I discovered Bluebird (a product of American Express) when I switched from a cash budget to a virtual budget. Bluebird is basically a prepaid debit card that can be loaded with money but is not tied to a traditional bank account. You can deposit cash onto the card at any Wal-Mart location, do an eCheck deposit using your mobile device, do a bank transfer, or set it up with direct deposit. The money is deposited into a Bluebird account, which can then be spent using the card just like a debit card.
So why would you ever want to use a pre-paid debit card?
There are three reasons I can think of for using a Bluebird card.
- If you use a “cash” budget but would like to load some cash onto a card for electronic purchases
- If you don’t want or don’t qualify for a regular bank account
- If your bank doesn’t allow cash deposits, but you need to deposit cash
Let’s look at each of these separately and I will explain my thought process.
If you use a “cash” budget but would like to load some cash onto a card for electronic purchases
If you’re using an envelope cash budget type system, that means you pay for most everything in cash. You might pay bills online with your debit card, but everything that can be paid in cash is paid in cash. This makes sense, because you don’t have to worry about overdraft fees. When the money is gone, it’s gone. You physically can’t over-spend.
Cash budgets are great and I highly recommend them, but they’re not always convenient. Let’s say you do a cash budget but you hate having to go inside the gas station each time you want to pay for gasoline. It would be much easier for you to just swipe your card at the pump, but that goes against your system. This is where the Bluebird card comes in. With this account, you can set up and automatic deposit each month to load your Bluebird card (aka your gas card now) with your monthly allotted amount for gas. You can’t overspend because you don’t overdraft with this card, so it’s the same as cash but more convenient.
If you don’t want or don’t qualify for a regular bank account
If you don’t want to pay fees or don’t meet the requirements to open a bank account, you can try a Bluebird account instead. I would first consider opening an account with Ally Bank because they also have no fees, no minimum balance, and great interest rates. But Ally might not be ideal for everyone since it’s an online only bank and doesn’t accept cash deposits. If you’re looking for an alternative to a bank, Bluebird requires no minimum balance and has no annual fees. If you set up a direct deposit you can use all ATM’s in their network for free (outside the network is $2 per withdrawal). You also get purchase protection, fraud protection, and your account is FDIC insured after all funds are confirmed. You can even get free checks.
If your bank doesn’t allow cash deposits, but you need to deposit cash
This is the reason I sought out Bluebird. I signed up with Ally Bank, which is the best bank I’ve encountered. They are awesome, and offer so many great perks! But they don’t accept cash deposits, and because I previously used a cash-only budget before purchasing my EveryDollar Budget account, most of my money was in cash. I needed to get those funds into my bank account and Bluebird made for the perfect middle man. I took my cash and made sure to note how much was in each category so I could properly redistribute once deposited. Then I signed up for a Bluebird account online. Once I got my card in the mail, I went to Wal-Mart and loaded it with the cash. Then I went to Bluebird.com, signed in, and followed these steps:
- After you sign in, click ‘Settings’
- Scroll down to ‘Withdraw Funds’ and click ‘Learn More’
- Find ‘Transfer to Bank’ and click the button
- From here, all you need to do is choose the amount you want to transfer into your bank account and enter your bank information. Ta-duh!
So what’s the catch?
Good question. Basically this is just Master Card’s way of getting their foot in the door to your life. This prepaid card is kind of like a “gateway drug”. You have to be careful to avoid getting sucked in to opening a credit card account. If you think you are susceptible to their master plan, then maybe you should stick to strictly cash. Remember, if you find yourself to be particularly vulnerable to credit cards applications, you can always take yourself off their mailing list.
Bluebird worked great for me.
Now that I’ve successfully transferred my funds I really have no use for the card. I suppose I’ll hang on to it since there’s no harm in having it as it doesn’t incur any fees. Who knows, maybe I’ll have a successful garage sale someday and want to deposit the cash I made. Either way, Bluebird is a great FREE option for a variety of use cases.
So Is Bluebird the best option?
There are other similar cards out there, such as the REDcard found at Target, and the Serve card. I have personally only used Bluebird, but for more info on the other cards these guys do a great job of breaking it down. For me, Bluebird was the best option, but things change to quickly that it would behoove you to look around.
If Bluebird seems like the right option for you, you can register for an account at Bluebird.com.