Best Prepaid & Debit Cards

Prepaid cards act as a cash substitute wherever credit or debit cards are accepted. Prepaid cards are not credit products and do not offer cardholders the option to finance purchases over time. Nevertheless, prepaid debit cards provide convenience for consumers who can’t or prefer not to use credit cards. If you are prepaid-curious, read on to have your questions about prepaid credit cards answered.

1. What Is a Prepaid Card?

A prepaid card, which is more akin to a debit card, is a piece of plastic that externally resembles a credit or regular debit card. But behind the scenes, prepaid cards tap the cash you deposit into the card account rather than your credit line or checking account.

Just as with a gift card, someone has to load funds onto the card before it can be used, unlike a traditional credit card where the bank lends you money to spend that you can repay over time.

Prepaid cards use the same Visa card, Mastercard, and American Express networks that process credit and debit card transactions and are accepted at the same places. You can obtain prepaid cards, regardless of your credit history (or lack thereof), which means they are a way for consumers with low or no credit scores to shop with plastic at retail and online venues.

Prepaid business cards also exist and provide a safe way for businesses to manage their financial transactions. They’re “better than checks and safer than cash,” according to Mastercard.

Plus, they provide fraud liability protection, which means account holders aren’t liable for any unauthorized transaction made with their account. Prepaid business credit cards provide real-time purchase alerts and other valuable features for business owners.

2. How Does a Prepaid Card Work?

Prepaid cards are similar to credit and debit cards in most respects. That makes them relatively easy to use. The card is attached to an account you open when you first buy the card. You can reload funds to your account at any time, although there may be limits on the minimum and maximum deposits.

To use the card at a retail location, you present it as you would a regular credit or debit card.

This usually means inserting the card into a terminal to read the card’s chip or swiping it to scan the magnetic stripe. The terminal may ask you to choose either a debit or credit transaction. You enter your PIN for a debit transaction (this is called a PIN transaction) or sign your name for a credit transaction.

It may be confusing to choose debit or credit when using a prepaid card, but the choice mainly has to do with how your transaction is processed. When you choose debit, the funds come out of your account immediately, but when you choose credit, it may take longer for the transaction to process.

The purchase amount is then subtracted from your card balance. If your balance is insufficient, your card will be rejected. For example, suppose your reloadable prepaid card balance is $100. If you use your card to make a $25 purchase, your new card balance will be $75.

However, if you try to make a $200 purchase, your transaction will be rejected. Some cards offer an optional overdraft protection feature that allows you to tap another account or small credit line to prevent an overdraft, but fees usually apply.

Online shopping with a prepaid card requires you to enter your card number, just as you would for a debit or traditional credit card transaction. The card should also have a security code, just like a traditional credit card.

3. How Do I Get a Prepaid Card?

First, consult our prepaid card reviews above to select the right card for you. Once you make your selection, visit the issuer’s website to check your purchase options, either at retail locations (like pharmacies and grocery stores), over the phone, online, or from some banks and credit unions. You’ll be required to load an initial amount when you buy the card, which may be subject to minimums.

You may have to pay a new card fee and/or an initial activation fee for the card. Some issuers waive these fees under certain circumstances, such as purchasing the card online. If you do buy the card online, you may be immediately issued a virtual card that you can use for card-not-present transactions (e.g., purchases made online, through a smartphone app, or over the phone) until you receive your physical card.

Some cards require you to register your new card by providing personal information such as:

• Full name
• Date of birth
• Social Security number
• Residential address
• Phone number
• Email address

Registration is important because certain features, such as online use or reloading money, may be restricted until registration is complete. Also, if you don’t register cards that require it, you won’t be protected against the card’s loss or theft.

You also may need to register to become eligible for deposit insurance on cards that offer it. You can activate your card in the issuer’s online account center or by calling the number on the card when you receive it.

4. Are Prepaid Cards Free?

No. Prepaid card issuers don’t make money on interest, so they need to charge fees. The first fee you’ll encounter is for activating the physical card. Issuers may also charge a flat monthly fee or collect pay-as-you-go fees on every transaction.

In fact, many issuers give you the choice of fee payment methods. For consumers who choose to pay monthly, some cards will reduce fees when the cardholder’s deposits exceed a specified amount.

Prepaid cards don’t charge late fees because they don’t extend credit, so you can’t spend more than your cash balance. Other fees may also apply, such as inactivity fees.

We’ve identified 24 fees that prepaid cards may charge. We haven’t found any prepaid cards that charge all 24 fees, but one may be lurking out there below the radar.

Here is a comprehensive list of the fees you could encounter:

1. Paper statement mailing
2. Annual fee
3. ATM withdrawals/inquiries
4. Authorized users
5. Automated clearing house payment
6. Card cancellation
7. Card delivery
8. Card purchase/activation
9. Check request
10. Check transaction
11. Custom card
12. Customer service
13. Direct deposit
14. Foreign transaction fee/foreign currency conversion
15. Inactivity fee
16. Mobile check load
17. Monthly plan
18. Overdrafts (optional)
19. Over-the-counter withdrawals at financial institutions and/or retail locations
20. Pay-as-you-go plan
21. Replacement cards
22. Stop payment
23. Transaction declined
24. Transfer transactions (including Western Union, MoneyGram, Customer Service Agent, etc.)

