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What Is Netspend?

Some consumers are not able to open a checking account at a bank or credit union to pay their bills or purchase groceries or other items and are forced to rely on using prepaid debit cards. In 2021, there were more than 5.9 million unbanked households in the U.S., according to the Federal Deposit Insurance Corp.

One option is to use a reloadable prepaid debit card issued by Netspend, which gives consumers the ability to conduct transactions just like a bank debit card and could be a better option than using a check cashing service.

A Netspend prepaid card can serve as a bank account alternative for some consumers, including ones who had trouble managing bank accounts in the past, perhaps incurring many overdrafts, says Ted Rossman, senior industry analyst at

“Banks share this information via services like ChexSystems and Early Warning Services that are akin to a credit reporting agency, but for bank accounts,” he says. “If you have a poor ChexSystems or Early Warning Services score, it could be hard to get a bank account.”

How Does Netspend Work?

Netspend offers consumers a prepaid Visa or Mastercard account as a checking account alternative. Without any credit checks or upfront fees, people unable to qualify for a checking account might benefit from a Netspend account, but the fees vary and can add up quickly each month, says Leslie Tayne, a New York attorney specializing in debt relief.

“Depending on how many checks a consumer cashes each month, choosing a Netspend account could be more cost-effective and allow individuals to shop online, use ATMs and send money to friends,” she says.

The company sends people cards after they sign up online, or you can buy them from retail locations for a fee. Consumers can choose from several images or logos on cards for another fee.

Consumers are able to load funds from paychecks or government payments onto the card via direct deposit or mobile check deposit or at thousands of brick-and-mortar reload locations by using a paper check or cash. These reload spots are at the likes of convenience stores, supermarkets and drugstores, but consumers will probably have to pay another fee to add funds to their account.

Similar to other debit cards, the limit you can spend is the balance on your account.

“Netspend accounts also provide customers with a small overdraft protection feature called Purchase Cushion,” Tayne says. “If the purchase exceeds the account balance by $10 or less, Netspend may approve the purchase.”

Watch Out for Netspend’s Fees

Netspend issues many fees that can eat into your balance quickly. Though they can vary, the fees generally include the following:

  • $9.95 per month for unlimited purchase use.
  • $5 per month for unlimited use with direct deposit each month of at least $500.
  • $1.50 per purchase with a pay-as-you-go plan.
  • $2.95 per ATM withdrawal (in addition to whatever the ATM owner may charge).
  • Up to $3.95 to reload at some locations.
  • Up to $9.95 to purchase a card at a retail location.
  • $4 or 2.75% of the amount, whichever is greater, for a withdrawal at a reload location.

“Netspend represents a potentially costly alternative to the banking system,” Rossman says. “I’d urge consumers to think about what they’re really looking for. Almost half of noninterest checking accounts are free these days, the highest percentage since 2010.”

There are even “second chance” checking accounts via Chime, Varo and Wells Fargo that “cater to people who have had prior missteps managing their money,” Rossman says.

Netspend prepaid cards do not help customers build credit, says Anthony Chan, former chief economist at JPMorgan Chase & Co. However, he also says, “With Netspend, a customer can keep their funds safe from being stolen and even provide some help in budgeting their funds from payday to payday.”

What Are Netspend’s Good Features?

Netspend allows individuals to receive access to their direct deposit funds two days early, and your money is FDIC-insured via Netspend’s relationship with three banks. The company does not charge overdraft fees and allows consumers to open a savings account that pays 5% on balances of less than $1,000.

“One nice thing I can say about Netspend is that it’s not debt. These are prepaid debit cards, so you’re not taking on debt or spending more than you have in your account,” Rossman says.

Should You Get a Netspend Card?

Consumers who are unable to open a bank account or get a second-chance bank account because of their banking history could turn to Netspend, which is a better option than some choices, but not the best one. Two better prepaid debit options include Bluebird by American Express and Walmart MoneyCard.

“If you really want a prepaid card, the American Express Bluebird card has better features and lower fees,” Rossman says.

A better alternative might be a neobank such as Chime and Current, which are financial institutions that are online-only and offer stripped-down services such as checking accounts and debit cards, he says.

“Like Netspend, these tout benefits like getting access to your paycheck two days early, but with other perks and lower fees,” Rossman says.

The unbanked “usually face the highest fees, which is unfortunate,” Chan says.

“Netspend may offer some improvement over high-interest payday loans if a customer opts to take advantage of the direct deposit option,” he says. “However, without selecting that option, the costs appear to be prohibitively high even though such services are usually used by those least able to afford such costs.”

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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