Can debit card purchases be traced?

A prepaid debit card is an alternative to a bank account, and only lets you spend the money you load onto the card. Like debit cards, prepaid cards work at any merchant that accept

Can debit card purchases be traced?

A prepaid debit card is an alternative to a bank account, and only lets you spend the money you load onto the card. Like debit cards, prepaid cards work at any merchant that accepts its payment network, such as Visa or Mastercard. Theyre safer and more convenient than using cash.

Many prepaid debit cards don't require credit checks, so they're easy to get.If you're in one of the roughly 7 million U.S. households without access to a bank account, prepaid cards can be a solution to safely spending money without having to use a bank. Here's how you can get a prepaid debit card and how they work.

How do I buy a prepaid debit card?

You can buy a prepaid debit card from a retailer, bank, credit card company or other financial services provider. When you purchase one, your card funds are usually part of an account held by a bank or credit union. Note that they can also be called stored-value cards, pay-as-you-go cards or, more formally, general-purpose reloadable prepaid cards.Nerdy tip: If you need to build credit or have been denied a bank account, a prepaid debit card might not be the best option: Secured credit cards help build credit, and if you can't get a regular checking account, try second chance checking. These accounts provide another shot at mainstream banking and its perks.

SavingsCash ManagementCDCheckingMoney Market

A savings account is a place where you can store money securely while earning interest.

A savings account is a place where you can store money securely while earning interest.

LendingClub Bank logo

LendingClub High-Yield Savings

LendingClub Bank logo
CIT Bank logo

CIT Bank Savings Connect

CIT Bank logo
Discover Bank logo

Discover Bank Online Savings

Discover Bank logo

APY

1.20%Advertised Online Savings Account APY is accurate as of 07/12/2022

Marcus by Goldman Sachs logo

Marcus by Goldman Sachs Online Savings Account

Marcus by Goldman Sachs logo

APY

1.20%1.20% APY (annual percentage yield) with $0 minimum balance to earn stated APY. Accounts must have a positive balance to remain open. APY valid as of 07/01/2022.

These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.

These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.

Aspiration logo

Aspiration Spend & Save Account - Aspiration Plus

Aspiration logo

APY

5.00%The Aspiration Save Accounts up to 5.00% Annual Percentage Yield (APY) with up to 83x the national interest rate is variable, subject to change, and only available to customers enrolled in Aspiration Plus after conditions are met. Customers not enrolled in Aspiration Plus receive 3.00% APY after conditions are met.

Wealthfront logo

Wealthfront Cash Account

Wealthfront logo
Betterment logo

Betterment Cash Reserve

Betterment logo

APY

1.10%The annual percentage yield ("APY") on the deposit balances in Betterment Cash Reserve ("Cash Reserve") is 1.10% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the "Program Banks") and is current as of June 22, 2022. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.

CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.

CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.

Synchrony Bank logo

Synchrony Bank CD

Synchrony Bank logo

APY

2.65%APYs are subject to change at any time without notice. Offers apply to personal accounts only. A penalty may be imposed for early withdrawals from a CD. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. Fees may reduce earnings. Member FDIC.

Discover Bank logo

Discover Bank CD

Discover Bank logo

APY

2.90%Annual Percentage Yield (APY) is accurate as of 07/12/2022

Current logo

Deposits are FDIC Insured

Current Account

Current logo
Chime logo

Deposits are FDIC Insured

Chime Checking Account

Chime logo
Citibank, N.A. logo

Citi Priority Account

Citibank, N.A. logo

Money market accounts pay rates similar to savings accounts and have some checking features.

Money market accounts pay rates similar to savings accounts and have some checking features.

Quontic Bank logo

Quontic Money Market Account

Quontic Bank logo
CIT Bank logo

CIT Bank Money Market Account

CIT Bank logo
UFB Direct logo

UFB Direct Money Market Account

UFB Direct logo

How prepaid debit cards work

Prepaid cards vary widely, but they tend to have these features in common:

Fees: You might have to pay for activating or getting a card, making deposits and using out-of-network ATMs. Theres often a monthly fee, which sometimes can be waived  by having direct deposits, for example. Some cards charge a fee for every purchase and ATM transaction.

Reload options: You can usually add money to a card in multiple ways, such as setting up direct deposits, loading cash at participating retailers and depositing checks at ATMs. Some cards also let you make online transfers or mobile check deposits from a smartphone.

