Ditch your checking account and save

An alternative -- a low- or no-fee prepaid card -- is essentially a checking account without the ability to write paper checks.

By MSN Money Partner Dec 28, 2011 9:01AM

This post comes from Odysseas Papadimitriou of Card Hub.


Card Hub on MSN MoneyTraditional checking accounts are progressively getting more expensive with higher fees and minimum-balance requirements. Prepaid debit cards, the fastest-growing method of payment over the past two years, are becoming increasingly rewarding as a result of recent legislative changes. 


So, if it will save you money, why not replace your checking account with a prepaid card?


The pros

Prepaid cards are essentially checking accounts without the ability to write paper checks.  They allow online account management and bill pay, direct deposit and ATM withdrawals -- basically all the functionality most people need from a checking account. They even provide an opportunity to lead your children by example, since providing your child's allowance via prepaid card is a great way to teach the principles of fiscal responsibility.


Post continues below.

Most importantly, the right prepaid card can be cheap to use. A recent Card Hub report showed exactly how inexpensive a prepaid card can be for a consumer who deposits a paycheck of at least $1,000 each month and only uses in-network ATMs. More specifically, by using a GreenDot prepaid card and tapping into the company's 18,000 in-network ATMs, one could escape fees entirely and essentially have a free checking account. 


Seeing as major banks -- such as Chase, Bank of America, Wells Fargo, SunTrust and Citi -- are beginning to implement monthly fees of $3 to $25 for various checking account offerings to compensate for the loss of revenue resulting from legislative and regulatory changes, free certainly sounds appealing.


The cons

Though financial-reform laws have done a lot to increase transparency within the credit card industry, prepaid cards have not yet come under the microscope of such regulatory attention. Now, this doesn't mean prepaid cards should be ruled out completely; it simply means that most cards have complex fee structures that need to be evaluated carefully.


The inability to write physical checks therefore becomes the only real drawback, but as more and more of your financial life goes online, that becomes less important.


Odysseas Papadimitriou is the founder and CEO of Card Hub, a marketplace for the best credit cards, prepaid cards and gift cards.


More on MSN Money:


Dec 29, 2011 10:56AM
This is nothing but a cheap advertisement for Card Hub.  The post is written by its CEO.  There are thousands of banks that still don't charge fees and most of them are local or a credit union in your area.  Come on MSN.
Jan 1, 2012 10:43PM

I don't think I will give any credance to an article written about plastic cards by the Founder and CEO of a company that is trying to market plastic cards.

Also, Fiscal Responsibility has nothing to do with plastic cards, it has to do with understanding enough to know that if you have $100.00 available to spend, you cannot go out and spend $1,000.00, no matter if it is with a check, plastic card, or any other means.


I'll keep my checking account, Thank You.

Jan 1, 2012 5:18PM
Jan 1, 2012 7:15PM
I still have 2 bills that will only take checks. I have never paid for a checking account so what is the problem?
I love my credit union, and couldn't be any happier. No fees and they have even waived a bunch of overdraft fees on my mistakes.
Jan 1, 2012 5:19PM
I bank with a credit union and a community bank and I pay very little to no fees at either one.  I rarely use checks as the actual cost of the checks has gotten expensive but I don't pay extra for writing a check.  I don't have a whole lot of money in the bank either.  My checking accounts don't have a minimum balance, they are free and I get cash when I use my debit card to pay for groceries.  I pay nothing for online banking and when I refinanced my home it was the bank who came to me, I didn't go begging to them.  They came to me and told me they had a better deal to offer me.  So I don't think one of these cards would be a smart move for me.  Personally I think you get better service all the way around at a credit union and certain small banks where the people know you by name and know where you live and where you work. 
Jan 1, 2012 9:08PM

what  BS is this  ? Like so many I have had free checking over 10 years with out any fees .

Who ever wrote this clearly hasn't a clue which shows don't believe everything you read on the internet

Jan 1, 2012 7:20PM
Why are they trying to get rid of checking accounts? Are the banks behind this article as it seems to show up every year? Not every organization takes debit or credit cards. I can't donate to church weekly with a debit card. I know I can donate to other charities using my credit card but using a check is often more convenient and I am not giving up my credit card information either by mail or by phone. I have more control and I like checks.
Jan 1, 2012 10:57PM
it doesn't matter what type of account you change to, bankers are always going to find a way to get into your wallet.  Bankers are just like the government, they don't have any money of their own and can't do anything without your money so once they get it they want more.
Jan 1, 2012 5:00PM

Pre-paid credit cards are what high-interest credit card issuers offer to people with zero or minimal credit history. Using one of these cards brands you as a so high a credit risk that the bank demands that you put up your own risk capital,  risk that the bank won't put up. And, you bet the bank has the use of your money and you don't get squat for it.


