Typically, a regular saving’s account has an interest rate that ranges from 0.70% – 1.00%, but what if I told you there are some savings accounts that give a 5% interest rate? Well, these savings/prepaid accounts give you just that. You will get a 5% APY on your funds. The only downside to this is the fact that you cannot deposit as much as you would in a normal savings account; some of these accounts have about a $1,000 – $5,000 maximum. This article will show you which banks carry these prepaid savings cards and how to maximize the benefits by combining specific cards into your arsenal.
Table of Contents
List of Options
Many of these special accounts are just prepaid cards that come with an additional benefit of a savings account with a high-yield interest. These accounts usually have about a 5% interest rate on a maximum balance of $5,000.
Currently, there are 8 accounts available that offer 5+% interest on balances of $5000. Click below for more information.
- Union Plus (currently unavailable for signup)
- Momentum (must obtain card in store) (must buy the black version to be eligible for the linked savings account)
- Purpose (must obtain card in store)
- Vision (max $1000 high-interest savings account)
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What is a Prepaid/Savings Account?
What exactly is this account and who is controlling it? Well, this account is not primarily a savings account; it is a mix of both a savings and prepaid account. However, there are two or three separate entities involved in each of these cards:
- Front end – run by the names mentioned above (Brinks, Paypal, Control, etc.).
- Back end – bank who is holding the FDIC-insured accounts.
- Most of the above cards have a third party, Netspend, administering all of the details of the card, including customer service, programs and features, etc.
Let’s get into detail about the cards:
- Netspend administers their own card and has MetaBank as the backer of the card.
- Ace, Control, Purpose, and Western Union have Netspend as the administer of the card and Metabank as the backer of the card.
- Brinks and H-E-B have Netspend as their administer and BofI Federal as the backer of the card. (H-E-B actually appears as part of the Netspend website itself.)
- Paypal, Vision, and Momentum have Netspend as their administer and Bancorp as their backer.
- Mango and Union Plus are really one company. They administer their own cards and have First Bank & Trust as their backer. (These two cards are the only ones that are unrelated to Netspend.)
Because you only have a maximum deposit of $5,000 for these special accounts, the strategy to perform is to have multiple savings accounts – all with a high amount of funds in order to maximize the return. Although many of these cards are issued by the same companies and backers, it is still possible to obtain an account from each company. You are able to use the same e-mail for all of your accounts as long as you have a unique user ID for each.
There’s an untold rule that you can only have a total of 3 Netspend cards backed by each unique bank. You won’t be able to get Netspend, Ace, Control, and Western Union, since that would be four cards all backed by Metabank. But you can get Netspend, Ace, and Control.
Many have stated that they’ve gotten 5 Netspend accounts total; for example, you can get 3 cards backed by Metabank and another two backed by Bancorp. While this is true for some, others have trouble when activating the 4th or 5th card. It is also possible to obtain a 6th.
You are not allowed to open two credit cards within 24 hours of each other. There is also an address limit meaning that even if you are different people, using the same address on an application will get deny you the account.
This section will show you which cards you can own in your arsenal by using the 3/5 rule from above:
- One Netspend, one Ace Elite, and one Western Union card. These three are all issued by Metabank and this maxes you out on the three-per-bank limit mentioned above.
- One Brinks and one H-E-B. While these are also Netspend cards, they are backed by a different bank (BofI). This will now max you out on the five-Netspend-total limit.
- One Mango and one Union Plus. These accounts are completely unrelated to Netspend so you can have these accounts in addition to the Netspend accounts.
This combination allows you to have 7 accounts with an APY of 5% on $35,000. Although it might not seem signification at first, it does add up, and you’ll be earning money easily.
Netspend Referral Program
If you refer a friend using the Netspend Referral Program, then you both have the opportunity to make an additional $20 each. The only requirement is to have your friend deposit at least $40 to their account. This may not seem like a lot to you, but if you are earning 5% on a savings account, then this money could go a long way.
The following cards are part of the Netspend referral bonus program:
There is a limit placed on the referral bonus for the person across all Netspend-family cards within 180 days. This means that if you sign up for two of these cards on the same day (i.e. Brinks and Netspend), you’ll only be able to get the bonus for the first account. After 180 days, it resets and you can earn another bonus. However, there is no limit to how many people you can refer. If the referred person is eligible for the program, then you will both earn the bonus.
Opening an Account
If you are worried about a hard pull on your credit score when opening an account, don’t be. Opening a prepaid savings card will not create a hard pull on your credit. However, the process of opening one of these special accounts is similar to applying for a any other bank account. You’ll have to provide them with personal information.
Required Direct Deposit
The prepaid savings cards need a direct deposit associated with these accounts. The Netspend cards (aside from Paypal) need a one-time $500 direct deposit to trigger the upgraded status which allows you to open the 5% savings account, and the Mango needs a $500 monthly direct deposit to make you eligible for the 6% interest rate.
Accessibility to Money
With having a duo savings and prepaid card, you might be a little worried about accessing your funds for purchases. However, you should know that all Netspend accounts come with an account and a routing number just like any other bank account. You can direct the money to your linked bank accounts by using your account/routing numbers. Just be sure to transfer the money from the savings account into the prepaid.
Other Important Information
- Limits to Location: Netspend accounts are not available for residents of Vermont. Restrictions on the Mango account are unclear.
- Tax Implications: You will receive a 1099INT form for all interest received.
These savings/prepaid accounts are surely interesting. Juggling 7 accounts may not seem fun to you, however, the interest on these accounts are higher than normal savings accounts and may be worthwhile for some. This is a great way to earn a couple of extra dollars on the side. Just remember to read the full details on each account in order to satisfy the requirements. If you liked this article, go ahead and check out our full list of Best Bank Rates only on Hustler Money Blog!
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