The prepaid card market was once the wild west of the banking industry. The players in the industry charged ridiculous fees, offered little in the way of added benefits, and treated cardholders poorly. Those days are long gone.
As large institutions like American Express, Chase, and Walmart entered the prepaid market, the product began to improve. As it improved, the costs came down significantly while many benefits were added. It has been a win-win for consumers.
To give you an idea of where the prepaid market stands today, here are 11 prepaid card perks that may surprise you.
1. Mobile Check Deposits: Prepaid cards today can serve as a checking account alternative. One of the features on some cards, is the ability to deposit checks with a smartphone. Simply snap a picture of a check, enter some details, and the check is added to your prepaid card.
2. High Yield Savings Account: Several prepaid cards offer FDIC insured savings accounts with interest rates as high as 5 or 6% APY.
3. Free Online Bill Pay: Consistent with the checking account alternative theme, prepaid cards today enable you to pay bills online. In some cases, if the creditor doesn’t accept online payments, the prepaid card company will send them a check.
4. Cash Management Tools: There are now various features that help cardholders manage their money.
5. Roadside Assistance: Some prepaid cards have started offering perks typically associated with credit cards.
6. Purchase Protection: The Serve card also offers purchase protection. According to the website, this perk “can help protect eligible purchases made with the Card against accidental damage and theft for up to 90 days from the date of purchase.”
7. Purchase Cushion: A prepaid debit card typically doesn’t extend credit to cardholders. Several cards, however, offer a small purchase cushion for those that spend more than their balance. This feature is typically limited to $10, but it can come in handy to cover purchases that exhaust the balance on the card.
8. FDIC Insurance: With banks FDIC insurance is typically a given. With prepaid debit cards it’s not so simple. Those cards issued by a bank typically are FDIC insured. Other cards may not be. The key, however, is that some prepaid debit cards are insured. For example, funds placed on a Rushcard are FDIC insured according to its website.
9. Text Alerts: Prepaid cards have started to embrace technology in some useful ways. One such development is in the area of text alerts. Some cards offer alerts when the balance on the card is low or a transaction is processed.
10. Mobile Apps: Keeping with technology, prepaid cards now offer some excellent mobile applications. Rivaling those offered by larger financial institutions, these apps allow cardholders to check their balances, review transactions, and even transfer money or pay bills.
11. Low Fees: Last but not least, the cost of prepaid cards has fallen significantly over the last few years. As larger players have moved into the market, the cost of these cards now make many of them more attractive than some bank accounts. It’s common, for example, to find prepaid cards that cost less than $5 a month to use. Many offer free ATM withdrawals.