How a Prepaid Charge Card Differs from a Debit Card

A prepaid charge card is different from a debit card because of the accounts that are established for the deductions. A debit card deducts the amount of the purchase from the account balance, while a prepaid charge card must have a balance on it before the purchase can be made. With a debit card, the purchase can go through and still be charged to the account even if the balance is less than the amount of the transactions, so long as the account has overdraft protection. If the account does not have overdraft protection, the transaction will be denied, and the prepaid charge card will work just like the debit card. 

No Bank Account Required

With a prepaid charge card, there is no need for a bank account. The card is attached to a bank account setup for deposits only so that money can be loaded directly to the account through direct deposit. The account cannot be used to setup automatic withdrawals. With a debit card, you must have a checking account where deposits and withdrawals are made, as the card is attached to the bank account. If there are credit problems or you have had issues with bouncing checks in the past, you may not be eligible for a checking account or a debit card.

Watch Out for Fees

While a debit card generally will not have any fees associated with its use as long as you are abiding by the rules and regulations of your bank account, a prepaid charge card will have fees associated with adding money to the card. The fees on the card can be charged per transaction or a monthly maintenance fee. There may also be fees for using the ATM--which may be refunded by a bank with a debit card--or for checking your balance via phone. There are many different prepaid charge card issuers, so it is important to read the terms and conditions of each card to determine what the fees are. There are some cards available that don't have any fees at all. 


The prepaid charge card is safe because it puts you in more control of your spending. You can only spend the amount of money loaded on the card, and if it is lost or stolen, generally has the same refund protection as a traditional debit card. It is important to check with each card issuer to check on their policies to ensure you will be able to get your money back if the card is compromised. There is no chance of going into debt or incurring over the limit or overdraft fees.


A prepaid charge card can be used as a credit card, or a debit card. Many issuers allow their users to attach a PIN to the card to use for transactions. Watch the terms and conditions because some will charge for transactions run as debit while credit transactions are free. The difference is a debit transaction requires the PIN to be entered at the point of sale, and credit requires an ID check and signature. The PIN is also used to get cash from the balance of the card at an ATM. 

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