What is a prepaid card? - General FAQ


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Credit Card Applications » Questions » FAQs » General » What is a prepaid card?

What is a prepaid card?

Answered on | Updated on February 3rd, 2013
The content is accurate at the time of publication and is subject to change.

Prepaid cards have more in common with gift cards than credit cards. A prepaid card looks like a credit card, but it isn’t actually a credit card. It’s loaded with money at the front end, so instead of spending money and paying it back later, you deposit money initially and spend it later.

You can load a prepaid card with any amount you’d like, and refill it when the balance runs out. Some people use prepaid cards as an alternative to a checking or bank account, in order to avoid bank fees – although prepaid cards come with their own fee schedules. Some of the things you can do with prepaid cards include:

  • Paying bills online
  • Shopping online
  • Making purchases anywhere that major credit cards are accepted
  • Getting cash from an ATM
  • Getting direct deposits from employers
  • Transferring money directly to other payees

Some cards charge fees for all of these actions, some charge for just some of them, and some don’t charge for any of them. Read the terms and conditions carefully when you are considering any prepaid card to find the best one for you.

Prepaid cards are a popular option with parents who might want to give their child a credit card, but don’t want them to get in over their heads in debt because with prepaid cards, when the money is gone, it is gone. They are also popular with people who can’t get a credit card or prefer not to get one, but still want the convenience of paying with plastic.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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