What Is a Prepaid Debit Card?

A prepaid debit card is a payment card loaded with funds before being used. It works like a credit or debit card when shopping, but it doesn't use a line of credit or a bank account.

Learn more about how these prepaid debit cards work, as well as some of the pros and cons of these cards.

What is a prepaid debit card?

Prepaid debit cards are payment cards that work like credit cards when you are shopping, except you are not borrowing money. Instead, you are spending your own money that you loaded onto the card in advance.

This makes them more like debit cards, but unlike a debit card, you don't need to have a bank account to use them. Like credit and debit cards, many come from Visa or Mastercard and can be used anywhere these types of cards are accepted.

Alternative name: prepaid card

There are many variations on prepaid cards. Some come from big companies like Visa or Mastercard and offer rewards like a credit card. Others are for specific purposes, such as a college student who has a prepaid card that allows access to student services and cafeterias.

How does a prepaid debit card work?

You can get prepaid debit cards from a bank or credit card company. You can even buy them over the counter at a store. Prepaid cards are reloadable, so you can add cash to the card whenever you need to replenish funds.

Add funds to your card

Some cards come with funds - you buy a card with a fixed value and that is the amount of money that comes with the card. Others are designed to be loaded with funds as needed. If you can add funds, you may have several options for doing this, including:

Set up direct deposit on the card
Bring cash to a retail store that can add funds to your card
Deposit a check with an app that is linked to your card (taking a photo of the check with your smartphone)
Transfer money from your bank account to your prepaid card

Some cards may charge a fee each time you top up funds. If that's the case with your card, plan your refills carefully to minimize these fees.

Buy or withdraw money with your card

Once you've added funds to your card, you can spend that money or withdraw cash at ATMs. To buy something in person, simply swipe or insert the card at the point of sale.

If you are shopping online, enter your card number. At an ATM, just insert your prepaid card like any other bank card and withdraw cash. Note that a fee may apply for each purchase or visit to the ATM, although this depends on how the issuer has structured the card.

Prepaid cards work in a similar way to a debit card linked to a checking account, but there are some important differences to keep in mind.

The main difference between prepaid cards and a bank debit card is that it is not necessary to have a normal bank account to obtain and use the prepaid card.

You can have a regular bank account and use additional prepaid cards to manage some of your expenses, or you can use prepaid cards exclusively, without any bank account at all.

Since prepaid debit cards are not linked to a checking account, they are also easier to buy. You can find one while shopping or collecting some trinkets for the house.

Debit cards linked to a checking account must be purchased from a financial institution that offers a checking account. This means that there will be a much stricter application process than simply paying for a prepaid debit card at a store.

Pros and cons of using a prepaid debit card


No credit history required

No bank account required

Budget support

Extra privacy


Less protections

High fees

No credit

Overdraft protections


We hope you enjoy watching this video about what is a prepaid debit card

Source: Annie Margarita Yang

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