Some cards waive the reload fee if you load your card through a direct deposit of paychecks or government benefits. Fees are usually subtracted directly from your account balance.

A few prepaid cards pay you interest on your cash balance, similar to a savings account. You won’t get rich on these interest payments, but they’re better than nothing.

5. What Is the Best Prepaid Card to Get?

Prepaid cards are definitely not one-size-fits-all, so the best-prepaid card to get depends on what’s important to you. Most folks prefer a card with minimal fees, but other considerations include:

• Flexibility: Cards may offer multiple options for monthly or pay-as-you-go usage fees. We like the for its flexible usage fees. This Visa prepaid card can be used everywhere Visa is accepted.
• Budgeting: Some cards offer online banking tools to help you manage your money. The tools that accompany the let you categorize transactions, set spending limits, and track up to four cards, both online and through the phone app.
• Cash back rewards: A few prepaid debit cards pay cash rewards, but the top one is the . This card gives you 1% cash back on all purchases of up to $3,000 spent per month. The also provides cash back rewards for purchases made at Walmart stores, and the pays 1% back on all purchases up to the set limit.
• Savings: If you want to earn interest on your deposited balance, then check out . You can earn 6% interest when you meet specific requirements.
• Direct deposit: We think the is your best bet if you arrange for direct deposit of your paychecks and/or government benefits. Using the card can shave two days off the time it takes to receive your money. You can transfer funds between the card and your PayPal account, but you do need a PayPal account.
• Fewest Fees: You can reload the for free from several sources, including cash or a debit card transfer at a Walmart store, as well as mobile check deposit and direct deposit. Moreover, the card doesn’t charge an activation fee or a card fee when you buy the card online. This card also the card charges no monthly fee or pay-as-you-go fee, and you won’t pay fees to use the card at a MoneyPass© ATM or to transfer money to or from other Bluebird accounts, linked Family Accounts, or SetAside® Accounts.

These are not the only criteria that may be important to you. For example, if you travel abroad, you may want a prepaid card with no foreign transaction fee or fee for foreign currency translation. Alternatively, you may be subject to an ATM transaction fee if you use these machines extensively.

6. Can I Build Credit With a Prepaid Card?

Prepaid cards can’t hurt your credit, nor will they help you build it. A prepaid card has no credit line, so when it comes to your credit score, prepaid cards are as neutral as Switzerland.

A card issuer must report your account activity to at least one credit bureau for it to help build your credit history, which prepaid card issuers do not do. However, if you are willing to concede that building credit is a long-term endeavor, you may consider a prepaid card as the first step on your journey. How? By giving you the opportunity to develop good money-management habits. Here are a few benefits:

• Prepaid cards are safer than cash. It’s not just that money in a lost wallet is gone forever. Many prepaid cards are insured and give you the opportunity to recover your money if the card is lost or stolen. Additionally, regulations instituted in 2019 expanded the protections available to holders of prepaid cards.
• Cash spending is hard to track. When you pay for everything with cash, it’s almost impossible to budget effectively. To track your spending, you’d have to keep all your receipts every day and then transcribe them to a spreadsheet or budget software. By contrast, prepaid cards can provide you with online or printed statements that make tracking easier. Some card issuers offer apps to automatically classify and track prepaid card usage. Budgeting and budget tracking are the foundation of financial responsibility, a core activity that will help you learn to control your spending habits.
• Prepaid cards require you to monitor your balance. You can’t just load your card and forget it, lest you find your card declined at your favorite restaurant or grocery store. Staying on top of your card balances is another core activity for financial responsibility.
• Prepaid cards facilitate online shopping. It’s hard to take advantage of lower online prices if you don’t have a way to transact securely. A prepaid card enables you to make secure card-not-present purchases, which could result in significant savings on necessities.
• Prepaid cards teach you to live without debt. Credit cards make it easy to generate debt and incur interest charges when you carry balances. Prepaid cards are like training wheels — the money management skills they help you develop can condition you to use credit cards without carrying balances. If and when you graduate to a credit card, paying your entire balance each month can mean you don’t pay any interest. That’s assuming you have a grace period.

For whatever reason, many schools just don’t teach financial literacy. It’s up to you to develop good habits, and using prepaid cards can be a helpful step in that direction. If you want a card that’s easy to get approved for and can help you build credit, consider a secured credit card.

These cards require a deposit for approval, similar to prepaid debit cards, and will report your account to the credit bureaus. This means the account will appear on your credit report with each bureau. Paying your bill on time and keeping your balance low will help you build credit over several months.

