on the best general purpose reloadable prepaid cards.
After reviewing 23 different cards, Consumer Reports crowned Bluebird, jointly issued by American Express and Walmart, as the best prepaid card to use instead of a traditional checking account. Chase Liquid, issued by Visa, and American Express Serve came in second and third, respectively. The findings are based on value, convenience, safety, and fee disclosures.
Value was determined as how much the cards cost to use—whether there is a monthly fee, a fee for purchases, a fee for loading the card with funds, etc. Convenience was judged according to the availability of in-network ATMs, how many places the card is accepted, and whether people can pay their bills using the card. Safety meant whether or not the card is covered by FDIC insurance, and how clearly fees are disclosed also weighed into the rankings.
The top-rated prepaid cards are free of monthly and/or many other fees, or make it possible for customers to avoid them. They are also FDIC insured, offer direct deposit and bill pay, making them comparable to checking accounts, and have clearly disclosed fees where they do charge them. Cards that did not fare so well tended to fall short in one or more of the four categories used to judge.
The best and the worst
The report ranked prepaid cards in two ways: cards that are used as replacements for a checking account, and cards that are used in addition to a regular checking account. Along with Bluebird, Chase, and Serve, Consumer Reports ranked Russell Simmons’ Prepaid Visa RushCard (Rush Unlimited Plan) as one of the best prepaid cards to replace a checking account.
As for cards to use in conjunction with a checking account, the Bluebird card took the top spot in that category as well. The report ranked H&R Block’s Emerald Prepaid MasterCard as the second best card to use in addition to a checking account. Chase Liquid Visa and American Express Serve came in third and fourth in this category.
According to Consumer Reports, the worst cards to use as a replacement checking account are: the NetSpend Fee Advantage Plan and the NetSpend Pay-As-You-Go-Plan, which are both Metabank products, and the AccountNow Gold Visa Prepaid Card. Lack of free in-network ATM access and high fees were the main drawbacks to these three cards. The American Express for Target prepaid card got a special place at the very bottom of the list because it lacks FDIC insurance. These same four cards also came out as the worst cards to use in addition to a checking account, making them two-time losers in the Consumer Reports prepaid study.