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Updated on Tuesday, August 30, 2016
The Green Dot Card is the biggest prepaid card in the U.S. with 4.28 million active cards currently issued. When you use a prepaid card, you must have money loaded onto it before you can use it, and it does not provide you with the opportunity to build credit history. Rather, prepaid cards often serve as a substitution for traditional checking accounts.
Many prepaid cards come with hefty fees. When you can’t get a checking account with a traditional financial institution, unfortunately you are usually subjected to charges that you wouldn’t normally encounter at a bank. These fees are commonly referred to as “poor tax.”
If you must use a prepaid card, the Green Dot Card isn’t your worst option, but you’ll want to read on to make sure you know all the ins and outs of dodging its fees.
Overview of the Green Dot Card
Options to load money:
Direct deposit: With the Green Dot Card, you can set up direct deposit for:
- Social Security benefits
- Veterans’ compensation and pension benefits
- Supplement Social Security Income (SSI)
- Federal Civil Service Benefits such as retirement or annuities
Direct deposit comes with no fees, but you are limited to only having $2,500 in your account at any given time. If your paycheck or benefits exceed this limit, you can make a request for an exception to be made.
Walmart: You can also put money on your card by cashing your check at Walmart. Walmart charges a $3 feeon all check-to-card transactions up to $1,000. This fee is in addition to the $3.74 that Green Dot charges.
Deposit cash: You can deposit cash at select financial service centers and retailers across the country. You will be charged reload fees, which can be as high as $4.95 depending on the retailer.
Deposit checks. If you want to avoid the fees at Walmart, you can cash your checks via Green Dot’s mobile app. It should be noted that you will not have access to these funds for up to ten business days, though.
MoneyPak: You can purchase a Green Dot MoneyPak, which is a card that will allow you to load money onto your personal card. This option comes with a $5.95 service fee per deposit.
Deposit cash into Paypal: You can use Green Dot to deposit cash into your PayPal account at select retailers. There is a $3.95 fee for this service, and you will need either a smartphone or access to a computer and printer.
Use your tax refund: During certain times of year, you can direct deposit your tax refund onto your Green Dot Card. The timeframe for this service is limited though; in 2016 it was only available until May. Because many people may not file taxes until after the standard mid-April filing deadline, this option may not be available when you file.
How to access your account:
App or Online: Green Dot has an app available for smartphone users. From this app, you can access transaction history, register your new card or order an additional card for your account with an authorized user. This app is available on both Android and iOS.
Text alerts: You can check your balance and recent deposits through text. Make sure you know if your cell carrier has any charges for this service before utilizing it.
Other ways to use your account besides swiping at checkout:
Pay bills online: While the cardholder agreement explicitly forbids setting up recurring transactions, you can pay your bills online for no fee. Just make sure they are one-time transactions and not set up to come out regularly.
Transfer money: You can send money to and from others with Green Dot Cards via mobile for no service fee.
Fees for paper checks: If you need paper checks, you can order them for $5.95 per 12 checks.
How it Works
Step 1: Apply
In order to open a Green Dot Card, you will need to either buy a temporary card at a participating retailer or financial service center, or get the process started online. When you apply online, you will be issued a temporary card number, but it can’t be used at places that require you to have a physical card in order to make a purchase. This is a non-issue when you apply for Green Dot in person as the temporary card will be physical.
Step 2: Register the account
In order to get a permanent card, you will have to register your account. You will have to provide personal details to verify your identity, such as your name, Social Security number, address and date of birth.
Step 3: Activate personalized card
After you have registered, Green Dot will send you a personalized card in the mail. You will then need to follow activation instructions in order to start using your account.
You will be able to use your card where Visa or MasterCard is accepted (depending on which you are issued,) and you’ll also be able to use it to withdraw cash from ATMS. As discussed above, you can also use your account to transfer money to others with a Green Dot Card or pay bills online fee-free.
The Fine Print
This card does come with a lot of fine print, and you’re going to want to review all of it before opening an account.
While Green Dot boasts that you can get your paycheck or benefits a full two days early when using direct deposit, that is by no means a guarantee. First, the institution paying you money must give Green Dot a notification that they intend to pay prior to actually paying you. Then, Green Dot must elect to put those funds in your account two days early. To further complicate matters, just because you have received your paycheck or benefits two days early in the past, there is no guarantee that you will continue to receive them two days early in the future. It’s a wait-and-see game each and every time.
WARNING: Know that your employer cannot legally require you to receive your paycheck via a prepaid card.
If the direct deposit transfer is irregular or there is a transmission error, you may not be able to access your funds for a full five days after their deposit.
You can only deposit up to $2,500 at a time, though if your benefits or pay is regular, Green Card may make exceptions on a case-by-case basis.
Max Transaction and Balance Limits
On any given day, you can only spend $2,500 on your Green Card. That is also the max you’re allowed to have in your account, unless an exception has been made for you because of direct deposit.
You’re only allowed to take out $400 at a time when making a withdraw from an ATM, however, the ATM you’re using may have limits that are even more stringent.
First Load at Retailer
The first time you load money onto your card at a retailer, you must load at least $10 but no more than $500. The retailer may or may not have stricter policies for the initial load. Also remember that when you load your card at a retailer, you will incur a fee.
You can have an authorized user on your account, and he or she will be issued a separate card. The card number and funds will be the same as yours, though, and you are solely responsible for any spending, charges or fees that they rack up. The authorized user will not be able to load funds onto your card. In order to remove an authorized user, you will have to close your entire account and open a new one.
Using Your Card to Make Specific Purchases
In some situations, you’ll have to use your card in precise ways. For example, if you’re getting gas, you can only use your Green Dot Card as a debit card with your PIN at the pump. If you want to pay credit, you’ll have to go inside.
