The 8 best prepaid cards

This post comes from Odysseas Papadimitriou of Card Hub. 
 
Prepaid cards are all the rage these days, but with new offers popping up left and right, it can be understandably difficult to determine which card best suits your needs.

There are clearly a few cards that are better than the rest, according to Card Hub, which recently released its annual Prepaid Card Report. But picking the right one necessitates knowing how you want to use it. (Check out Card Hub's full 2012 Prepaid Card Report.)

Prepaid cards have three primary applications, and each requires different features and necessitates that consumers consider certain fees more closely than others, as you'll see from the following breakdown:

• You can use it in place of a checking account. Requires a card that offers direct deposit, online bill pay, and a nationwide network of ATMs.
• You can use it to provide your child's allowance and teach financial literacy. Necessitates a card that can be loaded via a bank account or PayPal and that charges low fees for monthly maintenance and in-network ATM withdrawals.
• You can use it to cash checks if you don't have a bank account. Demands a card that allows you to load funds with a check and inexpensively access your money, either by making a purchase or an ATM withdrawal.

Now that you know how prepaid cards are typically used, let's check out the cards that most cost-effectively meet the needs of consumers. (Post continues below.)

• GreenDot Prepaid Card: This is the best card to use as an alternative checking account because it offers direct deposit and online bill pay and can be free to use if you load at least $1,000 per month and make withdrawals at GreenDot's 22,000 ATMs nationwide. (Compare checking accounts here.)
• The Approved Card from Suze Orman: Orman's card is the best card to use as a financial literacy teaching tool given that it allows parents to load funds from their bank accounts, has low fixed fees, and does not charge for ATM withdrawals at AllPoint's 43,000 locations if you load money at least once per month. This card also offers the necessary features to be used as an alternative checking account but will likely be more expensive to use than the GreenDot Prepaid Card.
• Chase Liquid Card: This is Chase's first prepaid card, and it makes for the best card to use as an alternative check-cashing tool given that you can load funds via cash or checks for free at Chase's 10,500 ATMs and 5,500 branches nationwide. It also charges a relatively low monthly fee ($4.95) and does not assess fees for purchases.

Tier 2

• American Express Prepaid Card: American Express' prepaid card is a decent option for giving your child his or her allowance and thereby teaching financial literacy, given that it only charges one fee: $2 for your second and subsequent monthly ATM withdrawals. However, you will also be charged an ATM owner surcharge given that AmEx does not have an ATM network linked to this card, and that will likely make it cost a little over $3 more each month more than The Approved Card from Suze Orman.
• American Express Pass Card: While this card is more targeted to young people than its aforementioned AmEx counterpart, it has the same features and fee structure, which means it's also a middling option.
• Capital One MasterCard Prepaid Card: This card is best used as a financial literacy teaching tool, and while it does charge a $4.95 monthly fee, people who live or work in one of the eight states in which Capital One has a presence (Connecticut, Delaware, Louisiana, Maryland, New Jersey, New York, Texas and Virginia, as well as the District of Columbia) can avoid paying the typical ATM owner surcharge of about $2. It does not offer online bill pay or allow you to load funds directly via check, making it ill-suited for the other two primary card applications.
• Western Union Prepaid MasterCard: If you are already a Western Union customer, you may want to consider this card because it will help boost your Western Union reward earnings. This card is actually quite similar to the American Express Prepaid Card, with the main difference being that it doesn't give you one free ATM withdrawal per month as the AmEx Card does.
• Walmart Prepaid Card: If you already use Wal-Mart's check-cashing services, you can load some of your cash onto this card for free and gain more flexibility in terms of how you spend your money, including gaining the ability to buy things online, rent a car or book a hotel room. Plus, there's no monthly fee if you load at least $1,000 per month, and if you can manage to leave some of your money in cash, you won't worry about expensive ATM fees.

It's important that you keep these recommendations in mind and don't simply apply for whichever card a celebrity decides to endorse next (check out Card Hub's review of the new Magic Johnson Prepaid Card) because picking the wrong prepaid card can cost you more than $300 in fees.

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Ultimately, there's no question that we will see new prepaid cards introduced in the coming months and years, which means the current hierarchy will undoubtedly change. However, you now know what to look for in prepaid cards, which will certainly come in handy as they gradually overtake debit cards in popularity.

More on MSN Money:

• Can new rules curb prepaid card fees?
• Is a prepaid card right for you?
• Prepaid cards growing in popularity
• Best checking accounts for kids
• The best way to exchange currency
• Find a better credit card