Prepaid Cards vs Gift Cards: Which One Is Better to Use?

Prepaid cards and gift cards both look like plastic bank credit cards and can be used to make transactions in-store or online. They are also popular as gifts because they are a flexible way to offer someone money to spend on whatever they want that’s safer than cash and easier than a personal check.

Gift cards, along with general gifts, were the top categories in which consumers spent the most money in the holiday season a year ago. Prepaid cards are also becoming increasingly popular. Prepaid card usage increased by 64% last year. Even though we aren’t going to talk about them today, there’s one more increasingly popular option for payments in the plastic form – prepaid vouchers, such as Paysafecard, independent of credit cards with which you can pay for practically everything online, including for gambling at

With shoppers drastically reducing their in-store visits, there’s a huge demand for convenient payment solutions that meet security requirements. Aside from the shift to online, contactless solutions are clearly more crucial than ever. Because of the ease and security that they provide as payment choices, prepaid cards and gift cards are expected to grow at an exponential rate. Is one, however, superior to the other? We’ve identified some major distinctions to assist you in making your decision.



Prepaid cards are usually more flexible. They are accepted anywhere, i.e. where credit cards are accepted in an open-loop arrangement. This applies to both in-store and online transactions. Depending on the program, closed-loop cards will have particular restrictions.

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The use of gift cards is frequently restricted. They are frequently customized for a certain retailer. They can only be used to make purchases with that single merchant if they aren’t part of a network of multiple retailers.


Although you may have better safety than gift cards, each prepaid supplier has its own security standards. Visa’s Zero Liability policy applies to prepaid Visa cards. These programs typically exempt cardholders from liability for fraudulent purchases if the loss or theft is reported promptly. There are certain exceptions, so read the fine print carefully.

Gift cards that have been registered are protected from being lost or stolen. You should be able to get a new card if the old one hasn’t been used. If the gift card isn’t registered, funds that have been lost or stolen are unlikely to be recovered.



The ability to recharge prepaid cards is one of the primary aspects that makes them appealing. After the card is purchased, money can be loaded on a regular basis depending on the demands of the user.

Typically, gift cards are pre-loaded with a set amount of money. The card is normally destroyed once the funds have been expended, and a new card is required.


Prepaid cards don’t have an expiration date because they are filled with funds. The funds will never expire, even if the actual card has a replacement date.

If gift cards are used for promotional purposes or for a specific purpose, they may have an expiration date. When you receive the gift, make sure to read the tiny print.

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Monthly fees are common on prepaid cards, as are various service costs. Reloading money or withdrawing money from an ATM, for example, may incur a cost.

When purchasing gift cards from a retailer, there are frequently fees associated with them. Inactivity and monthly fees are usually not charged during the first year, although they can be charged after that.

Specs of Prepaid Card and Gift Card

Features Prepaid Debit Card Retail Gift Card
Network Branded (Visa/Mastercard) Yes No
Monthly Fees Usually No
Accepted at most merchants Yes No
Comes in Pre-set denominations No Yes
Reloadable Yes No

Key differences:


  • Prepaid cards and gift cards both have a predetermined amount of money loaded on them.
  • Prepaid cards are a sort of debit card that can be used to make purchases, pay bills, and withdraw cash from ATMs. They are issued by banks or credit card companies.
  • Gift cards are mostly intended for usage at a specific merchant, though certain credit card issuers also issue them; they can often only be used to purchase products.
  • Prepaid cards, unlike most gift cards, can be used indefinitely as long as money is supplied to the card on a regular basis.
  • Both approaches, which can be utilized as contactless payment solutions, provide convenience and meet security requirements.

We can sum up the article by underlining that the most significant distinction between the two is their indefinite use: prepaid cards may be reloaded and used indefinitely, but gift cards can usually only be used until the monetary amount on them is depleted.

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