(Update) Netspend 5% Savings Accounts on up to $1,000

Update 4/18/24: Readers note that the inactivity $5.95 fee dormancy period has changed from $90 days to 60 days, so keep that in mind. There are some other fee changes as well – see pdf link here. 

[Updated 4/6/16]

We’ve written about various options of prepaid cards which offer high-interest rates. This post will be about the following prepaid accounts: Netspend, Brinks, Western Union, and Ace Elite. All four of these have the same details, as described in this post.

• Interest Rate: 5% APY
• Minimum Balance: None
• Maximum Balance: $5,000 (any portion of the balance above $5k will get .50% APY)
• Payments: Issued quarterly
• Availability: Nationwide
• Direct deposit required: No
• Additional Requirements: Initial $500 ACH transfer (see below)
• Hard/soft pull: Soft
• Credit card funding: No
• Monthly fees: None
• Insured: FDIC
• Length of promotion: Unknown

The Offer

Update 5/31/16: Netspend, Brinks, Western Union, Ace Elite, Control, H-E-B, and probably Paypal are lowering the 5% rate to just $1,000, effective July 1, 2016.

Direct link: Netspend, Brinks, Western Union, Ace Elite

• Open any one of these prepaid accounts and you’ll be eligible to open a connected Savings account with 5% APY on up to $5000.

In order to be eligible for the Savings Account, some of the Netspend varieties require that you first upgrade the prepaid account to a Premier account by making a $500 direct deposit. In the past, any ACH transfer worked, but as of 1/22/16, a real payroll or government payment is required. This change does not affect those who were already upgraded under the old rules.

As soon as the money appears in your prepaid account, you’ll be upgraded to Premier and they’ll send you a new Premier debit card. Your account will be upgraded and eligible for the Savings Account immediately, even before you get the new Premier debit card.

[You can split up the $500 deposit into multiple transactions; so long as a total of $500 is directly deposited within one calendar month the account will be upgraded to a Premier account.]

Opening an Account

The process of opening an account with all of these Netspend options is to signup with your name and address, without giving your SSN and other personal info. After getting the card, you’ll give in this info at the time of activating the card.

A few points:

• You may want to signup with a referral link, instead of signing up directly, so as to get a $20 bonus – see below.
• At the time of the initial card signup, you’ll have the option of setting up an online login immediately.
• Do not try to ACH funds into your account before receiving and activating the card. It needs to be activated first.

Loading Funds

The prepaid account has a routing number and an account number, same as any checking account, and you can transfer funds to it same as you would transfer between any two checking accounts.

All funds initially come into the prepaid account (via ACH or any other method such as cash loading) and are transferred to the attached Savings Account. There is no way to fund the Savings Account directly.

Things to keep in mind:

• Since this is a prepaid card and not an ordinary checking account, some banks may not allow transfers to it. My experience so far is that my banks are treating the prepaid account as an ordinary checking account.
• We don’t recommend trying to transfer from a CapitalOne360 account since they’ve been known to have problems with people making transfers to prepaid accounts in general. Some mention not to use Chase or Discover either.
• There is one report that Bluebird/Serve/REDbird do not work.

Avoiding Fees

All these cards can be obtained online with no fees.

As far as monthly fees go, there are two plans available:

1. Pay-as-you-go plan. Under this plan, you pay $1 per signature transaction and $2 per PIN transaction. You pay no fees if you don’t make any purchases with the card.
2. Monthly fee plan. It’s $5 for Premier cardholders (more on being Premier below), and $9.95 for non-Premier cardholders. There are then no fees per transaction at all.

For those of us who just want the prepaid card for the 5% savings account benefit, the best option is to go with the pay-as-you-go plan. You’ll end up with no fees whatsoever, no signup/activation/monthly fees at all.

Other possible fees:

• $.50 fee for checking the card balance with a CSR or at an ATM. (All online services are free.)
• $3.95 card replacement fee.

