Amex Ups the Ante With Its Serve Prepaid Debit Card

[Update: Some offers mentioned below have expired. For current terms and conditions, please see card agreements. Disclosure: Cards from our partners are mentioned below.]

For decades, banks have offered their customers debit cards, which they originally called check cards. But recently, a new generation of debit cards — prepaid debit cards — are being offered by companies without traditional retail bank branches.

American Express has been on the forefront of this trend as it previously introduced its Bluebird card, co-branded with Wal-Mart. Now, American Express has upgraded its Serve Prepaid Debit Card to meet the demands of the growing number of Americans who are looking for an alternative to traditional bank accounts.

What is the Serve Prepaid Debit Card?

The Serve Prepaid Debit Card is ideal for those consumers that wish to step away from the traditional roles that banks and credit unions have regarding their money. The Serve offer is particularly noteworthy because it is the only prepaid card that you can find that also allows the consumer to participate in a rewards program. With the rewards program, the cardholder has the opportunity to earn 1% cash back every time they use the card while shopping.

Other Pros and Cons of the Serve Prepaid Debit Card

Among its other advantages, the cardholder will have all the debit card features you would find with a traditional card and you can avoid having to pay the typically high prepaid debit card fees that are usually imposed.

On the other hand, the consumer should also keep in mind that they will be faced with the same limitations; such as not being able to build their credit as well as being limited by consumer protections.

While prepaid debit cardholders enjoy the freedom from interest charges and debt, they are vulnerable to the myriad of fees that many of these cards impose. American Express is clearly trying to alleviate those concerns by slashing fees on its Serve card.

The card is free to acquire online or at participating retail locations.  Cardholders then pay a monthly fee and this fee will vary by card. However, this fee can also be waived for those who load at least $500 a month (the fee is not charged to residents of New York, Texas or Vermont).

The temporary card you receive is also subject to a monthly fee thirty days after purchase if you failed to register for a personalized card in that time. The fee is withdrawn from the available balance on the card. If there is no available balance on the card, then no fee will be charged because American Express does not want to put your card in a negative standing. However, they are able to charge a partial fee depending on the available balance in the account.

ATM withdrawals are free at thousands of MoneyPass machines around the country, and $2.50 at each non-MoneyPass machines, plus any third-party ATM fees. The best part about this product may be that there is no fee for cash reloads at 14,000 participating CVS pharmacy and 7-Eleven stores. With other prepaid products, cardholders typically pay third-party networks a fee of $3 to $5 to add cash to their cards. Regular purchases do not incur a fee, but American Express imposes its 2.7% foreign transaction fee on all charges processed outside of the United States.

More Features

In order to more closely reproduce the features of a traditional bank account, American Express has introduced several new features. As with most prepaid cards, users can now set up direct deposit from their employer or government disbursement program.

When you elect direct deposit, your paycheck may be available to you up to two days prior to the actual payday. Once you set up the direct deposit, it can take up to two pay cycles before it becomes effective and begins.

Choosing to load your Serve card with cash means that the funds will be immediately available for use on the card. Checks may take up to six business days to clear, however. Serve cardholders are able to make these deposits with the mobile check capture app. The app is available on both iPhone through the App Store as well as Android through Google Play. Sign into the app and closely follow the step by step instructions it provides you to successfully deposit the check.

The fees will vary based on the deposit method and length you chose. If you choose Money in Days, then there is no fee associated with using the app. However, if you choose the faster option of Money in Minutes, then you may be charged either 1% or 5% of the check’s amount, with a minimum fee of $5.00.

Cardholders can also link their cards to a savings account called Reserve, in order to set aside money for emergencies, although no interest accrues as in many savings accounts. Furthermore, cardholders will be able to issue payments electronically to any person or business using online bill pay. Finally, deposits will be FDIC-insured, just like those with traditional banks.

These new features come on top of existing benefits such as purchase protection, roadside assistance, emergency travel services, fraud protection in the event the card is lost or stolen, and 24/7 live customer service. Just remember that like all debit cards, Serve will not help cardholders improve their credit —  a common misconception.

Types of Available Amex Serve Cards

American Express Serve allows for free direct deposit, online bill pay, and offers tools you need to help better manage your money including fraud protection. The monthly fee for this card is $1 per month.

American Express Serve Free Reloads provides you with all the same benefits as the previous card as well as free reloads at over 45,000 available and participating locations. This card is free to register online and can be used while making purchases online. The monthly fee for this card is $4.95 per month.

American Express Serve Cash Back is another card with all the same benefits, but also provides the cardholder with 1% cash back on purchases made in store or online. The monthly fee for this card is $5.95 per month.

How Other Prepaid Debit Cards Compare 

Bluebird from American Express and Wal-Mart

This product is so similar to Serve that cardholders are not permitted to have both cards at once. As with Serve, customers can add funds for free using direct deposit, but in-person cash loads will incur a third-party fee (although they are free at Wal-Mart). Although Bluebird allows cardholders to write paper checks, a checkbook fee applies. There is no cost to obtain a Bluebird card online, and no monthly fee.

H & R Block Emerald Card

Cardholders can receive an Emerald card for free at any H & R Block retail branch. Money can be loaded by direct deposit for free, but cash loads at any Green Dot network location incur third-party fees of up to $4.95. ATM withdrawals are free from Allpoint ATMs, and there is a $3.00 fee for the use of other terminals (plus any fee imposed by the ATM owner). There are no monthly fees for this card, but online bill pay costs 95 cents per transaction.

Green Dot Card

Green Dot operates the cash load networks that are used by dozens of cards, but it also offers its own prepaid debit card. Their reloadable prepaid card can be ordered for free online, or costs up to $1.95 in stores. There is a $7.95 monthly fee for this card that is waived for those who load at least $1,000. There is no charge for direct deposit, but there is a fee of up to $4.95 to reload at the cash registers or $5.95 for purchasing MoneyPaks. Cardholders can withdraw cash from MoneyPass ATMs with no fee, but there is a $2.50 fee for non-MoneyPass withdrawals.

For more information or to answer any other questions you may have about the American Express Serve Prepaid Debit Card, be sure to thoroughly read through the cardholder agreement.

Image: Goodshoot

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