Green Dot cards are secure debit cards that can do almost anything checking accounts can do. Issued by Green Dot Bank and backed by the FDIC, Green Dot cards come in MasterCard and Visa varieties and can be used anywhere credit cards can. They can be reloaded online, by direct deposit or with checks or cash at Wal Mart and some other stores. Green Dot cards also come with an online bill pay service and they can cash checks and send checks through the mail.
The bad news is, those who aren’t careful about how they use a Green Dot card can rack up a lot of fees fast. There’s also a limit to how much money Green Dot cards can hold. We’ll talk about all that and how to avoid Green Dot’s fees below.
The Advantages of Checking Accounts
- Checking accounts are a way to cash paychecks.
- Cash can be deposited into a checking account.
- Checking accounts offer a way to pay bills.
- Checking accounts let people send money through the mail.
- Many checking accounts come with debit cards.
- The money in a checking account is more secure than cash.
- There’s no limit to the amount of money a checking account can hold.
Let’s see how a Green Dot card stacks up to each of those criteria.
Can a Green Dot Card be Used for Cashing Checks?
Consumers can use Green Dot cards to cash checks in a number of different ways.
Anyone can set up a Green Dot card to cash and deposit paychecks and government checks automatically with direct deposit. There’s no fee for this service. The video below from Green Dot’s website explains how.
Also, users can deposit checks into Green Dot cards at any Walmart. The fee is a fairly steep $6.74 per check for in-store check cashing.
Third-party checks can’t be cashed or deposited with a Green Dot card. These include non-payroll, non-government checks; for example a personal check from a friend. A better option for third party checks is to ask the friend for cash. Someone who needs to transfer money to the owner of a Green Dot card can also do so online. They will need to use their bank’s online money transfer feature.
Do Green Dot Cards Accept Cash Deposits?
The owner of a Green Dot card can deposit cash into it at Walmart and other retailers. There is a list of retailers that accept cash deposits to Green Dot cards at GreenDot.com. There’s a fee of up to $4.95 each time the card is reloaded with cash. It’s good practice to keep cash deposits to a minimum to keep the fees from piling up. A Green Dot card can also be reloaded online, from a separate bank account. There’s no fee for this service.
Can Green Dot Cards be Used to Pay bills?
Yes. With Green Dot’s online bill pay feature, Green Dot card holders can pay bills. This feature is available from any smartphone, tablet or computer. The feature offers the choice of paying by electronic payment or by paper check. There’s no fee for either.
Can Green Dot Cards be Used to Send Money Through the Mail?
Green Dot cards can be used to send paper checks through the mail. They can also make transfers of funds into PayPal accounts or other Green Dot cards. There’s no fee here, either.
Can a Green Dot Card Work Like a Debit Card?
A Green Dot card is a debit card. The cards are prepaid and reloadable. They come with either the Visa or the MasterCard logo. They can be used anywhere credit cards can. This includes online and in stores and restaurants.
Is the Money in a Green Dot Card Secure?
What if a Green Dot card is lost or stolen, or if someone uses it for purchases without permission? In this case, federal regulations require the Green Dot company to reimburse the cardholder. One caveat is that the cardholder must report the theft or fraud in a timely manner. In this way, a Green Dot card is definitely safer than cash. Green Dot cards are also covered by FDIC insurance, just like the money in regular checking accounts.
Is There a Limit to the Amount of Money a Green Dot Card Can Hold?
Green Dot’s website says the maximum balance on their cards is $2,500. However, they’ll allow more in cases where someone sets the card up to accept direct deposits from a paycheck.
One Way Green Dot Cards Are Better Than Checking Accounts
Even someone with a bad checking account history can get a Green Dot card. If someone has bounced several checks or has abandoned checking accounts, it might be very difficult for them to get a checking account. That’s because each consumer has a written checking account history called a ChexSystems report. Banks use ChexSystems reports to decide whether to let people open checking accounts. Since Green Dot doesn’t check ChexSystems reports before issuing Green Dot cards, checking account history doesn’t affect approval for a Green Dot card.
Beware These Pitfalls
Although a Green Dot card can do almost everything a checking account can, there are some things to watch out for. The pitfalls all involve fees. A smart card user can avoid most fees. But if someone isn’t careful, Green Dot’s fees can wind up costing more than a regular checking account.
- In store purchase fee: Up to $4.95. Consumers can avoid this by buying the card online.
- Monthly fee: $5.95. People can only dodge this fee by loading $1,000 into the card in any billing cycle.
- Card reload fee: Up to $4.95 each time. This fee can really rack up if someone reloads the card multiple times per month.
- Fee for non-network ATMs: $2.50 per withdrawal.
- Fee for reloading with non direct deposit checks: $6.74 each time.
Green Dot vs Checking in a Nutshell
Overall, Green Dot cards stack up pretty well against traditional checking accounts. They have almost all the same advantages, except they can’t be used to cash third party personal checks. In addition, consumers can easily use them to check balances online. There are never any overdraft fees. There’s no minimum balance. Finally, a Green Dot card will never affect a person’s credit score. Other advantages include:
- Free ATM withdrawals as long from machines in their network.
- Even those with bad credit and bad checking account histories can get Green Dot cards.
- Consumers can have tax refunds sent directly to a Green Dot card.
- All fees can be avoided if the card is used in certain ways. These include buying the card online, loading in $1,000 per month, reloading the card only through direct deposit and using only in-network ATMs.
- Green Dot cards can be set up to send text message alerts, such as daily balance, weekly balance and “reload now” alerts.
Overall, a Green Dot card can be an excellent solution for someone who can’t get a regular checking account but wants all the benefits of having one. Just watch out for those fees. The smartest way to use a Green Dot card is by using it only for direct deposits of paychecks and government checks.