NetSpend is a prepaid card, not a checking account
NetSpend is a prepaid debit card, not a checking account. You load money onto the card yourself, and you can spend only what you have loaded. There is no bank account behind it, no routing number tied to your name, and no overdraft protection. If you need direct deposit, bill pay, or the ability to write checks, NetSpend does not offer those things.
NetSpend is run by a company called TSYS, which partners with banks to issue the card. The card works like a debit card at stores and ATMs, but the money is sitting in a prepaid account, not a checking account. This matters because prepaid cards and checking accounts have different rules, different protections, and different costs.
If you arrived here looking for a checking account, NetSpend is not the answer. If you are considering NetSpend because you cannot open a checking account elsewhere, there are other routes worth exploring first.
Key Takeaways
- NetSpend holds your money in a prepaid account, not a bank checking account, so you cannot write checks or set up traditional bill pay.
- You can receive direct deposit on a NetSpend card, which makes it useful for paychecks even though it is not a checking account.
- NetSpend charges monthly fees, ATM fees, and fees for certain transactions, so the total cost depends on how you use it.
- If you have been denied a checking account, a second-chance checking account or a basic savings account at a credit union may cost less and offer more features.
How NetSpend works and what it costs
You buy a NetSpend card at a retail store or online, then register it and load money onto it. The money can come from a bank transfer, a direct deposit, a check deposit (through the mobile app), or cash at a retail location. Once the money is on the card, you can use it anywhere Mastercard is accepted.
NetSpend charges a monthly maintenance fee, which varies depending on the card type you choose. Some versions charge around $9.95 per month; others charge less if you meet certain conditions like receiving direct deposit. Out-of-network ATM withdrawals cost extra. Transferring money off the card, replacing a lost card, and checking your balance at certain ATMs also carry fees. Over a year, these fees can add up to $100 or more if you use the card frequently.
The upside is that NetSpend does not require a credit check, does not report to credit bureaus, and does not deny you based on banking history. If you have been turned down for a checking account, NetSpend will take you. But that convenience comes at a cost.
When NetSpend makes sense and when it does not
NetSpend works well if you need a way to receive direct deposit and spend money without a traditional bank account. Many employers and government agencies (including tax refunds and stimulus payments) can deposit directly to a NetSpend card using the routing and account number the card provides. If your only goal is to cash paychecks and pay for things, NetSpend can do that.
NetSpend does not work if you need to write checks, set up automatic bill payments to specific companies, or maintain a savings account. You also cannot overdraft on NetSpend — if you try to spend more than you have loaded, the transaction will be declined. For some people that is a feature; for others it is a problem.
NetSpend also does not build credit history. Checking accounts and credit cards can help establish or rebuild credit if you use them responsibly. NetSpend cannot do that because it is not a credit product.
How NetSpend compares to a second-chance checking account
If you were denied a checking account, a second-chance checking account is often a better option than NetSpend. Second-chance accounts are offered by banks and credit unions specifically for people with poor banking history or no history at all. They usually have lower fees than NetSpend, and they are actual checking accounts, so you get a routing number, the ability to write checks, and automatic bill pay.
Second-chance accounts do require a deposit (often $25 to $100), and some banks will check ChexSystems, a banking history database, before opening one. But many credit unions and smaller banks will open a second-chance account even if you have been denied elsewhere. The monthly fee is typically $5 to $15, which is often less than NetSpend once you factor in all the transaction fees.
The other advantage is that a checking account can help rebuild your banking record. If you use it responsibly for six months to a year, you may be able to move to a standard checking account with lower fees and better terms.
Direct deposit and tax refunds on NetSpend
NetSpend provides a routing number and account number, so you can receive direct deposit just like you would with a checking account. Your employer or the government agency sending a refund or payment can deposit directly to your NetSpend card. The money usually arrives within one to two business days, the same as a checking account.
Tax refunds can be deposited to NetSpend if you provide the routing and account number on your tax return. The IRS will send the refund to NetSpend the same way it would send it to any bank. However, some tax preparation services charge extra to deposit to a prepaid card, so check the fee before you file.
The catch is that NetSpend is not FDIC-insured the way a bank checking account is. Your money is held in a trust account, which is supposed to be protected, but the legal protections are different. If NetSpend or its partner bank fails, your money may not be covered the same way a checking account would be.
Fees that add up on NetSpend
The monthly maintenance fee is only the beginning. Here are the other costs you may face:
- Out-of-network ATM withdrawal: $1.50 to $2.50 per transaction
- Balance inquiry at an out-of-network ATM: $0.50 to $1.00
- Replacement card: $5 to $15
- Expedited card replacement: $15 to $25
- Money transfer to a bank account: $2 to $5
- Paper statement: $1 to $2 per month (if you do not use online statements)
If you use your NetSpend card to withdraw cash from out-of-network ATMs twice a week, you could pay $150 to $260 per year just in ATM fees, on top of the monthly maintenance fee. A checking account at a credit union or online bank often includes unlimited ATM access and costs less overall.
Alternatives to NetSpend if you cannot open a checking account
Before you settle on NetSpend, explore these other options:
- Credit union basic savings account: Many credit unions offer savings accounts with no minimum balance and low fees, even to people with poor banking history. Some credit unions also offer second-chance checking accounts.
- Online bank checking account: Online banks like Chime, LendingClub, and others offer checking accounts with no monthly fee and no minimum balance. Some do not check ChexSystems at all.
- Secured credit card: If you want to build credit while having a card to spend with, a secured credit card requires a deposit but reports to credit bureaus and helps establish history.
- Bank-issued prepaid card with lower fees: Some banks offer prepaid cards with lower monthly fees than NetSpend if you meet certain conditions.
Call your local credit union or visit an online bank's website to see what they offer. Many will tell you over the phone whether they can open an account for you, without a hard inquiry.
Frequently Asked Questions
Can I use NetSpend to receive a tax refund?
Yes. Provide the routing and account number from your NetSpend card on your tax return, and the IRS will deposit your refund directly to the card. The refund usually arrives within one to two business days after the IRS processes it. Some tax preparation services charge extra to deposit to a prepaid card, so check before you file.
Does NetSpend report to credit bureaus?
No. NetSpend is a prepaid card, not a credit product, so it does not report to Equifax, Experian, or TransUnion. Using NetSpend responsibly will not help you build credit history. If rebuilding credit is your goal, a secured credit card or a credit-builder loan is a better choice.
What happens if I lose my NetSpend card?
Call NetSpend immediately to freeze the card so no one else can use it. Your money is protected as long as you report the loss quickly. NetSpend will issue a replacement card, which costs $5 to $15 depending on how fast you need it. Expedited replacement costs more.
Can I write checks with NetSpend?
No. NetSpend is a prepaid debit card, not a checking account, so it does not come with checkbooks or check-writing capability. If you need to pay by check, you will need a checking account or a money order.
Is NetSpend FDIC-insured?
NetSpend itself is not FDIC-insured because it is not a bank. However, the money you load onto NetSpend is held in a trust account at a partner bank, which is supposed to be protected. The protections are different from FDIC insurance on a checking account, and the legal details vary by state.