Posted by: John S Kiernan

Rating: 2 / 5

The Verdict: Prepaid cards are basically newfangled checking accounts minus the checkbook. And given that PayPal bills itself as “new money,” you’d think the PayPal Prepaid Card would be a perfect fit. But that would certainly be an overstatement.

According to WalletHub’s most recent Prepaid Cards Report, the PayPal Card isn’t suitable as a replacement checking account, for the purpose of giving a child an allowance or as an alternative check-cashing tool. Ultimately, the only type of person for whom this card will really work is someone interested in using a prepaid card solely for online shopping.

The biggest things to watch out for in regard to this card are its $4.95 monthly fee (which adds up to $59.40 over the course of a year) and its $1.95 ATM withdrawal fee. Plus, if you were imagining this card to be a convenient means of accessing PayPal funds, you’re better off just opening an actual PayPal account. This will give you the option of requesting a PayPal debit card with which to spend the funds in your account.

For more information about what the PayPal Prepaid Card brings to the table (as well as what it lacks), continue reading below.

The Highlights

• No Purchase Fees: The PayPal Prepaid Card is not among the prepaid cards that will charge you for making a purchase, regardless of whether you verify that transaction with a PIN or signature. This at least gives you one free way to access your money, which could be sufficient if you hardly ever need cash.This card, perhaps obviously, can be used anywhere that Mastercard is accepted. 

• Free Reload Options: Two of the PayPal Mastercard’s three reload methods are free: direct deposit and regular bank/PayPal transfers. However, “instant” bank transfers of $100 or less cost $1.95 each. It’s therefore best to avoid that option with a bit of planning, as regular bank transfers typically clear either the same day they’re initiated or the next. (If you transfer from a bank account, your bank also may charge its own fee to transfer the funds.)The other option is to add funds at a retail location, but that typically costs between $2 to $3.95 per transaction. You can load a maximum of $2,500 to your card in a 24-hour period and up to $15,000 overall. 

• Instant Transfers From A PayPal Account: You can move funds for free from your PayPal account to your PayPal Prepaid Card account — up to a point. You can’t transfer more than $300 per day or more than $2,000 during any 30-day period. 

• Access To A Sky-High APY: Interest is a good thing when it comes to deposit accounts, so you may be interested to know that being a PayPal Prepaid accountholder automatically qualifies you to open a Bancorp savings account with an APY of up to 5% on a maximum $1,000 balance. When you consider that the best deposit accounts yield only 0.67% on average, that is an outstanding deal — particularly since the account doesn’t seem to have a monthly fee.

The Lowlights

• $4.95 Monthly Fee: Keep this card for a year, and you’ll pay $59.40 in monthly fees. In two years that adds up to $118.80, totaling $297 after five years. That’s a lot of money. It’s also an avoidable expense, as not all prepaid cards charge a monthly fee. 

• $1.95 ATM Withdrawal Fee: Let’s say you withdraw cash from the ATM once a week. That’s roughly 52 times per year. The PayPal Mastercard’s $1.95 withdrawal fee would therefore cost you at least $101.40 per year. Your overall ATM costs would likely rise far higher, in fact, considering the average ATM owner levies a surcharge of roughly $4.57. At non-network ATMs, you’d therefore be looking at paying around $257.40 each year just to access your own money. Currently, only Allpoint Network ATMs waive the owner surcharge. 

• $5.95 Replacement-Card Fee: If you ever lose your card or it’s stolen from you, you won’t be able to just call up the issuer (The Bancorp Bank), ask for a new one and wait for it to come in the mail. What’s typically a very straightforward process is complicated by the PayPal Mastercard’s $5.95 replacement-card fee. Many issuers give you at least one free replacement as a matter of courtesy, but it seems PayPal isn’t so generous. 

• Nuisance Fees: You’d better know your account balance before you head to an ATM because checking at the terminal will cost you $0.50 a pop. And if you try to perform an ATM transaction or make a purchase and it gets declined, you’ll be out another $1.

Other Things To Consider

• Free Customer Service: Most prepaid cards offer free automated customer service, but you’d be surprised at the number that charge a fee each time you want to talk to a human being. So consider yourself lucky if you tend to have a lot of questions and end up opening this account. 

• No Inactivity Or Cancellation Fees: Fees for extended account inactivity and cancellation are among the nine different types of charges levied by the average prepaid card. But the PayPal Prepaid Card is not average in this regard. You won’t have to worry about using your card irregularly, and you should be able to cut ties without hassle. 

• $5 Refer-A-Friend Bonus: Each time you get a friend to sign up for the PayPal Prepaid Card and that friend loads at least $10 to his or her account, both of you will get a $5 bonus within two business days. There’s no limit to the amount you can earn through this process, which means popularity has the potential to be quite rewarding. 

• Cash Back Rewards Opportunities: Hardly any prepaid cards currently offer rewards, and the PayPal Prepaid Card only partly bucks this trend. It doesn’t offer traditional purchase-based rewards, which you may expect if you’re used to credit cards. Rather, it gives cardholders who hook their PayPal Prepaid cards to their PayPal accounts the ability to take advantage of special savings opportunities for online purchases.Not much in the way of specifics is provided about this rewards program, however, so you probably shouldn’t count on it to any great extent.
• Purchase Cushion: If you sign up for direct deposit, you qualify for the ability to overdraw your account by as much as $10 at The Bancorp Bank’s discretion without incurring a fee. If a purchase or withdrawal that would create such a negative balance is approved, you will have 30 days to repay the amount in question. If you fail to do so by the specified deadline, your ability to make purchases with your account will be cut off until you do.

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via Finance Xpress