Inactivity Fee

The one fee to be aware of is a 90-day inactivity fee of $5.95. To remedy this, you need to make sure there is some sort of activity on the debit card every 90-days. You can buy a $.50 Amazon gift card every 90-days, but that would cost you $1 for the transaction, or you can set up an ACH pull/push of $1 from your checking account into the prepaid every 90-days.

It’s likely that transferring money from the saving to the prepaid or vice versa will satisfy the inactivity requirement. Similarly, it’s likely that if there is no money in the prepaid account, the inactivity fee doesn’t apply and they won’t put your account into a negative balance. [Prepaid cards often have inactivity fees as a means of draining unused cards, not as a penalty for inactivity.]

Exclusion: In the Netspend Fee Schedule it mentions that NJ and CT are exempt from this fee (HT: Eric). I do not see this detail with regards to Brinks or any of the other above-mentioned accounts.

Referral Program

A popular aspect of these prepaid cards is the $20 referral bonus program.

• Refer-a-friend and each of you will get a $20 bonus after the new member adds $40 to their account.

Some people have been opening these prepaid accounts just for the sake of the $20 bonus. That may not be worth it for many, but it is an added little perk to go along with the 5% Savings Account. You’ll only get the $20 bonus if you use a referral link, not if you open an account directly.

Referral Limits

There is a limit of one $20 referral for the recipient across all Netspend-and-clones cards within 180-days. This means that if you sign up for two of these cards on the same day (say – Brinks and Netspend), you’ll only get the bonus for the first one. After 180-days it resets, and you can get another bonus.

There is no limit as to how many people you can refer; you can refer as many people you want. So long as the referred member is eligible for the bonus, you’ll get the bonus as well.

Ace Elite Bonus

While all the other cards offer a $20 referral bonus, the Ace Elite card offers just a $10 bonus. All the other details are the same.

Please do not leave any referrals in the comments of this post. Instead, please visit our dedicated page for referrals on all Netspend-family products. You can pick up a referral there (to net the $20) or you can leave your referrals there. We also wrote more details there on the rules of the referral program.

Rewards Programs

All of these prepaid cards come with various rewards programs. Here are some of the offerings (which vary by the card):

• Various ‘payback rewards’ which offer you cashback for using  your debit card at different merchants. These offers are loaded based on you spending history. If you don’t use the card for purchases, you won’t see any offers.
• Prescription savings. They partner with this company to offer discounts on prescriptions. (I have no idea if this actually works or if the discounts are useful for someone who has insurance coverage.)
• Phone refill discounts. Use your prepaid card to refill your phone balance, and get $1 back on each $25 of spend.
• Virtual account number. You can get a one-time use account number for online purchases, similar to a benefit offered by Citi on their credit cards.

H-E-B Card

Direct Link

This is mentioned on Fatwallet as another card which can come with a 5% savings account on balances up to $5000. While the Cardholder Agreement doesn’t specify this option, reports indicate that the HEB indeed has the 5% savings option. I can attest to this as well.

The HEB/Netspend card appears as part of the Netspend website itself, and you’ll login to your account from the netspend.com website. The standard Netspend card is backed by MetaBank while the H-E-B version is backed by BofI. This card does not have the referral program like the other Netspend cards have.

The only different between this card and the other Netspend cards is that the H-E-B version comes with a $2.95 initial-ordering fee.

Our Verdict

These Netspend cards are, perhaps, the best option from all the 5% prepaid/savings accounts. These cards have no fees as all, while the Paypal and Control prepaid cards – also Netspend clones – have a non-waivable monthly fee of around $5 which eats into the total value of the cards.

While some of these accounts do need a one-time $500 ACH deposit to enable the Savings Account option, it should be smooth sailing afterward. This makes it arguably better than the Mango account which yields a similar interest rate but require a $500 monthly direct deposit. Also, the Netspend, Ace, and Western Union cards don’t even need the initial $500 deposit at all, as explained here.

Two downsides of these Netspend cards:

• the interest is issued quarterly (versus the Mango monthly)
• there is a 90-day inactivity fee which we have to be sure to avoid

See also Guide to 5% Interest Prepaid/Savings Accounts where we round up all the options for 5% savings accounts.