NetSpend Prepaid Debit Card Review: Fees Can Get Costly, But Savings Rate Is High

Along with competitors like Green Dot and Bluebird, NetSpend is a prepaid debit card provider that is popular with consumers who don’t have bank accounts. There’s no need for a credit check or a spotless ChexSystems record.

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You can deposit checks, make purchases, pay bills and get cash with NetSpend, but the associated fees can add up quickly. NetSpend offers three card tiers, and it takes strategic use to keep the fees affordable.

However, NetSpend’s promotional 5% interest rate on savings may help offset some of the fees. That’s a high enough interest rate to be attractive even to consumers who have a conventional bank account.

NetSpend may be right for you if:

• You’ve been turned down for a checking account — perhaps after a ChexSystems review of your banking history — and need a debit card.
• You can meet the $500 a month direct deposit requirement for a Premier FeeAdvantage NetSpend card, which cuts your monthly fee to $5 from $9.95.
• You’re building up savings and looking for high yield. NetSpend offers cardholders a savings account currently paying a promotional 5% annual percentage yield on balances up to $5,000. Keep in mind that with Netspend’s fee structure, the interest you earn might just cancel out the fees you pay. If you put $1,000 in a NetSpend savings account and leave it there for a year, for example, you would earn right around $50 in interest — about $9 less than what you’d pay in fees if you’re using the card’s Premier FeeAdvantage plan.
• You can avoid all other fees by limiting yourself to the free options for loading money, getting cash and checking your balance.

» MORE: NerdWallet’s best prepaid debit cards

NetSpend prepaid debit card

Pros	Cons
No credit check or ChexSystems requirement.	There’s no avoiding fees. The basic NetSpend card charges you with each purchase: $1 for signature purchase transactions and $2 for PIN purchase transactions. Higher tiers require a monthly fee of $5 or $9.95.
You can get cash back on debit transactions at many retailers without paying a fee.	No free ATMs. Cash withdrawals from domestic ATMs cost $2.50, plus any fee from the ATM owner. If the transaction is declined, it still costs you $1.
You can load money on your card for free by using direct deposit or mobile check deposit or by making an online transfer from another NetSpend account.	Loading checks or cash at grocery stores and gas stations costs up to $3.95. Checks you load via mobile take 10 days to clear — although same-day processing is available for a minimum fee of $5.

3 tiers of prepaid card

PAY AS YOU GO	FEEADVANTAGE	PREMIER FEEADVANTAGE
$1 per signature purchase transaction (when you select “credit”) $2 per PIN purchase transaction (when you select “debit”)	$9.95 per month. Includes all transactions.	$5 per month. Includes all transactions.
No minimum deposit or minimum balance.	No minimum deposit or minimum balance.	Requires $500 direct deposit in payroll or government benefits each month.

NetSpend fees at a glance

ATM withdrawal (domestic)	$2.50 plus fees from ATM owner
Load cash or checks at retailers	$0 to $3.95
Deposit check by mobile app or direct deposit	$0
Balance inquiry (ATM or phone)	$0.50
Overdraft protection service fee (optional)	$15 per overdraft, up to 3 per month
Declined transactions (ATM or debit)	$1

NetSpend’s hits and misses

NetSpend can be one of the more expensive prepaid debit cards, depending on your usage. You’ll pay $1 or $2 per purchase, or $9.95 a month for an unlimited transactions plan. If you can commit to the $500 direct deposit threshold, the fee drops to $5 a month.

The card is widely accepted, and you can load money at more than 130,000 retailers — but the fee to do so can be as high as $3.95. Because there is no free ATM network, your best bet is to use the cash back function with your debit purchases. For loading checks, the frugal option is free mobile check deposits, but there’s a 10-day waiting period before your money is available.

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The game changer for the NetSpend prepaid card is its promotional high-yield savings account. It pays a variable interest rate — currently 5% — on deposits up to $5,000. For balances above that, the rate drops to 0.5%.

» MORE: NerdWallet’s top high-yield savings accounts

That top-of-market yield may alleviate the sting of the fees you can’t avoid.

Jeanne Lee is a staff writer at NerdWallet, a personal finance website. Email: jlee@nerdwallet.com. Twitter: @jlee_jeanne.