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 2023, there were more than 5.6 million unbanked households in the U.S., according to the Federal Deposit Insurance Corp.’s most recent survey, published in November 2024.
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 consumers who have trouble managing bank accounts in the past or who distrust banks, says Mike Sullivan, a personal finance consultant with the nonprofit credit counseling agency Take Charge America.
“Netspend may be attractive to people who are unbanked for any reason, with no credit or debit cards,” he says. “These consumers still need to make purchases and pay bills in transactions that cannot be done with cash, so they often turn to prepaid cards of some type. Netspend is one option and has somewhat of a high profile.”
[Read: Best Checking Accounts.]
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, Esq., credit and debt expert and Founder of Tayne Law Group, P.C.
“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. Convenience stores, supermarkets and drugstores often serve as reload spots, though consumers will likely 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.”
[READ Best High-Yield Savings Accounts]
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 fees are significantly higher than a typical bank or credit union account with a debit card,” Sullivan says. “It is possible in many areas to open a bank account without paying any fee, and many institutions do not charge consumers for regular purchase or deposit transactions.”
There are even “second chance” checking accounts via Chime, Varo and Wells Fargo that cater to people who “cannot obtain or maintain a traditional account,” Sullivan says.
Netspend prepaid cards do not help customers build credit, says Anthony Chan, former chief economist at JPMorgan Chase. 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.”
[Read: Best Online Banks.]
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.
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 the Greenlight Prepaid Mastercard and Walmart MoneyCard.
“There are many prepaid cards with many payment options,” Sullivan says. “Netspend is not the least expensive, but the actual cost of using any card depends on such factors as minimum balance, number of deposits, and use of ATMs.”
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.
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.”
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What Is Netspend? originally appeared on usnews.com
Update 07/25/25: This story was published at an earlier date and has been updated with new information.
