Prepaid Credit Card


DEFINITION of 'Prepaid Credit Card'

A card issued by a financial institution that is preloaded with funds and is used like a normal credit card. A prepaid credit card works in the opposite way of a normal credit card, because instead of buying something with borrowed funds (through credit), you buy things with funds that have already been paid. This card functions like a gift card.

BREAKING DOWN 'Prepaid Credit Card'

A prepaid credit card allows a person the convenience of a credit card without going into debt. You can use them to purchase items online or in person, but since you must load them with funds before using them, you never spend more money than you have. These can be effective tools to teach kids about credit cards without allowing them to irresponsibly rack up charges that they can't afford, or for those that have a hard time managing their finances and end up with tremendous amounts of credit card debt.

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  1. What are the pros and cons of digital gift cards (e-gift cards)?

    Many retailers, both of the online and brick and mortar variety, offer consumers gift cards as a way to shop or give money ... Read Full Answer >>
  2. What transactions cannot be made using prepaid credit cards?

    It is difficult to rent automobiles using prepaid credit cards with many major American car rental companies. There are some ... Read Full Answer >>
  3. What is the difference between a prepaid credit card and a gift card?

    Gift cards are a popular way for a gift giver to ensure the intended receiver gets the desired gift. One no longer has to ... Read Full Answer >>
  4. Is Apple Pay safe and free?

    Apple Pay is a mobile payment system created by Apple to reducing the number of times shoppers and buyers have to pay for ... Read Full Answer >>
  5. Can you use your Walmart credit card at Sam's Club?

    Consumers can use their Walmart credit cards to shop at Sam's Club. However, they cannot use their Walmart credit cards when ... Read Full Answer >>
  6. How can you cancel your Walmart credit card?

    Walmart offers two types of credit cards: the Walmart MasterCard and the Walmart credit card. How to Close Your Walmart Credit ... Read Full Answer >>

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