Join our community of Solution Seekers!

A Prepaid Debit Card or a Checking Account?

A prepaid debit card might seem like an attractive option, but here's what to know before you close out your checking account and and make the switch.

Illustration of a checking account and debit card

Back in the day—say, 2002—most checking accounts were free. Not anymore: Now nearly two-thirds of them carry a monthly maintenance fee of about $12, according to, a financial tracking site. No wonder a growing number of people are flocking to prepaid debit cards as a cheaper alternative to checking. After all, the cards can be loaded with funds (as much as $15,000 on some versions), and you can use them to make purchases and pay bills. What’s not to like?

Unfortunately, quite a bit. For one thing, you probably won’t kiss that maintenance fee good-bye. Some prepaid cards levy up to $10 a month, according to the credit-card–comparison site Plus, you can get dinged $1 to $5 every time you load money onto the card or use an ATM.

Prepaid cards also tend to offer fewer consumer protections, says John Ulzheimer, the president of consumer education at, a credit-monitoring site. Unlike money in the bank, the funds you load onto a card may not be insured by the FDIC, and with some, if you lose the card, your money is gone, too.

That’s why experts suggest that you maintain a checking account. “Many prepaid cards are poor substitutes,” says Odysseas Papadimitriou, the CEO of “Also, most checking accounts offer more customer-friendly features, such as free withdrawals at branch ATMs and reward programs.” And since some banks do still offer free checking (find one at, if you do a little detective work, owning an account doesn’t have to cost you a thing.

Read More About:Money

Related Content

Handing over money

3 Ways to Protect Yourself When Loaning Money

Whether it’s for an overdue bill or to fund a new business, a relative will ask for financial help at some point. Follow these tips for a smoother lending process.

What do you think about this article? Share your own solutions and ideas

View Earlier Comments

Quick Tip

Illustration of suitcases

Packing for a family vacation? Travel versions of favorite games won’t crowd suitcases, and playing them will keep kids from begging to watch TV at night. Get more tips.