What is a Prepaid Card?
Like debit and credit cards, prepaid cards allow you to make purchases without cash. Unlike credit cards, you cannot take on debt with a prepaid card, and unlike debit cards, prepaid cards are not linked to a bank account. A prepaid card has a zero balance until you add money to it.
How Prepaid Cards Work
When you make a purchase with a prepaid card, the amount is subtracted from the balance of the card. Once the balance reaches zero, the card is empty. It can then be discarded, unless it is a reloadable card, in which case you can add funds and continue using it.
With Prepaid Cards You Can:
- Make purchases in person, online, or by phone
- Give gifts to friends and family
- Withdraw cash from an ATM or bank
- Receive wages or funds by direct deposit to the card
- Pay bills
Kinds of Prepaid Cards
- Reloadable cards. A reloadable prepaid card is one that lets you add funds after your initial purchase.
- Gift cards. These non-reloadable prepaid cards can be given as gifts and used until the balance is zero.
- Travel cards. Travel cards are a safe alternative to cash and travellers checks. Some cards offer lost luggage reimbursement, emergency card replacement, and zero liability for lost or stolen cards.