Pre-paid cards are for suckers--period.

Jan 1, 2012 5:45PM

DH & I both have accounts for people over 55.  We have no fees, we get free checks, there is no minimum balance requirement and they are interest bearing....small interest but still interest!

It is a small community bank....NOT one of those big messes!

Jan 1, 2012 6:37PM
Actually lucky haskins, credit unions are normally made up of employees of a business looking to make banking more affordable. The company I work for has their own credit union which was started 35 years ago by the employees. You seem to think a credit union is for people with bad credit? do your homework before you speak. I have excellent credit and real money in the bank, credit union, 401k etc and have never heard someone call a credit union what you have.
Jan 2, 2012 12:01AM
Dump all big banks if you possibly can. Go with local or regional credit unions. Often if you have a checking and savings and maybe your mortgage with one of these they will waive or significantly reduce any fees they may have. I have used one for over 35 years and have always been very satisfied with their products and service (especially their service). Mine has kept current with banking technology, I pay all of my utilities with their online service and only need to write 2-3 checks per month.
Jan 1, 2012 10:17PM
Let's see...written by a guy who runs a company that deals with the pre paid cards for a fee? Sounds more like a commercial. Small business in small towns will not use the service because it costs to set the program up. The elderly will feel more comfortable with the way they pay with a check. I'm always suspicious of new service fees and having to read the small print to see if there's hidden fees on top of that. Banks are looking for different methods of revenues. Put it all together and I'd rather not put my trust in a service employee writing an article for the company. The whole article is just bad/lazy journalism.
Jan 1, 2012 7:28PM
"Odysseas Papadimitriou is the founder and CEO of Card Hub, a marketplace for the best credit cards, prepaid cards and gift cards."
How nice of the CEO to let us know the pros of using his product. No bias here. Smile
Jan 1, 2012 7:41PM
This article is brought to you and approved by Bank of America.Financial advice from BofA? Really?     
Jan 1, 2012 6:42PM
Cash is king. Direct deposit to a Credit Union. Pull your cash out at payday and pay your bills. Buy your fluff items (**** you don't need ...your wants for a better term) and have no worries.

If you can't pay cash for it, shop elsewhere. For those that disagree more power to you. On the other hand I am the only person I know that hasn't been ****ed over in the last 4 years................

Like everyone else has.

Jan 1, 2012 10:52PM
I have a Chase checking account with no minimum balance and no fees as long as I Direct Deposit my pay. 
Pre-paid debit cards would not work for me, because many of the bills I pay require a payment from a checking account and do not accept credit/debit cards.

Jan 1, 2012 5:37PM
Odysseas Papadimitriou, you are a FREAKING ID-10-T!!!!!  Believe it or not, there are businesses out there who are refusing to take credit or debit cards for payment due to the high cost of doing business with them.  American Express is the biggest rejection followed by Diners Club.  Wit all other credit card transactions costing a point and a half at best, it's easier to simply refuse them and become a cash only business.  Most of those "cash only" businesses still take a written check although the number of those are becoming less and less with each passing restriction imposed by the banking industry.  So, next you are going to recommend everyone just go to strictly cash?   As I stated in my opening comment:  You are a Freaking idiot!!!  Has anyone thought about just limiting the multi-million dollar bonus payouts and imposing excessive profit limitations on the banking industry???? 
Jan 1, 2012 4:27PM
I would rather talk to a person face-to-face to get an issue resolved at a community bank/credit union, rather than a calling center (probably in another country with people that don't speak English fluently) that more than likely will be less sensitive to my situation. I like the entire experience of talking to the SAME people I know and trust, that know me as well, and I can see them each time I visit. I like investing in the community; it is a small step to restabilizing the economy imo. The fees mentioned in a previous post could have been related to OD/NSF fees, not just membership/account holder fees. Free is free; just read the fine print when signing a checking account/cardholder form, at a LOCAL bank/credit union, of course. :)
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