In other situations, Green Dot may put a hold put on your card. That means that a certain amount of funds are frozen and you can’t use them, even if they exceed the actual transaction amount. This commonly happens when you make a huge purchase, such as reserving a hotel or car rental. It can also happen when you go out to a restaurant; Green Dot may reserve additional funds in case you decide to leave a non-cash tip. These funds can be frozen for up to 90 days.
If you lose your card or it is stolen, you have two days to notify Green Dot. If you’re reviewing your transaction history and see some weird activity that is not your own, you have 60 days, though there is exception for those with “good cause” like being hospitalized or away on long trips. If you notify Green Dot within these timeframes, you will only lose $50. If you don’t, but Green Dot decides that it could have identified the fraud themselves, you can only lose up to $500. If neither of those apply, you could lose everything according to Green Dot’s own policies.
However, MasterCard and Visa also provide protection. If your card is a Visa, you will only lose money if they determine that you’re lying about the charges being fraudulent or if you were grossly negligent. If your card is a MasterCard, you will only lose money if your card is not in good standing (which is rather difficult, though not impossible, to do with a prepaid card,) or if you have reported unauthorized activity more than twice in the past twelve months.
Negative Balance and Account Closures
If you have a zero account balance and incur fees, Green Dot will charge you a max of $11.90. That is more than can be said about many traditional financial institutions. If you try to spend more money than you have on your card, the transaction may be declined, or you may end up with a negative balance on your card commensurate with the difference. So if you tried to make a $30 purchase, but only had $10 on your card, you could potentially end up with a -$20 balance.
You must pay off negative balances. If you don’t, or if you have a zero balance, your card can be closed without notice.
If you have money in your account, but you don’t use it for a year, it will be turned over to your state as unclaimed property. You must then go through the claim process with your state if you want to see that money again. You can find out if you have any unclaimed property here.
The Green Dot Card does come with a number of fees. Here are ways you can avoid them:
- Initial Purchase Fee: $4.95 or less if you purchase in-person at a retailer (but $6.95 for the NASCAR® Prepaid Visa card). You can avoid this fee by opening your card online.
- Monthly Charge: $5.95. You can avoid this charge by loading at least $1,000 onto your card during each billing cycle, or by making 30 purchase transactions in each billing cycle. It should be noted that many, though by no means all, traditional financial institutions will also have a monthly service fee if you do not meet similar guidelines.
- ATM Fee: $3.00 every time you withdraw cash from an out-of-network ATM or from any teller. $0.50 per balance inquiry at out-of-network ATMs. You can avoid these fees by only withdrawing money from in-network ATMs, though you should remember that individual ATM operators may have their own fees.
- Reloading at Retail Locations: This can cost you up to $4.95, depending on the retailer. To avoid this, keep as much of your money digital as possible so that you won’t have to deposit cash. If you work in the service industry, this is much easier said than done.
- Replacement Card Fee: $4.95. You can avoid this fee by not losing, damaging or having your card stolen, but that’s everyone’s goal, anyways.
- Foreign Transaction Fee: 3%. You can avoid this fee by not using this card out of the country, or by using another card that carries no foreign transaction fees.
- Failure to Register: $5.95 starting after 90 days. If you purchase your card in person, you will need to register and submit all necessary identifying documentation within 90 days, otherwise, you’ll start incurring a $5.95 fee. Avoid this by registering within 90 days.
- Charge for Checks: $5.95/12 checks. You can potentially avoid this fee by paying all of your bills online or in cash. (Just be sure to always get a receipt.) If a check is mandatory, you can’t really get around this one.
- PayPal Service Fee: $3.95 every time you put cash directly into PayPal. To get around this fee, find another way to fund your PayPal account.
Pros & Cons
Pro: Provides a way for many to access financial services that otherwise wouldn’t be available to them.
Con: These services are riddled with fees.
Pro: Direct deposit is free, and provides a way to dodge expensive cash-checking services.
Con: You can only have $2,500 in your account at a time unless you have filed for a direct deposit exception and been approved.
Pro: Many of these fees can be circumvented if you have internet access.
Con: The very reason you need a prepaid card may be lack of internet access.
Pro: Reasonable limit on fees if your card has a zero balance.
Con: The monthly deposit requirement to avoid a Monthly Charge may exceed your income.
When to Migrate Away from Prepaid Cards
If you have a prepaid card, do everything you can to find a reputable bank or credit union to use instead. Investigate their fees, too, to make sure you’re not paying too much for services that are free with many traditional financial institutions.
However, there are legitimate reasons for having a prepaid card. If you have a poor banking history, for example, traditional banks might not allow you to open a checking or savings account.
Another reason you may opt for a prepaid card if you don’t have a traditional financial institution in your neighborhood, and lack a way to regularly access one in another neighborhood. If this is the case, turn to your computer. Mobile banking has been made easier and more reliable in recent years, and you can do almost anything that you’d be able to do at a physical branch.
If you don’t have access to a computer or a home internet connection, it is not advised to use the library to do mobile banking as this connection is shared and not secured. Instead, you may want to look at doing mobile banking via your smartphone, or look into the ConnectHome program to get a low- or no-cost computer and/or internet connection.
If you don’t have a smart phone and have exhausted all other options, a prepaid card may be your best bet. Go in with your eyes wide opened. Figure out the best way to dodge fees so that they don’t cut into your pay or benefits. Then, as you build your credit score or gain access to mobile banking, migrate away to a traditional checking account that is almost guaranteed to be less laden with fees, allowing you to keep more of your own money.