Comparing the Value of NetSpend Cards to Axos and Varo

by
Adam Rust

Before you get a NetSpend card, you should consider your alternatives, as you can undoubtedly find a better option.

I will compare the NetSpend prepaid debit card with the Axos and Varo Money bank accounts.

In my opinion, both alternatives present a much better value to a consumer.

Before I go any further, let me advise you that it makes a difference. For people who use one of these accounts as their primary banking tool, choosing the wrong (NetSpend) card could cost as much as $60 per year!

Measuring by the total number of accounts, NetSpend is one of the two largest providers of prepaid debit cards. They market their cards through relationships with several check cashing stores. You can find them in other retail settings as well. By purchasing valuable rack space, they can put their product in front of many potential customers. You will enjoy the convenience, but you will pay for it in the form of higher fees.

To save money, you will have to get a Varo Money or an Empower card digitally. You will not find these cards in stores.

NetSpend has two plans. The first, known as the “pay-as-you-go plan,” has no monthly fee. You can load money by direct deposit or by a cash load. Most people will add funds via a load, as those who use direct deposit can avail themselves of a discounted price on their monthly plan option.

Under pay-as-you-go, you’ll pay a fee just about every time you use your account:

• $2 per purchase

• $2.50 to withdraw funds from an ATM – not including any host ATM fees that might also be added.

• $3.95 to load cash

• $0.50 to check your balance at an ATM

• $5.95 if your account has no activity for 90 days.

NetSpend also offers a monthly plan. It costs $9.95 per month, but the price drops to $5.00 when more than $500 is deposited to the account by a direct deposit. NetSpend wants you to establish a direct deposit. Direct depositors are the best customers, as they tend to keep their account open for a long time and generate lots of fees for NetSpend when they buy things with their card. Nonetheless, NetSpend’s monthly plan still has several fees:

• $9.95/$5.00 monthly fee

• No charge for purchases. The lack of a per-purchase fee is the primary virtue of the monthly plan.

• $2.50 to withdraw funds from an ATM.

• $3.95 to load cash

• $0.50 to check your balance at an ATM

NetSpend does not subscribe to a fee-free ATM network.

Better Alternatives to a NetSpend Card
Picture of card
Picture of card
couple switching to a debit card from a NetSpend Prepaid Card

Not to be blunt, but you can do better. WiseWage specializes in helping people do better. That’s why we exist.

Consider the Varo bank account:

• No monthly fee

• No purchase fee

• Access to 55,000 surcharge-free Allpoint ATMs

• No inactivity fee

• No fee to check your balance at an ATM

On top of that, you can benefit from Varo Money’s savings account. As of May 24th, 2019, Varo’s savings account pays 2.14 percent interest. Additionally, you can deposit checks to the account.

Varo recently announced a new service that should add more to its value proposition. Varo's new No Fee Overdraft service upends the standard assumptions about how banks treat customers who encounter a temporary financial hardship. Most banks charge overdraft fees of up to $37. Varo responds differently and instead gives its customers some grace to make a momentary mistake. For qualifiying accounts (direct deposit, minimum # of swipes in the prior month), Varo will permit an overage of up to $50 without applying any fees or interest charges.

Another difference: Varo Money is a bank account. The NetSpend card is a prepaid debit card.

Axos is also a bank account. It offers many of the same functions as Varo:

- early direct deposit of pay

- no monthly fee

- no purchase fees

- no overdraft fees

- optional high yield savings account

Axos does not offer a "no-fee overdraft" service.

It does reimburse card holders for up to two out-of-network ATM visits per month.

It pays to shop around to find the best card. WiseWage has done that for you.

Additional reporting on NetSpend:

NetSpend to Cease Overdraft Services on its prepaid debit cards (March 2019)

FTC Settles with NetSpend over Blocked Accounts

CFPB Prepaid Rule Goes into Effect - No More Overdrafts for NetSpend (March 2019)

How Will NetSpend Respond to the New CFPB Prepaid Rule? November 2019

Comparison of Fees for NetSpend, Green Dot, and Varo Accounts

NetSpend's Ace Flare Account Has Overdraft Fees - Is this an Evasion? (September 2019)

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Adam Rust has worked to defend consumers against harmful financial practices since 2005. He has written extensively about overdraft fees, payday lending, credit insurance, student loans, prepaid debit cards, high-cost installment loans, and subprime mortgage lending. The New York Times interviewed him when it reported on the CFPB's rulemaking on prepaid debit cards; subsequently, his research paper framed the debate on consumer protections.

He serves on the Board of the US Faster Payments Council. He is Director of Research at Reinvestment Partners in Durham, North Carolina. He is the author of BankTalk. He is the author of "This is My Home: Challenges and Opportunities of Manufactured Housing" and has testified to Congress on how to redress some of the problems with manufactured housing. See more on his LinkedIn profile.