How is a prepaid card different from a debit card or... - Prepaid Cards Questions


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Credit Card Applications » Questions » User Questions » Prepaid Cards » How is a prepaid card different from a debit card or a regular credit card? I’m not sure which type...

How is a prepaid card different from a debit card or a regular credit card? I’m not sure which type of card I should encourage my teenager to get before she heads off to college. I’ve heard that a prepaid card is best, but I’m not convinced that’s true.

Answered on

A prepaid card is indeed a good choice for a child headed off to college. However, it’s important to understand exactly what a prepaid card is, and isn’t. A prepaid card is a payment card that is used in a similar way to a credit card, but is entirely different than a credit card, as well. It has more in common with a debit card, which is linked to a bank account. Debit cards and prepaid cards both draw on funds that are already there – with a debit card, money is automatically and immediately drawn from your checking account. With a prepaid card, money is loaded onto the card initially and then withdrawn as the cardholder makes purchases. The great thing about a prepaid card is, your teen cannot spend money she doesn’t have, and therefore cannot get into any debt.

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