NetSpend challenges the throne


Is NetSpend a better option for 5X everywhere? 

Update: Shortly after writing this post, NetSpend cancelled my account without warning or explanation.  For details, see “We’re sorry, there is a problem with your account.”

Seven weeks ago I declared the American Express Prepaid card to be the “One card to rule them all.”  In that post, I described how one could earn 5X everywhere by using a Chase Ink card to buy Vanilla Reload cards at Office Depot.  Those Vanilla Reload cards could then be used to load up money on the American Express Prepaid card.  The points come from having used your Chase Ink card at Office Depot: the Chase Ink cards automatically earn 5 points per dollar at office supply stores.

American Express Prepaid Card Recap

In addition to the huge benefit of being able to load from Vanilla Reload cards, the American Express Prepaid card has some great features:

  • Order online for free.  There is no cost to obtaining the card and no credit check is performed.
  • ATM withdrawals are allowed.  The first ATM withdrawal each month is free, then it is $2 per withdrawal after that.
  • No fees (other than ATM withdrawals, as described above)
  • Purchase protection
  • Roadside assistance

Overall, it’s almost too good to be true.  However, there are some annoying limitations:

  • No more than $1000 can be loaded to the card per day.
  • No more than $2500 can be loaded to the card in any 28 day period.
  • The card cannot be used as a debit card.
  • It is an American Express card, so it is not accepted everywhere.
  • It can be difficult to use at Walmart (see “How to shut down Walmart with one swipe”)


Enter Netspend

imageLike the American Express prepaid card, NetSpend prepaid cards can be ordered for free and can be loaded with Vanilla reload cards.  That’s where the similarities end.  Let’s look at the pros and cons:


  • Free money!  If you use this referral link to order a card (, you and the referrer (not me) will earn $20 when you load at least $40 to the card.  Once you have a card, you can get your own referral link to give to family and friends so that you and they can make even more money.
  • Mastercard.  Unlike American Express, Mastercard is accepted almost everywhere.
  • Debit card.  Some transactions require debit cards, and the NetSpend card can be used in those circumstances.  Also, in some cases, using a debit card can save you money.  For example, if you were to use a debit card to pay taxes, you would be charged a very low fixed fee (less than $4) whereas you would be charged 1.89% (or higher) if you were to use a credit card.  Unless you were to make a very small tax payment, the % fee would be much higher than the debit fee.
  • Fewer restrictions.  You can load up to $7,500.00 over any 24‐hour period and up to $15,000 total.  You can make up to $940 in ATM withdrawals per 24-hour period.  More information can be found in their Terms & Conditions here.
  • Payback rewards.  There is a possibility to earn cash back for some transactions.  NetSpend supposedly monitors your spending patterns and offers deals accordingly.  I’ve only been using my card for about a week so I haven’t been offered any deals yet, but I’ll watch this one closely to see what happens.

If you thought the above pros were too good to be true, you’re right.  There are a couple of serious drawbacks:

  • High fees.  $1 per credit transaction, $2 per debit transaction, $2.50 per ATM withdrawal, $1 per bill pay, 3.5% foreign transaction fee.  Credit and debit transaction fees will be waved if you signup for their monthly FeeAdvantage plan ($10 per month, or $5 per month with direct deposit).
  • Account closings.  Quite a few people have reported using the NetSpend card’s debit feature to quickly cash out after loading up the card.  Everyone I’ve heard from who has done this has had their account closed.



The NetSpend card has a few great advantages over the American Express prepaid card, but it’s fees are pretty steep.  The question to consider is whether the advantages of this card outweigh the fees.

It’s theoretically possible to minimize NetSpend fees by making few, very large transactions.  That way, the fees would be a small percentage of each transaction and may be worth the expense.  Unfortunately, evidence suggests that people who do this get their accounts shut down pretty quickly. I don’t recommend this approach.

For those with light spending patterns, this card is unlikely to be a good fit due to it’s high fees.  If this is you, stick with the American Express prepaid cards.

My working hypothesis is that the NetSpend card will be best for those that pay the monthly fee (to avoid per-use fees) and use the card heavily for regular transactions.  At $10 per month, you would have to run at least $1000 per month through the card to keep the fees down to 1% or less.  My guess is that if you establish a pattern of using the card for regular purposes, you will then be less likely to get shut down when you use the card to pay large bills, pay taxes, or do other things that may be construed as “cashing out”.  This is the path I’ve started down, and I’ll do my best to keep you informed as this experiment progresses.  I’m looking forward to using the card to pay estimated taxes, so I’m hoping this works!  Keep in mind, that the above is just my current best guess.  Your mileage may vary.


If you haven’t already read my post “One card to rule them all,” I recommend doing so to get a general understanding of the approach to earning 5X everywhere.  To make the most of this approach, here are some specific steps to consider:

  • Ink Bold: Consider signing up for the Ink Bold, Ink Classic, or Ink Cash.  Each of these cards offer 5X for office supply purchases and thus are really key to getting the most out of this overall approach.  See “How to sign up for the Ink Bold” for details of how to apply and whether you are likely to qualify.  Other cards that might make sense include the American Express Simply Cash Business card (5% cash-back for office supply purchases) or the CitiBusiness AAdvantage World Mastercard (2X for office supply purchases).
  • Vanilla Reload:  Another key to success here is the ability to buy Vanilla Reload cards at Office Depot using your credit card.  Some Office Depot stores have stopped selling the cards and some others have posted signs saying “cash or debit only” for buying prepaid cards.  Fortunately, most stores still allow these purchases.  Many readers have reported ongoing success in the comments of the post “When thieves steal our points”.
  • Reloadable Prepaid card: You will need one or more prepaid cards that can be loaded using Vanilla Reload cards:
    • American Express Prepaid:  Consider signing up for the American Express prepaid card.  Since it has no fees except for ATM withdrawals, it’s a great option for most people.  This will be my go-to card overseas (for any place that accepts Amex) since it has no foreign transaction fees.  See “American Express loves to give us money, part 2” for an opportunity to get $25 free from American Express.
    • NetSpend:  With its high fees, this card is definitely not for everyone, but with the $20 sign-up bonus, there is little risk in giving this card a shot.  Worst case, you can get your $20 bonus and then cash out entirely at an ATM to make a small profit after the fees.  In my case, I decided to pay the $10 monthly fee (for a month or two) to see how well this card works as my primary card.  I won’t use it overseas (due to the 3.5% foreign transaction fees), but I will use it for all of my day to day spend within the U.S.



In the next month or so, I hope to test out all of the following:

  • Paying Taxes: The possibility of earning 5X while paying taxes is too good to pass up.
  • Paying Bills / Mortgage: NetSpend has a bill pay feature in which it appears that they’ll charge a fee of just $1 to send a check.  I’m looking forward to trying this for bills in which I can’t currently use a credit card.  I’ll stick to payments of $100 or more so as to keep my costs down to 1% or less.
  • Direct Deposit via PayPal: I’d like to get the $10 monthly fee lowered to $5.  This supposedly happens when you make a direct deposit of more than $500.  I’m curious to see whether a Paypal transfer will qualify.
  • Other Cards: In addition to the Amex Prepaid and NetSpend cards, there is a Mio card and a soon to be released Vanilla card that can be loaded via Vanilla Reload cards.  I hope to test out these options to see if they offer any advantages over the two I already have.  I also hope to take a look at a competing reload card called Reloadit, but I have yet to find one in a local store.


Reader experiences

Have you already tried the NetSpend or Mio cards?  Have you tried Reloadit cards, or any similar product?  Please let us know about your experiences.  What has worked, and what hasn’t?  Comment below.

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