What is a prepaid debit card?

A prepaid debit card is an alternative banking card that only lets you spend the money you load onto the card. Like a debit card, a prepaid card works at any merchant that accepts its payment network, such as Visa or Mastercard. It’s safer and more convenient than using cash. It’s also known as a pay-as-you-go card or, more formally, a general-purpose reloadable prepaid card.

Prepaid cards are different from both bank debit cards and credit cards. The main difference between prepaid cards and a bank debit card is that you don’t need to have a regular bank account to get and use the prepaid card. You can have a regular bank account and use prepaid cards on the side to manage some of your spending, or you can use prepaid cards exclusively, with no bank account at all.

With a prepaid card, unlike with a credit card, you can’t spend money you don’t have. Once you’ve used all of the loaded funds, the card won’t work until you load more. Credit cards, on the other hand, let you spend money you don’t have with the promise you’ll pay it back later (with interest). Credit cards also require minimum payments, late fees, and finance charges—prepaid cards don’t (although they do charge other fees).