In June 2011 American Express launched a prepaid card. I’ve noticed many hailing it as their first prepaid card, but actually there’s the AmEx Pass that’s been out for a while now, although that is mainly geared towards teens.
Is it a debit or credit card?
American Express prepaid credit cards? Or debit cards? Actually… neither! Since this new card doesn’t allow you to buy anything on credit, it’s definitely not a credit card. Most stories I’ve seen so far has referred to them as being prepaid AmEx debit cards. That’s a closer description but if you want to be nit-picky about it, these aren’t exactly debit cards either by definition.But that’s all semantics, let’s get into the
good, bad, and ugly aspects of this new card.
The Good
Almost no feesLet’s be honest here… most of the prepaid card issuers are famous for nickel and diming customers with fees, fees, and more fees. I’m not claiming all are rotten but a lot of them definitely are.
With AmEx’s new prepaid reloadable card you won’t be shook down with a million different fees. In fact, getting the card itself is completely free and you can order it online. There are no activation fees, no fees for calling customer service, no monthly or yearly fees, no purchase fees, and no overdraft fees.
So how is American Express making money you ask? Well, since your purchases are processed the same as a credit card, the merchant has to pay those credit card processing fees. AmEx is hoping your purchase volume brings in enough processing fees to offset the costs they have to pay to advertise, issue, and manage these prepaid accounts.
Better customer service (probably)
I haven’t gotten any feedback or reviews from customers since the card just came out, so I can’t conclusively judge the card’s customer service yet. But given that it’s American Express, I expect it will be a heck of a lot better than the service you get with most other prepaid debit cards. According to the AmEx website, service is available 24 hours a day via 1-866-207-7970.
Several good benefits for free
If you have an AmEx charge or credit card, chances are you already know about these great benefits:
- Purchase Protection: Covered items which are lost or stolen during the first 90 days will be reimbursed.
- Fraud Protection: The AmEx website says they will refund charges if your card is lost or stolen.
- Global Assist: In a nutshell this is a help line you can call when you are traveling more than 100 miles from home. They won’t actually pay for the help you need, but they will provide free guidance/advice in how to get that help. For example, if you need help finding an emergency dentist overseas or you lost your passport, they should be able to direct you to the right people.
- Arranging Roadside Assistance: This benefit isn’t that exciting since AmEx is not actually paying for the roadside assistance, but they will arrange the service for you without charge. You can use this up to 5x per year.
The Bad
ATM feesYou do get one free withdrawal per month with an AmEx Prepaid Card but anything beyond that and you will be charged $2.00 per withdrawal. Then you also need to take into account the additional fees the ATM may charge you on top of that, because the two bucks just goes to American Express.
Free reloads may be tricky
If you don’t want to pay any fees to reload, then you have to transfer funds either from a bank account or another American Express card.
The problem with this is that many people who use reloadable prepaid cards don’t have a checking account nor a credit card, let alone an American Express. I’m not claiming that’s the case with everyone who this card would appeal to but certainly a good chunk of people fall under this umbrella.
The Ugly
Reloading with cashIf you don’t have a bank account or an AmEx card, you will need to reload with cash using a GreenDot MoneyPak (which is used for many other prepaid cards, too). You can pick up a GreenDot MoneyPak at drugstores, convenience stores and load money onto it for a fee, which is often $4.95.
Typically the most you can load onto it is $500 so that means right off the bat, that $4.95 equals almost 1% of your money. If you load $250 on it, the $4.95 equals almost 2%. As you see the less you load, the more your fee is percentagewise.
Verdict?
If you can reload your American Express Prepaid Card using a bank account or other AmEx card, then this is definitely a good deal compared to most of the other prepaid cards on the market. However if you need to use the GreenDot MoneyPak the fees definitely suck, but at the same time, they are comparable to what you would be paying on other cards. So overall, this prepaid card from AmEx isn’t perfect but it’s a lot better than most of your other options in the prepaid category.If the reason you are interested in a prepaid card is because you have bad credit and can’t get approved for a regular credit card, then you might want to consider applying for a secured credit card. Approval is almost guaranteed and yes, the fees are high with them, but at least the account will help your credit if used responsibly.
Posted in: American Express,Credit Card,online banking
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