7. How Do You Put Money onto a Prepaid Card?

When it comes to reloading your prepaid card, you’ve got options, many of which are no-fee. The ways to put money onto your prepaid card include:

• Cash, checks, or money orders at retail locations: Some cards have relationships with specific merchants that provide no-fee reloading. For example, the allows you to add money to your card at any Walmart checkout register without fees. Other participating retailers may charge a fee.
• Reload packs: You can buy a reload pack for cash. Each reload pack has a unique identifying number. You then go online to transfer the money from the reload pack to your prepaid card.
• Debit card transfers: Prepaid cards do not require you to have a checking account. But if you do, you can often use your regular debit card to transfer money to your prepaid cards online or at retail locations.
• Electronic funds transfer: If you have a checking account, you may be able to link it to a prepaid card and electronically transfer money between the two accounts.
• Direct deposit: You can typically make a direct deposit of your paycheck and government benefits into your prepaid card account.
• Mobile check capture: Some prepaid cards work with mobile apps that allow you to scan a check and deposit it to the card.
• Bank teller: A few banks issue prepaid cards. With one of these, you can walk up to the bank teller and cash reload your card, including with a check. You can also do a bank transfer transaction.

Before deciding on a prepaid card, check the different ways it accepts reloads and the fees for each method. Also, be aware that the card issuer sets the daily and overall reload limits for its prepaid cards. Those limits may range from $500 to $10,000 or more for cash deposits.

8. Are Prepaid Cards Safe?

The Consumer Financial Protection Bureau introduced prepaid card protections in 2019. The safeguards include:

• If you are the victim of unauthorized or fraudulent charges, your liability is limited to $50 when you report the problem within two days of discovery.
• Fee disclosure must be more transparent.
• Issuers must disclose whether the Federal Deposit Insurance Corporation (FDIC) secures the card balance.
• You can no longer be charged for seeking information about your card account.
• If you opt for overdraft protection, the fees are capped for the first year at 25% of the credit limit. However, there is no cap after the first year.

These are good protections, but some dangers still lurk in the form of fee abuse by predatory card issuers. We recommend you decline optional overdraft protection, as it can accumulate high overdraft charges. Also, stay with cards that provide FDIC coverage.

9. Is there a Difference Between a Prepaid Debit Card and a Prepaid Credit Card?

Both terms refer to prepaid cards, but they can be confusing. A prepaid credit card implies that the card has a credit line, but prepaid cards do not (unless you opt for overdraft protection, which we discourage).

A prepaid debit card is better, but it implies that it is backed by a checking account, which it isn’t. It’s also important to understand that a secured credit card is different from a prepaid one.

	Secured Credit Cards	Debit Cards	Prepaid Cards
Operated by major issuers	✅	✅	✅
Can use for in-store purchases	✅	✅	✅
Can use for online purchases	✅	✅	✅
Connected to a bank account	✅	✅	❌
Uses a line of credit for purchases	✅	❌	❌
Reports to the credit bureaus	✅	❌	❌
Can impact credit scores	✅	❌	❌
Can carry an outstanding balance	✅	❌	❌

A secured card requires a refundable deposit, but it extends credit to you up to the deposit amount. A prepaid card also requires a deposit, but it doesn’t secure a credit line. Instead, that’s the money you spend when you use the card. Another difference is that a secured card can help you build credit, whereas a prepaid card cannot.

Why do these terms pop up at all? Some of it is marketing, as card issuers attempt to compete for customers.

10. Can I Use a Prepaid Card to Get Cash at an ATM?

Most prepaid cards allow ATM withdrawals. The biggest variable is fees. Typically, prepaid cards charge nothing for cash withdrawals from in-network ATMs.

Out-of-network ATM withdrawals are a different story, and prepaid cards may charge several dollars per withdrawal, plus whatever the cash machine operator may charge. The challenge for a prepaid card owner is to locate a conveniently situated in-network ATM.

Some prepaid cards have no withdrawal fees for in-network ATMs but charge a fee for out-of-network ATMs. Be sure to research where you can withdraw money for free before you need it.

That gives an advantage to prepaid cards that have extensive ATM networks. Our top pick for prepaid cards with no ATM fees is , which provides free withdrawals from the MoneyPass ATM network throughout the country.

The card offers many free services, including no reload fee at more than 45,000 retail locations. There are three different cards, each with different features and costs, so you’d need to evaluate each to determine which is right for you.

Editorial Note: Our site content is not provided or commissioned by any credit card issuer(s). Opinions expressed on CardRates.com are the author's alone, not those of any credit card issuer, and have not been reviewed, approved, or otherwise endorsed by credit card issuers. Every reasonable effort has been made to maintain accurate information; however, all credit card offer details, including information about rewards, signup bonuses, introductory offers, and other terms and conditions, is presented without warranty. Clicking on any offer on CardRates.com will direct you to the issuer's website, where you can review the current terms and conditions of the offer.

The information on this page was reviewed for accuracy on February 24, 2025.

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