In May I first wrote about how United was planning on introducing a prepaid debit card. While this perhaps isn’t that exciting for credit-worthy individuals, a lot of Americans aren’t in a position where they can acquire credit cards. As a result, the prepaid industry has grown massively, and is now a $100+ billion annual industry.
Well, it’s now official — the MileagePlus GO Visa Prepaid Card has been introduced. The basic details are as follows:
- The card has an $85 annual fee
- You can earn one MileagePlus mile per dollar spent, up to 2,500 miles each month for qualifying signature purchases made in-store and online
This card is just about what I expected. PIN-based transactions don’t earn any miles, as they’ll be processed as debit. Meanwhile signature based purchases do earn miles, but at the rate of one mile per dollar spent, and with a cap of 2,500 miles per month.
For some people this card will make sense. If you’re not eligible for credit cards (either due to past problems with your credit, your age, etc.) or if you don’t feel like you can control your spending with the flexibility of a credit card, then this card could make sense. However, do keep in mind the $85 annual fee. I value MileagePlus miles at ~1.4 cents each, so you’d have to earn 6,000+ miles annually to breakeven on the annual fee.
However, if you have credit cards and use them responsibly, then there’s no upside to this card that I can think of.
I’d say the $85 annual fee is steep for this card, but then again, this is the only prepaid card on which you can earn airline miles, so it does have a unique value proposition. I suspect the reason for the annual fee is that there’s otherwise limited upside for the card issuer. Credit card companies make a lot of money on people financing charges, and that’s not an area where they can profit here, given that it’s a prepaid card.
Does anyone plan on picking up the MileagePlus GO Visa Prepaid Card, or see any other value that I’m missing?
(Tip of the hat to Points Fitness)