The content is accurate at the time of publication and is subject to change.
Prepaid cards have more in common with gift cards than with debit and credit cards. A prepaid card looks like a credit card of debit card, but it isn't actually any. Unlike those cards, a prepaid comes with a balance that acts as a spending limit. Once you've spent the balance, the card can't be used until you add more money to it.
You can load a prepaid card with any amount you'd like (up to the allowed limit) 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.
Here's what you can use your prepaid cards for include:
- Pay bills online or offline
- Shop in-store or online
- Make purchases anywhere major credit cards are accepted
- Get cash at ATMs
- Receive direct deposits from employers
- Transfer money
Some prepaid 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 want to give their child a card, but don't want them to get in over their heads in debt because with prepaid cards, when the money is gone, you cannot spend more. 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 or do not want to carry cash. Having a prepaid card won't impact your credit scores, so it's often considered a good instrument to learn how to manage cards before getting a real credit card.
