Prepaid card what is

Read more. What To Know. How do prepaid cards work? Here is how a prepaid card works: You get a card from a store or company. Sometimes, you buy a card in a certain amount. Sometimes, you buy a card and then add money to it. You can use the card to buy things in stores. You also can get cash from an ATM. Your card stops working when you spend all the money you added. You can add more money. Unlike most debit cards, many prepaid cards charge very high fees.

What kind of fees do prepaid cards charge? You might have to pay fees to: buy a card add more money to a card buy something with the card find out what your balance is, or how much money you have left on the card use an ATM with your card Sometimes there is a fee every month just to have the card. For Example. What To Do. How do I choose a prepaid card? Deeper definition Prepaid credit cards resemble standard credit cards, but they work like a debit card.

Reloading fee is assessed for adding funds to the prepaid card account. Declined transaction fee is charged if the user tries to make a purchase without sufficient funds in his account. Transaction fees are charged for every transaction prepaid card users make, both online and over-the-counter. The same applies for withdrawals through ATMs. These will either be a percentage of what an individual withdraws, or a set charge.

Funds transfer fee is a fee charged for transferring funds to another account. Inactivity fees are charged if an account is dormant for several months. Want a lower credit card interest rate? Best cash back credit card bonus offers Check out some of the best cash back cards available and their bonuses.

It may not be the same model your lender uses, but it is an accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion.

Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at or you do not have a file at one or more consumer reporting agencies.

Check for pre-approval offers before you apply for a credit card—with no risk to your credit score. How Do Prepaid Cards Work? Prepaid cards function similarly to debit and credit cards with a few key differences.

And you may also find it to be a safer alternative to cash. You want an extra layer of security: While a stolen prepaid card may be easy to use, a thief will only have access to the balance on the card—unlike a debit card where they may be able to overdraw an account.

You want to limit your spending : A prepaid card can help you not spend more than the balance available on your card. So it could be a helpful short-term credit card alternative.

There are several ways to do this: Deposit money directly to the card from a checking or savings account. Deposit money to the card from paychecks or other sources of regular income.

Prepaid cards are technically a type of debit card. Issued by a financial institution or credit card company—Visa, MasterCard, and Discover all offer them—they are deposited or "loaded" with a certain amount of money.

They then can be used in person or online to purchase items or pay bills. They can also be used at ATMs to withdraw cash. Just like regular credit cards, prepaid credit cards have a number and an expiration date printed on the front or back, and they generally can be used in the same places. The amount of money deposited or "loaded" onto the card represents the card's credit limit—that is, how much can be charged on it.

Once the balance on the card had been exhausted, the card is worthless, unless more funds are deposited on it. In fact, a prepaid debit card can be used repeatedly, so long as the cardholder keeps adding money to the card. It may carry a monthly fee, however. Although the terms are often used interchangeably, these prepaid cards are not the same as prepaid credit cards. Requiring an application, a credit check, and approval from the issuer, a prepaid credit card functions like a regular credit card : the cardholder can maintain an outstanding balance, receives monthly statements, etc.

The key difference is that approval for the card is contingent on a security deposit—collateral for the issuer, in case the cardholder falls delinquent in their payments. Prepaid cards are technically prepaid debit cards: When used in a transaction, the money on them is subtracted right away, and not put on a balance to be paid later.

A gift card is also a type of stored value card loaded with funds for future discretionary use. Only it contains a specific amount of money.

Once this sum is spent down, the card can no longer be used. Gift cards also have expiration dates, which are often much shorter than that of prepaid cards. Gift cards can be purchased in several different formats.