July 13, 2024

Bucks: New American Express Prepaid Card Is Light on Fees

American Express' prepaid card.Courtesy of American ExpressAmerican Express’ prepaid card.
Review - Your Money - Bucks Blog - NYTimes.com

Many prepaid cards are known for charging fees at every turn — fees to activate the card, fees to make a purchase, even fees to call customer service.

But American Express is coming out with a reloadable prepaid card on Tuesday that appears to right many of the industry’s wrongs: You can order the reloadable card online at no cost, and there are no hidden fees lurking in the fine print. And even more impressively, you can use the card overseas and you won’t be charged any of the pesky foreign exchange transaction fees that most American Express credit and charge cards usually hit you with.

“The prepaid market is synonymous with fees,” said Dan Schulman, president of the company’s enterprise growth group. “If we were going to enter the market, we wanted to be a consumer champion.”

Of course, Amex isn’t forgoing profits for the sake of consumers. The company can afford to be competitive because it owns the payment network that process its transactions. So instead of collecting fees from consumers, it makes money on the fees that it collects from retailers every time you swipe your card. Keep in mind that American Express levies higher swipe fees than Visa and MasterCard, so its cards are not as widely accepted for that reason.

Starting today, you can order the card online at no cost and load money onto the card through a checking account (but not through a credit card). You can also reload the card online at no cost, as well as set up recurring transactions so that your funds are replenished every week or month, for example.

In coming months, customers will also be able to load the cards with money via direct deposit, Mr. Schulman said. You could automatically add, say, $100 per pay check to the card.

But it will cost you $4.95 if you want to load the card with cash. It also takes some doing.

Here’s how it would work, at least for now: You can order the prepaid card online for free and then buy what’s known as a “Green Dot MoneyPak” at major retailers like Walmart, CVS, Rite Aid and 7-Eleven. You would pick up the MoneyPak from the prepaid section and take it to the cashier, who would then load the amount you want onto the MoneyPak (you can typically load $25 to $500 at most retailers) and charge you the $4.95 fee.

One you have the loaded MoneyPak in hand, you would either go to MoneyPak.com or call 1-800-GreenDot to transfer the money to the Amex prepaid card. American Express doesn’t charge any fees to load the card with a MoneyPak, and it will refund the $4.95 fee on the first MoneyPak you purchase.

The prepaid card will be likely available in retail stores later this year for those who don’t want to buy it online. Typically, those retailers charge a nominal fee, also in the neighborhood of $4.95, to provide the cards; Mr. Schulman said he’d like to keep that charge as low as possible. But it’s still too soon to say how much, if anything, it will cost to load the card.

“You have a lot of folks who don’t have access to credit or charge cards and they want to have the safety of having the card,” Mr. Schulman said. “They want to be able to make online transactions and they want a budgetary tool.”

Some more particulars: The card has no activation or maintenance fees, nor are there any fees to make purchases, balance inquiries, or to replace a card. The funds on the card do not expire, and you can load up to $2,500 on the card.

If the car is lost or stolen, the money on the card will be replaced if you report it to the company. The first monthly A.T.M. withdrawal is free, after which you’ll be charged $2 (that doesn’t include any fees charged by the bank or ATM network). Users also have the option to disable ATM access.

Some perks: You can add additional users to the card, like a family member or babysitter, for instance. You can also see your transaction history online or receive e-mail or text alerts for low funds or notification when a transaction has occurred. Like a regular Amex card, your purchases are protected against accidental damage or theft for 90 days from the date of purchase, up to $1,000 per occurrence.

And though there’s been a recent uptick in credit cards that have stopped charging transaction fees on purchases denominated in currencies other than dollars, most cards still charge them. You’ll avoid those charges on the Amex prepaid card; dollars are converted at the same rate as if you used a regular American Express credit or charge card, but you won’t be charged the 2.7 percent fee that typically accompanies those transactions.

Would you use the new prepaid card? If anyone decides to order the card, please let us know what your experience was like in the comment section below.

Article source: http://feeds.nytimes.com/click.phdo?i=88a3042ffc9ff2d2952518562704e7e3

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