Prepaid Card vs Debit Card: Which One Should You Choose?

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On the surface, prepaid cards and debit cards look similar. But the cards have some key differences embedded, most notably where the funds are stored. When you should use them varies based on the situation.

Quick Overview

  • Both prepaid and debit cards allow you to make purchases. But they work differently.
  • Prepaid cards are loaded with money you add yourself.
  • Debit cards allow you to spend funds directly from your checking account.

What Is a Prepaid Card?

A prepaid card involves loading funds onto the card. You won’t need to connect a bank account to the card to make purchases. Once loaded, you can only spend the amount loaded onto the card.

Prepaid cards are often used as gift cards, budgeting tools and travel cards.

What Is a Debit Card?

A debit card is linked directly to a checking account. When you make a purchase with a debit card, it will immediately pull the funds from your checking account.

Many use debit cards for everyday spending and ATM withdrawals.

Key Differences Between Prepaid and Debit Cards

Prepaid cards and debit cards might look similar. But there are key differences to consider, which we explore in the table below.

Prepaid Card Debit Card
Source of funds Loaded onto the card Pulled from a connected bank account
Common fees Activation fees
Reload fees
Monthly account fees
Overdraft fees
Accepted by most retailers? Yes Yes

Pros and Cons of Prepaid Cards

Every financial product has advantages and disadvantages, including prepaid cards. Here’s what to know.

Starting with the pros:

  • No credit checks: You’ll simply need to buy and load a card without any credit checks.
  • Good for budgeting: You can preload funds up to a limit, which might help you stay on budget.
  • Safer than cash: Carrying around too much physical cash could be a problem; a prepaid card provides a layer of security.

Now for the cons:

  • Fees: You’ll likely face activation and reload fees to use your card.
  • Limited protections: Prepaid cards have fewer purchase protections than debit cards or credit cards.

Pros and Cons of Debit Cards

Debit cards have their share of pros and cons.

Some advantages include:

  • No reloading required: The debit card remains connected to your linked checking account, which means no reloading commitments.
  • Fraud monitoring: Most banks deploy fraud monitoring tools to help protect your funds.
  • Easy ATM access: You can use your debit card to withdraw cash from an ATM.

Some disadvantages include:

  • Fees: You might encounter monthly maintenance fees or overdraft fees.
  • Qualification hurdles: When applying for a new bank account, the financial institution might check your banking history. For some, this could lead to a denied application.

When To Choose a Prepaid Card

A prepaid card makes the most sense if:

  • You don’t want or need a bank account. If you want to skip a bank account, prepaid cards make sense.
  • You want to control spending carefully. Since you’ll load funds onto the card, you can carefully limit your spending with a prepaid card.
  • You want an alternative to carrying physical cash. Carrying cash can be a liability. If you want the convenience of plastic without a bank account, prepaid cards could work.

When To Choose a Debit Card

A debit card makes sense if:

  • You already have a checking account. If you already have a checking account, it’s fairly straightforward to obtain a debit card.
  • You want easy access to your entire checking account balance. For cardholders who want to spend up to their checking account balance, a debit card simplifies things.
  • You want fraud protection measures to safeguard your funds. Most banks impose fraud protection measures designed to protect your checking account funds from fraud.

Choosing Between a Prepaid Card and a Debit Card

The right choice between a prepaid card and a debit card varies based on your situation. For those who don’t want to open a bank account or want to tightly control spending, a prepaid card might work best.

For those who want more flexibility and stronger fraud protections, a debit card might work best.

  • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

FAQ

    • Can you build credit with a prepaid or debit card?
        • No, you cannot build credit with either a prepaid card or a debit card.
    • Can you use prepaid cards for online shopping?
        • Yes, you can use prepaid cards for online shopping.
    • Do prepaid cards have limits?
        • Yes, prepaid cards only allow you to spend up to the amount you've loaded onto the card. For example, if you load $100 onto a prepaid card, you'll only be able to spend $100.
  • Which has better fraud protection?
    • Generally, debit cards offer better fraud protection than prepaid cards.

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