4 Things You Need to Know About Prepaid Debit Cards


Many people use prepaid debit cards to pay for everyday items, monthly bills and large one-time purchases. These cards offer a convenient and secure way to pay.

What is a Prepaid Debit Card?

A prepaid debit card is linked to a checking account, and it’s used to withdraw funds from the account. The card can be used at ATMs to get cash, at merchants to make payments, and online/over the phone to pay bills.

Essentially, a prepaid debit card is the modern-day equivalent of writing checks. Compared to a check, a debit card is easier to use and doesn’t share your bank’s routing number. Banks are also better able to spot potential fraud with debit cards.

How Are Prepaid Debit Cards Different From Prepaid Credit Cards?

Prepaid debit cards and prepaid credit cards are fundamentally different in how they access money.

A prepaid debit card draws money from the checking account that it’s linked to. It will only draw money that’s in the account, and money is immediately drawn from the account when payment is made. Thus, there is no interest charged or monthly bill to be paid off.

A prepaid debit card uses money that you provide as collateral against a line of credit. The card issuer will draw from the provided money if you default on the card, but that’s not the modus operandi. Instead, transactions are added to a bill that’s charged each month. Interest (and possibly other fees) are charged on prepaid credit cards — and interest rates often range between 14.54 and 24.42 percent.

Another difference lies in how the funds that are drawn from the card are protected. Since prepaid debit cards draw from a checking account, many FDIC insure funds in case something disastrous happen. Funds provided to secure a prepaid credit card aren’t FDIC insured.

What Fees Should You Look Out for With Prepaid Debit Cards?

Most prepaid debit cards have a monthly fee of around $10, and may charge a fee of around $5 to open the card. You’ll also have to pay a fee for each ATM withdrawal. A per-transaction “debit” fee can usually be avoided by running your debit card as “credit.”

What Are Common Prepaid Debit Card Perks?

Some prepaid debit cards offer perks or awards programs. These may come in the form of points for goods, points for travel, or rebates. The indi for Jobblers card gives you access to the Mastercard Easy Savings program, as well as other perks like faster pay and easy money management.

Some cards also offer discounts on certain goods, access to exclusive opportunities, identity theft protection and/or other perks.

If you’re interested in a prepaid debit card that’s designed to provide low fees and excellent perks, click the banner below to learn more about indi for Jobblers!

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About the Author: Scott Brodie is a freelance writer covering education, insurance and finance. He is often found with his cup of coffee and faithful dog at his side.