Prepaid Card

Prepaid card summary:

  • A prepaid card is a payment card with a preloaded balance that acts as a spending limit. 

  • A prepaid card isn't linked to a bank account. You must buy a card with preloaded funds, or reload it (add money to the account) before you can use it. 

  • Prepaid cards aren't reported to the credit bureaus. There's no minimum credit score to get one. Using it won’t help or hurt your credit.

  • A prepaid card could help you manage your money.

Prepaid card definition and meaning 

A prepaid card is a payment card with preloaded funds that you can spend. Prepaid cards typically come preloaded with a set amount of money, which serves as the spending limit. With many prepaid cards, you also have the option to reload (add more money) whenever you want. Prepaid cards are a convenient way to pay for purchases.

Key concept: A prepaid card is a payment card that allows you to spend the amount of money loaded onto it. 

Prepaid card: a comprehensive overview 

A prepaid card looks and feels like a credit or debit card, but it functions differently. It's a payment card funded with money. It works like a gift card. You can only spend up to the funded balance. If you try to make a purchase that costs more than your loaded funds, the transaction will be declined. 

Since a prepaid card isn't linked to a bank account, you must add money to the account after you've spent the preloaded balance if you want to keep using the card. Prepaid cards can be reloaded in various ways:

  • Electronic transfer from a bank or credit union account 

  • Direct deposit

  • Reload with cash at participating retailers

You can purchase prepaid cards online or at retail stores. 

Prepaid cards are a good personal finance solution for some people. For example, you can receive your paycheck by direct deposit to a prepaid card. This is convenient if you don’t have a bank account. Prepaid cards can also be a great tool to learn and practice responsible spending habits. 

If you don’t qualify for a traditional credit card, or you don’t have one, or if you don’t have a bank account, a prepaid card may be a good solution. 

Most prepaid cards have fees associated with them. Here are some examples of fees that may be charged when you use prepaid cards: 

  • Card purchase

  • Card activation

  • Monthly maintenance 

  • Check your balance 

  • Reload 

  • Transaction

  • Declined transaction 

  • Cash advance

  • ATM withdrawal

  • Inactivity fee

Prepaid cards and your credit

Prepaid cards aren’t reported to the credit bureaus. Using a prepaid card won't help or hurt your credit.

Prepaid Card FAQs

You can load money onto a prepaid card in several ways:

  • Enroll in direct deposit

  • Transfer money electronically from a bank or credit union account

  • Add funds at participating retail locations 

You can review the funding options and other details on the prepaid card issuer’s website or by calling the customer service line. 

A prepaid card may be declined if you don't have enough money on it to pay for a purchase. A purchase could also be turned down if you haven't activated or registered the card. Another reason is that you may have reached the daily or monthly spending limit for your prepaid card. Review the specific details of a prepaid card before buying or using one so you know what to expect. 



Prepaid cards have several disadvantages. You can't build credit with them, and you may pay fees for activation, keeping the account open, making purchases, not using the card, checking your balance, and reloading the card with cash.  You can only spend money that’s been loaded onto your card, which limits your spending power.

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