Green Dot Prepaid Visa Card: A prepaid card worth the fees?

The Netspend® Visa® Prepaid Card is one of many competitors worth looking into if you want prepaid card. This card works similarly to the Green Dot Prepaid Visa and carries a long list of potential fees as well. But unlike the Green Dot Prepaid Visa, the Netspend card offers the chance to get a high-yield savings account with a 5 percent APY on the first $1,000 in your account (any portion of your balance beyond that will earn 0.50 percent APY) and a pay-as-you-go plan, which might be more appealing if you don’t anticipate using your card daily.

The Brink’s Prepaid Mastercard® is another option to consider if you’re looking for a prepaid card. It has a similar list of fees to the Green Dot Prepaid Visa, but is more lenient in a few areas. The Green Dot Prepaid Visa waives the entire monthly fee when you load at least $1,000 the prior month. The Brink’s card only reduces its monthly fee to $5 for meeting loading requirements, but you’ll only need to deposit $500 for the waiver, which might be easier to manage depending on your spending.

The Brink’s card offers Payback Points, which you can redeem for cash back, and a simple welcome offer of 500 points after you enroll. It also has a similar high-yield savings account that offers a 5 percent APY on the first $1,000 in your account (any portion of your balance beyond that will earn 0.50 percent APY), which can give the Brink’s card better overall returns.

Prepaid cards like the Green Dot Prepaid Visa are a reasonable short-term substitute for a bank account. You can write checks and use the card like a debit card, allowing you to avoid opening a bank account while maintaining access to most of their functions. 

The Green Dot Prepaid Visa is a solid option for working on finance management skills. You can easily track your current deposited funds from the Green Dot app and avoid the risks associated with bank accounts, such as overdrafts. Just bear in mind the various limits associated with your card at a given time. 

A student or credit-building card’s cost has a large influence on its overall score. 

Students already face a ton of expenses, so extra card costs are best avoided if possible, and people with limited or damaged credit tend often find the cards they can qualify for are much pricier than traditional credit cards designed for people with a good or better credit score. 

We compare a card’s total cost, including any annual fees, account activation fees, monthly fees and more against the total cost of other cards in this category and assign each card a score based on its affordability. We also factor rewards-earning potential into our assessment of a credit-building card’s total cost, subtracting a card’s expected earnings from the sum of its fees. 

To get a sense of a card’s rewards-earning potential, we estimate its average annual rewards rate and average annual earnings based on the most popular spending categories (as covered in the latest Bureau of Labor Statistics consumer spending report). 

However, we use a slightly lower spending assumption ($300 per month or $3,600 per year) to estimate average earnings, assuming students and credit-builders will start out with a lower credit limit, will want to keep credit utilization low and will focus primarily on small purchases they can easily pay off.

Given the many costs students face — from textbooks to laptops — the presence of an introductory APR on purchases or balance transfers also plays a role in a student card’s score.

A card’s APR is also a major factor in its credit-building score. Each card’s average APR is compared against the average APR of other cards in the category, and the cards with lower-than-average APRs receive a higher rating. 

Though high APRs are hard to avoid when you’re just starting out or working on your score, credit-builders should strive for as low an APR as possible since they’re likely to either be new to managing cards or trying to establish better financial habits and avoid falling into debt.

Along with a credit-building card’s cost, our rating system takes into account how easy the card makes it to build credit. To assess this, we evaluate its credit limit potential and minimum deposit requirement.

Unsecured cards with a high starting credit limit and secured cards that let you put down a large deposit and get a matching high credit limit will score the highest according to our “Ease of building credit” rubric and are more likely to appear on our list. 

This is because a high credit limit can make it much easier to keep your credit utilization low, a primary credit-building factor that makes up 30 percent of your FICO credit score. 

Secured cards have a slight advantage in this category since the maximum credit limit on a secured card tends to be much higher than the typical starting credit limit on an unsecured card that’s available with a bad or fair credit score. However, unsecured credit-building cards have the upper hand in another key aspect of building credit: accessibility. 

Cards that carry no or a low deposit requirement can also receive a high score according to our “Ease of building credit” rubric since these cards offer a lower barrier to entry than secured cards that require you to put up hundreds of dollars in an upfront deposit. 

Indeed, some users may prefer to pay a non-refundable $50 annual fee while they work on their credit score than tie up hundreds in a refundable security deposit.

We also evaluate each card’s benefits based on how useful they are for students or someone looking to build a positive credit history and save money on everyday spending. 

We consider the inclusion of a rewards program, student-centric perks and access to your credit score or a credit monitoring service of prime importance, along with the ability to prequalify for the card with only a soft credit pull and a clear path to increase your credit limit or graduate to an unsecured or full-fledged rewards card.

Cards that include these benefits are likely to score higher according to our credit-building card scoring rubric.

The Green Dot Prepaid Visa is like a debit card without a bank. The primary use is making purchases, payments, and withdrawing money. This is useful for paying bills or making purchases online and streamlining in-person payments without needing a bank. Unfortunately, you don’t have the perks or protections of a bank or the ability to build credit. Look at prepaid cards as a temporary rather than a long-term solution.

You can activate your card on the Green Dot website, mobile app or by calling customer service. You’ll need to give your name, address, date of birth, 16-digit card number, expiration date, 3-digit security code, and mobile phone number. Afterward you can immediately use your card.

Your daily and overall cash deposit limit is $3,000. However, the maximum monetary value you can have on the card is $10,000. Additional limits may apply from store to store. Green Dot reserves the right to deny or review a deposit. If you routinely exceed the deposit limit, it may be time to upgrade to a debit card.