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We no longer rely on cash for everyday purchases or paper checks for paying bills. According to recent findings published by the Federal Reserve, debit cards have become the preferred option for payment, with cash accounting for only 20% of all payments.
This development has banks and debit card issuers offering attractive incentives for new and current customers. Offering prepaid debit cards that load your account with free money is one of the ways card issuers compete for your business.
If you're looking for free debit cards with money on them, prepaid debit cards are an excellent place to start.
Prepaid Debit Cards vs. Regular Debit Cards
Prepaid debit cards provide an alternative to credit cards or traditional debit cards issued by a financial institution for making purchases.
Unlike a traditional debit card, a prepaid card is not linked to a bank account. With prepaid debit cards, you load the card with money and then use it to make purchases anywhere debit cards are accepted. When you use a regular debit card, the money for your purchases is taken directly from your checking account.
Why Prepaid Debit Cards?
Getting a regular checking account with a debit card attached is not guaranteed. A poor credit history, issues with previous bank accounts, and problems verifying your ID could result in the bank denying your application. Prepaid debit cards are an option if you cannot open a bank account.
They are also a good option if you have had problems paying off debt in the past. Be aware that prepaid cards are sometimes incorrectly referred to as prepaid credit cards, but they are not the same as secured credit cards. Although useful for everyday spending, they will not help you build credit.
Prepaid cards also help you stick to your budget and safeguard against overspending. When you use a prepaid debit card, you spend money you put onto the card in advance. You cannot spend more than the amount loaded on the card, so you are not subject to overdraft fees.
Aside from availability and usefulness as a budgeting tool, another reason for choosing a prepaid card is the cash incentives some prepaid debit card issuers offer. These cash rewards typically come in the form of sign-up bonuses, referral bonuses, and cashback.
Prepaid Debit Cards That Give You Cash Rewards
Here is a list of prepaid debit cards that will give you cashback or cash bonuses for referring a friend:
American Express Serve Cash Back Prepaid Debit Card
With American Express Serve, there are no fees when you make a cash deposit onto your card at CVS, Walmart, 7-Eleven, Family Dollar, and other participating retailers. You also get several benefits regular American Express cardholders enjoy, such as purchase protection and access to over 30,000 no-fee ATMs.
You can also get unlimited 1% cashback on your purchases. The funds become available when the transaction clears. You don't have to wait until the end of the month or longer to access your earnings.
Brinks Prepaid Mastercard
The Brinks prepaid card offers a refer-a-friend bonus and a points-based cashback reward system.
The referral bonus is a credit of $20. You and the person you refer get the reward after the new cardholder activates the card and loads $40 or more in cash or direct deposits. There is no limit on the number of referral bonuses you can receive.
You can also earn Payback Points for your purchases. You can redeem the points you accumulate for cashback credited to your account.
PayPal Prepaid Mastercard
The PayPal prepaid card might be your best choice if you use PayPal frequently. You can load money for free using direct deposit, bank transfer, transfers from your PayPal account, or PayPal accounts from your friends and family.
With the refer-a-friend program, you and your friend could receive a $20 credit. The new card member must activate their card and put $40 or more onto it. Referral bonuses are unlimited.
You might also be eligible to receive Payback Rewards and special offers by shopping at qualifying stores with your card. The program is automatic, but you can opt out anytime.
The Walmart MoneyCard is a decent option if you shop at Walmart regularly. There is no monthly fee if you load $500 or more every month. You can also do free cash reloads via bank transfer, the Walmart MoneyCard app, direct deposit, and mobile check deposit.
The Walmart MoneyCard offers cashback rewards. You can earn 3% back at Walmart.com, 2% back from Walmart gas stations, and 1% back for in-store purchases. You can earn up to $75 in cashback per year.
FamZoo Prepaid Card
FamZoo positions itself as a family-friendly card for parents to teach their kids about money. You can get four cards free for family members.
Parents can use the cards for sending allowances, view debit card transactions for all cards, and set up text or email alerts. You can reload the cards at retail stores via Mastercard rePower or other networks.
The FamZoo prepaid card has a $15 referral bonus. You receive a unique referral link you can send to friends or family members. The referred individual will get an extra free month on their account.
Greenlight Debit Card for Kids
The Greenlight card is another family-friendly prepaid Mastercard that offers parental controls and an educational app. Greenlight can alert parents to new transactions in real time. Parents can also pre-approve stores where their children can spend money and create custom cards with a photo of their choice.
Greenlight has a referral program that pays between $30 and $70 for each friend referred. There is a limit of $600 in referral cash per year.
The Greenlight Max account offers 1% cashback, purchase protection, and other perks for a higher monthly fee.
There are a couple of significant downsides to this card, though. First, check or cash deposits are not accepted, so you will need to do bank or debit card transfers from another account. Second, the daily ATM withdrawal limit is only $100, so you may need to consider alternatives.
What To Look for in a Prepaid Debit Card (Besides Free Money)
You can buy prepaid debit cards from a retail store, bank, credit card company, or other financial services provider. Now all prepaid debit cards are created equal, however. Consider the following features:
Low fees: Unfortunately, the list of fees prepaid card issuers charge is long. Fees you might encounter include activation fees, a monthly maintenance fee, cash reload fees, and fees for out-of-network ATM withdrawals. Some issuers also charge balance inquiry fees, inactivity fees, a fee if your card gets declined, or a fee for sending you a paper statement.
ATM availability: Some prepaid cards give you free use of nationwide ATM networks, such as MoneyPass. Cards issued by banks may give you free ATM access via branch locations and any networks they belong to.
Adequate limits: Some cards have withdrawal limits, per day or per month spending limits, and a cap on how much you can deposit at once. Review your spending habits to see if these limits will pose a problem.
Convenient options for reloads: There should be multiple reload methods available. An issuer might offer direct deposit, check deposit at an ATM, mobile check deposits through your smartphone, bank or debit card transfer, and in-person cash reloads through participating retailers.
Other services: Some prepaid cards offer extra services such as online bill payment, check writing, and an extra card for family members or joint owners.
Insurance: Federal deposit insurance covers many prepaid cards, which means your money is protected if a card issuer goes bankrupt. Prepaid cards also have the same liability and fraud protections as traditional debit cards.
Purchase protection: Some cards offer purchase protection. If available, eligible purchases made with the card are protected against theft and accidental damage for a specified period.
Rewards: Some prepaid cards offer rewards such as cashback on purchases, referral programs that pay you for each person you refer, and sign-up bonuses. Some will waive fees if you sign up for a direct deposit or meet monthly minimum balance requirements.
What About Gift Cards?
Major credit card issuers, American Express, Discover, MasterCard, and Visa, offer gift cards in various preloaded amounts. They look like any regular credit card, are not tied to a bank account, and require no credit check. You can use them anywhere that accepts its payment network.
The most significant difference between a gift card issued by a credit card company and a prepaid debit card is that prepaid cards can be reloaded and used repeatedly. The amount on a gift card is the card's credit limit. When the balance on it reaches zero, the card is unusable.
Gift cards also have short expiration dates and require a one-time activation fee, while many reloadable cards do not. Gift cards do not typically offer rewards or incentives. However, some retailers might waive activation fees as part of a promotion.
We have not yet become a cashless society, but payment methods have evolved in that direction. As banks and debit card issuers compete for customers, finding debit cards offering cash rewards and bonuses could get much easier.
Sara is an HR professional with over 15 years of combined staffing agency and corporate talent acquisition experience. She writes about frugal living, budgeting, and saving money on the blog Kinda Frugal, which she co-founded with her husband Jerry.