What is a prepaid card? Differences from credit and debit cards

Prepaid cards are payment cards funded with a set, preloaded balance rather than a linked bank account or credit line, allowing individuals and businesses to make online, in-person, and sometimes ATM transactions while limiting spending and exposure if card details are lost or stolen. Businesses can issue separate cards for employees or departments, making them useful for budgeting and expense separation amid growing demand for digital payments. Compared with credit and debit cards, prepaid cards generally offer less access to banking funds and may lack rewards, credit-building benefits, and some consumer protections, while potentially charging maintenance, reload, withdrawal, foreign transaction, or inactivity fees. Alternatives include secured credit cards, international business debit cards, and virtual single- or multi-use cards, which may provide stronger spending controls, fraud protections, multi-currency functionality, or cashback. Cardholders should compare fees, limits, expiration policies, insurance eligibility, security features, and expense-management tools when selecting a payment option.

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