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The AAA Prepaid Card. A Good Deal?

Just before the Christmas holiday, I received in the postal mail my new AAA card for 2013. While reading the materials enclosed, I learned that my new AAA membership card is also an American Express Prepaid Card. To learn more, I visited the AAA.com/americanexpress website and read the Cardmember Agreement.

AAA Prepaid Card website. Click to view larger image.

The website clearly states that the AAA Prepaid card is not a debit card, credit card, nor a gift card. You can use it wherever retail stores accept American Express Cards. AAA crafted the deal correctly: AAA members have to opt in or activate their AAA Prepaid card in order to use its prepaid features from American Express. If a member does nothing, then their AAA Membership card functions as it always has.

The AAA/American Express website pitches four major benefits of the AAA Prepaid Card:

  • World-class American Express benefits
  • A safer way to spend
  • Several ways to fund the AAA prepaid card
  • Manage spending easily

The American Express benefits include purchase protection, savings on tickets to entertainment events, assistance when traveling, and other special offers. The card seems beneficial as a payment method while traveling abroad when retail merchants don't accept credit card payment methods (e.g., MasterCard, Visa). A consumer could use the AAA Prepaid Card instead of American Express Travelers Cheques when traveling abroad.

The "safer way to spend" benefits include protections if the card is lost or stolen, and no overspending and no overdraft fees. The lost/stolen protection is helpful, but the no overspending/overdraft-fee benefits are dubious. There are no overdraft fees with cash. If I don't have the cash, I don't spend it.

There are several ways to add money to the AAA Prepaid Card: cash, bank account transfer, check, direct deposit, or an American Express(TM) Card. You have to load at least $25.00 on the AAA Prepaid card and a maximum monthly of $2,500 (or a $10,000 max with direct deposit). Each month, the first ATM withdrawal is free, and all other ATM withdrawals are $2 each.

If the AAA website has a link to the American Express ATM locator, I couldn't find it. Having that link would be helpful for consumers who anticipate using their AAA Prepaid Card for ATM withdrawals.

The website emphasizes no activation fee, no monthly fees, no reload fees, and no foreign currency transaction fees. This is good because prepaid cards often have lots of fees. However, the ATM withdrawal fees mean you have to pay to access your own money, and can only make withdrawals at ATM machines that accept American Express Cards. Not good, especially if you have a bank account of sufficient size where your bank or credit union waives ATM fees.

The Cardmember Agreement clearly states:

"The Card is a prepaid, reloadable payment device which must have funds loaded to it prior to use. The Card is not a gift, credit, debit or charge card, and does not constitute a checking, savings or other demand deposit or consumer asset account. The Card is not a payroll card and cannot be used to make payroll to anyone... Subject to the amount of Available Funds on the Card, we may allow you to use the Card to obtain cash from Automatic Teller Machines worldwide that accept the American Express Card..."

This means it is a "general-purpose reloadable" prepaid card and has the responsibilities and liabilites associated with any GPR prepaid card. The bank can raise fees or change terms at any time without notice. There are no Federal disclosure requirements, so you are at the good graces of AAA and/or American Express to promptly alert you with advance notice about any changes in fees or terms.

The AAA Prepaid Card is "paperless" (Adobe PDF) -- all disclosures statements are only online. You don't receive monthly statements, so you have to check your balances online. The Cardmember Agreement also has specific disclosures for residents of Alaska, Arizona, California, Indiana, Kentucky, New Hampshire, Oklahoma, Oregon, South Dakota, Texas, and Vermont.

I've Been Mugged blog readers know that this blog has covered prepaid card before. Wise consumers should understand their rights and responsibilities before registering any prepaid card. If you are looking for a prepaid card to avoid overdraft fees with your debit card, it is wise to shop around and compare first, so you don't get "mugged" by other fees. Both CNN Money and Consumer Reports found a wide variety of fees when it investigated prepaid cards: activation fees, monthly fees, reload fees, cash withdrawal fees, inactivity fees, online payment fees, paper statement fees, customer service phone call fees, and more.

If you need to build your credit history, then a prepaid card may not be right for you. If you already have checking and savings accounts, then you may find a prepaid card of little benefit. Wise consumers do the research to determine whether a prepaid card fits your lifestyle and spending habits. Read this FDIC comparison between debit cards, credit cards, and prepaid cards.

Is the AAA Prepaid card a good deal? Only you can decide for yourself. You know your lifestyle and spending habits best.

For me, I chose tol continue using my AAA membership card the traditional way, and not activate its prepaid card features. I'll continue to use my debit- and credit cards instead. My bank account balances are sufficiently high that my bank waives all ATM fees. My credit cards already provide rewards and special offers. Plus, I have not had any problems using my credit cards when traveling abroad. I simply don't buy that much when traveling abroad.

The new AAA Prepaid Card highlights the trend of many retail organizations to turn membership cards into prepaid cards. In my opinion, we consumers now see so many prepaid card offers because prepaid cards are a way for banks to avoid the newer rules governing debit- and credit cards that mandate certain disclosures and protections for consumers.

What do you think of the AAA Prepaid Card? If you use it as a prepaid card, what has been your experience?


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AAA website has misleading informations about their pre paid cards, suggesting that Amex while not reporting to credit bureaus still monitors your spending and jn the future offers regular unsecured cards to loyal and good standing pre paid card holders, in reality after speaking to four different customers service agents, NOT true!!!! In other words, stick to your bank Visa/Mastercard debit card!

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