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netspend cards
With a checking account, you get a debit card to spend your cash nearly anywhere you wish. But many people can’t qualify for bank checking accounts, and in a world where card transactions are increasingly common, that’s a problem. This is why prepaid debit cards like NetSpend are a billion-dollar business, with more card options appearing each year. We’ll review some of the benefits NetSpend cards provide, as well as the fees and headaches. If you want to learn more about good spending habits and long-term goals, consulting with  a financial advisor may be a good next step.

What are NetSpend Cards?

NetSpend isn’t the new kid on the pre-paid card block. The company began in 1999 and serves more than 10 million ‘underbanked’ customers. Mostly, these are people who don’t qualify for checking or savings accounts. But it also includes people who prefer cash-only transactions and stay away from the large banks deliberately. Some business owners may use pre-paid cards to keep business expenses separate from their personal accounts.

NetSpend cards come with Visa 0r Mastercard imprints and you can use them just like credit or debit cards for every-day expenses and online purchases. Like the cards of major banks, NetSpend cards are FDIC-insured and come with encryption layers to protect transactions and personal information.

The difference is that users load money onto a NetSpend card balance before they start using it. Since there is no account to draw from, the card’s reserves are only as deep as the money you’ve put on the card.

It’s easy to acquire a NetSpend card: You don’t need a bank account, there’s no credit check and anyone with a valid ID can apply. But you do pay for the privilege of using it. NetSpend makes its money through usage fees, and there are quite a lot of these. You pay to load money on the card, for transactions and ATM withdrawals. If your card is inactive for more than 90 days, you’ll pay to reactivate it.

NetSpend Cards: The Pros

netspend cards
There is a lot of competition in the prepaid debit card space. If you’re comparison shopping-and you should-here are some NetSpend card benefits:

  • Lots of places and ways to reload. NetSpend has 130,000 locations across the country where you can reload your card for free. It’s also free to reload through electronic direct deposit. Bank account transfers are another option, but you’ll pay a fee for these transactions.
  • A variety of account options. You’ll pay to use a NetSpend card, but you have choices around how you spend. If you’re a regular user, you can opt for a Premier card with unlimited transactions for a monthly fee. Otherwise, you can pay for each transaction and ATM withdrawal. The premier package also has an option for small business purchases.
  • Low threshold to qualify and maintain an account. Since there is no background check, you just need to be at least 18 years old to qualify. There’s no minimum balance required, either.
  • NetSpend transfers are free. There’s no charge if you need to send money to a NetSpend holder or another one of your NetSpend accounts.
  • Rewards offers. Like some credit cards, NetSpend has some user perks, like cash back on purchases and a friend-referral bonus. Also, you can earn interest on savings accounts: up to 5% annual percentage yield (APY) on balances $1000 or less. If you go above $1000, however, the APY drops significantly.

NetSpend Cards: The Cons

NetSpend’s detractors point to several drawbacks, especially when compared to traditional checking accounts. For the most part, this comes down to the number of fees. To some, NetSpend takes too many small bites out of an account balance to be worth the convenience. Here are the main pain points:

  • You will pay to load. Some load locations may not charge a fee, but those that do can charge up to $3.95 to reload your card. 
  • Pay to withdraw. Every ATM and credit union withdrawals cost $2.50.
  • And pay to use. Consider how many times you might use a debit card in a month. Now imagine paying $1 for every purchase. It can add up quickly, especially if you don’t have a large account balance. Premier accounts charge up to $9.95 for the n0-transaction fee option. .
  • Online bill pay also will cost you. You can pay bills online with your NetSpend card, but a third party, called MoneyGram, actually completes the transaction. And yes, it also requires a fee.
  • Pay to not use. There’s a $5.95 charge if you don’t use your NetSpend card for 90 days.
  • Pay to cancel. You can cancel anytime and receive a check for your remaining balance, minus a $5.95 servicing fee. 

Is a NetSpend Card Right for You?

Before you sign up for a NetSpend prepaid card, here are the main points to consider:

  1. Do you have access to a bank? Traditional brick-and-mortar branches and online banks are eager for your business too. If there is no impediment to opening a standard checking account, be aware that you’ll be able to use a debit card at practically no cost. 
  2. Are the fees worth it? There is no getting around NetSpend’s fees. One way or the other you can expect to pay $9.95 at a minimum and potentially much more for its convenience.
  3. Is there a better pre-paid card option? You certainly aren’t restricted to NetSpend if you’re convinced a pre-paid card is your best option. Taking some time to evaluate other options can help you determine which best fits your circumstances and spending habits.

Bottom Line

netspend cards
If you don’t have access to a bank or credit union, pre-paid cards like NetSpend can be a welcome alternative. NetSpend is an established company with many of the regulatory and transactional protections banks use. You can use the card almost anywhere and even enjoy some perks. The potential deal-breaker for most people is the number of fees. If you need a less expensive option for your day-to-day spending needs, you should consider other pre-paid card companies. 

Tips for Banking

  • Traditional savings and checking accounts also come with a variety of options and requirements. Even if you don’t want to explore pre-paid cards, take some time to compare what different banks in your area offer in terms of fees, account balance requirements and rewards.
  • Personal finance is much easier if you’ve consulted with a professional who understands your needs and goals. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/Viktoriia Hnatiuk, ©iStock.com/Sushiman, ©iStock.com/PeopleImages

Dori Zinn Dori Zinn has been covering personal finance for nearly a decade. Her writing has appeared in Wirecutter, Quartz, Bankrate, Credit Karma, Huffington Post and other publications. She previously worked as a staff writer at Student Loan Hero. Zinn is a past president of the Florida chapter of the Society of Professional Journalists and won the national organization's "Chapter of the Year" award two years in a row while she was head of the chapter. She graduated with a bachelor's degree from Florida Atlantic University and currently lives in South Florida.
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