What is the difference between a prepaid card, a credit card, and a debit card?

Answer: Unlike a debit card, a prepaid card is not linked to a bank account. Generally, when you use a prepaid card, you are spending money that you have already loaded onto the card.

Prepaid cards vs. debit cards:

A prepaid card is very different from a bank account debit card. A bank account debit card is linked to your checking account. A prepaid card is not linked to a checking account. Instead, you are spending money you loaded onto the prepaid card in advance.

In most cases, you can’t spend more money than you have already loaded onto your prepaid card.  Overspending can occur with a checking account for some types of uses, and with a bank account debit card if you have “opted in” to your bank’s overdraft program. This means that your bank may charge you a fee for covering the cost of a purchase or ATM withdrawal that exceeds what you have in your account. Your bank will also require you to repay the overdraft.

In addition, right now prepaid cards may have fewer consumer protections than debit cards, such as those that apply if the card is lost, stolen, or other unauthorized charges appear. The CFPB has issued a rule requiring all prepaid cards to offer these protections, but that rule starts on October 1, 2017.

Prepaid cards vs. credit cards:

Prepaid cards are very different from credit cards.  This can be confusing because both types of cards may have a card network logo like Visa, MasterCard, American Express, or Discover on them. When you use a credit card, you are borrowing money. Generally, when you use a prepaid card, you are spending money you loaded onto the card in advance.

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