American Express pre-paid card can be a deal


American Express has a new prepaid card that, if you jump through the right hoops, can be free of any fees to use.

Prepaid cards (aka stored-value cards) are generally garbage. You may recall a big fuss some months ago when the Kardashians licensed their name for a piece of garbage prepaid card called the Kardashian Kard. The clan had no idea how bad the card’s terms were and it tarnished their reputation as they moved to quickly distance themselves from the product.

The people behind the Kardashian Kard then tried to sue the sisters for $75 million. That case was recently thrown out of court. While the sisters won the lawsuit, you’re the real winner because of all the publicity that’s now floating around about how dangerous prepaid cards can be.

But the pre-paid card from AmEx is a different story. The American Express PrePaid Card has no fees to load money and you buy it online at no cost. You can use it anywhere AmEx is accepted with no monthly fees. But there’s only 1 ATM withdrawal allowed per month, so that’s where it can get ugly.

This is the kind of situation where you can figure out how to fee yourself to death if you try. But if you keep within the guidelines, there are no fees.

AmEx historically charges the merchants that accept its cards very high fees. That may explain why they don’t need to rip consumers on this particular prepaid card. AmEx makes all its money on fees and on “the float,” which is the money as it sits there on a card for them to use interest free until you need it.

You may want to consider the American Express PrePaid Card to give funds to a kid going to camp or to a student going off to college in lieu of having them travel with cash. Or you might use it for online shopping if you’re worried about hackers compromising your normal account.

I’m amazed to say that this is only the second prepaid card ever that I can recommend without reservation. The other had been the prepaid card that was available to USAA members. (Editor’s note: As of mid-2013, this card is no longer being USAA customers.)

The only other relatively low cost alternative that I know of is the Wal-Mart prepaid card. That has fees, but many can be avoided by you jumping through hoops.

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