Legal Disclosure    Advertiser Disclosure

What Are Prepaid Debit Cards?

Updated October 28, 2020   |   4 min. read

Josh Smith

 Josh is an associate content manager at Credit.com. He works with... Read More
0 comments

A prepaid card is an alternative to a debit or credit card. It only allows you to spend up to the amount of money you load onto it. Prepaid cards are safer than using cash and like other types of credit and debit cards, can work at any merchant that accepts its payment network such as Mastercard or Visa.

Establishments offering prepaid cards include:

  • Retailers
  • Banks
  • Credit card companies

Unlike typical debit cards, you can’t overdraw funds from a prepaid debit card. You can only use the amount of money you put onto the card. This is one strategy people use to keep from using credit cards and falling into debt.

A lot of prepaid debit cards charge monthly fees, including fees to load your card with money. A lot of cards allow you to set up a direct deposit and if you deposit more than a monthly amount onto your card, these fees can be waived, depending on the card issuer.

Why Would You Want to Use Prepaid Debit Cards?

Prepaid debit cards are convenient. Many people also use them to gain control of their finances, avoid overspending, and avoid overdraft fees.

It’s important to note that when you use a prepaid debit card, you’re not building your credit.

How Can You Get a Prepaid Debit Card?

Getting a prepaid debit card is simple. Hundreds of popular retailers sell them, like Wal-Mart and Walgreens. It’s a good idea to see what different prepaid debit cards have to offer so that you can pick the one that’s right for you.

You will also need to provide proof of identification. Some card issuers allow you to link it to an existing bank account. Some cards also let you give family members access to funds on these cards and will issue you extra ones to give to them.

What are the Pros and Cons of Getting a Prepaid Card?

Reloadable prepaid cards have a lot of benefits including:

  • You don’t have to carry cash.
  • The card can help you develop good spending habits and keep you from over-spending.
  • They are a good option for parents who have high school or college-aged
  • It allows you to set a limit on just how much your child can spend in a given period.
  • They’re accepted at a wide variety of outlets, just like your Mastercard or Visa
  • These cards don’t hold your personal data such as SSN or bank information making them safe from identity thieves.

The disadvantages of using reloadable prepaid cards include:

  • They don’t help you build your credit score or history.
  • They don’t provide you with any advance or credit.
  • Some come with considerable fees.

If you’re particular about your spending or would love to make better financial decisions, then getting a prepaid debit card is one of the most practical decisions you can make. Not only will you be spending money that you have already earned, but you won’t be tempted to overspend and find yourself in a deep hole due to overdraft charges. They’re secure, easy to apply for and convenient to use.

At publishing time, the cards mentioned above are offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for any of these cards. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved, or otherwise endorsed by the issuer(s).

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team