ATM access: Some prepaid cards have access to free nationwide ATM networks, such as MoneyPass and Allpoint, or to branded bank networks for cards issued by banks.

Amount limits: Some cards restrict how much you can withdraw, reload or spend during a certain period, such as a day or month.

Protections: Reloadable prepaid cards have the liability and fraud protections required of debit cards by federal law. Some cards offer purchase protections, but it can be difficult to dispute unauthorized transactions or correct errors. One safeguard many cards have is federal deposit insurance, meaning your money is covered if an issuer becomes bankrupt.

Expiration dates: Prepaid cards have expiration dates. Funds on the cards shouldnt expire but youll need to be reissued a card before it expires so you can continue using it. In a 2016 report by the Consumer Financial Protection Bureau, some consumers complained that they had money on their cards when they expired, but the issuer didnt reissue cards that included those balances. If that happens to you, reach out to the prepaid card company to see if it can be resolved. If not, you can submit a complaint on the CFPB website.

Other features: Some prepaid cards offer check writing, online bill pay and multiple copies of a card for family members. A rare few even offer rewards such as cash back on purchases, similar to what rewards credit cards do.

Limitations of prepaid debit cards

Prepaid debit cards have major limitations compared with banking accounts and credit cards. Although they typically have online services, many prepaid cards lack standard banking services, such as a way to withdraw or reload cash for free. The money you load on a card probably won't earn interest, either.

If you only want to load cash for safekeeping, and don't plan to make many withdrawals, it may be better to find a high-rate savings account for your funds. Prepaid debit cards dont affect your credit, so they wont help build it, either.

No effect on credit: Because prepaid debit cards arent credit cards, you cant build credit with them. For that, youd want to consider a secured credit card.

Lack of bank services: Prepaid cards also dont automatically have all the features youd expect with a checking account, including access to an ATM or branch network, online or mobile banking, or bank services such as wire transfers and the ability to stop payments.

Past horror stories: Several prepaid cards have been affected by technological outages that lasted days or weeks. When RushCards parent company switched its payment processor to Mastercard in 2015, a technological glitch locked tens of thousands of users out of their RushCard accounts for days. The Walmart MoneyCard experienced an outage in 2016. Netspend settled with a federal regulator over claims that customers were blocked from accessing their accounts, providing refunds to those who were eligible.

Whether used as a budgeting tool or as an alternative way to bank, prepaid debit cards can help you store and spend money.

Prepaid debit cards vs. credit and debit cards

Heres a quick breakdown of the differences:

Prepaid debit cards  pay before: You load money onto the card via cash, checks, direct deposit or a transfer from another account before paying for transactions. No checking account is required.

Debit cards  pay now: You use money directly from a checking account when paying for purchases or withdrawing money from an ATM.

Credit cards  pay later: You borrow money from a bank when you use the card and pay the money back later.

Prepaid debit card alternatives

If a prepaid debit card isnt quite right for you, you can find a good alternative with a no-fee checking account. Though some checking accounts come with monthly costs, a growing number of online institutions offer accounts without monthly fees or minimum balance requirements, and there are options if youve had problems with bank accounts in the past. Check out these three accounts, including one that doesnt require your ChexSystems record (ChexSystems is the reporting agency banks use to track customers who have mishandled previous bank accounts).

Chime Checking Account

NerdWallet rating

NerdWallet's ratings are determined by our editorial team. The scoring formulas take into account multiple data points for each financial product and service.

at Chime, Deposits are FDIC Insured

Free ATM access: Over 60,000 ATMs.

Bonus features: No overdraft fees. No ChexSystems records check.

Chime says: "Cash withdrawal and third-party fees may apply. Chime is a financial technology company, not a bank. Banking services provided by, and debit card issued by, The Bancorp Bank or Stride Bank, N.A.; Members FDIC."

Ally Bank Interest Checking Account

NerdWallet rating

NerdWallet's ratings are determined by our editorial team. The scoring formulas take into account multiple data points for each financial product and service.

Free ATM access: Over 43,000 ATMs.

Bonus features: Account pays interest.

Capital One 360 Checking

NerdWallet rating

NerdWallet's ratings are determined by our editorial team. The scoring formulas take into account multiple data points for each financial product and service.

Free ATM access: Over 70,000 ATMs.

Bonus features: Account pays interest.

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