A prepaid card is a type of plastic card that is meant to load money onto it. People use such cards for day-to-day shopping. Prepaid cards are not linked to a bank checking account or a credit union share draft account. That means you can’t run up to debts on the prepaid cards. You can only use the sum you have yourself loaded to a prepaid card.
How does the prepaid card work?
The prepaid card looks like a usual plastic credit card. However, it acts as an alternative to carrying money around. Prepaid cards are called everyday cards. You load a prepaid card with cash when you first buy it. Then, when you spend all the funds loaded, you top it up. The great benefit of a prepaid card is that you can’t run up debts on it.
What is the difference between a prepaid card and a debit card?
While the debit card is linked to a bank account, a prepaid card is not. When you use a prepaid card, you are spending money that you have already loaded onto the card.
What is the difference between a prepaid card and a credit card?
Prepaid cards differ from credit cards a lot. That might seem complicated as both types of cards usually have logos on them — for example, Visa, MasterCard, American Express, or Discover. When you use a credit card, you are borrowing money. When you use a prepaid card, you are spending money you have already loaded onto the card in advance.