Prepaid Cards vs. Gift Cards: Which is Better to Use?

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

Gift cards, along with general gifts, were the top categories consumers spent the most money on during the holiday season a year ago. Prepaid cards are also increasingly popular. The use of prepaid cards increased by 64% last year. Although we are not going to talk about it today, there is another increasingly popular option for payments in plastic form: prepaid vouchers, such as Paysafecard, independent of credit cards with which you can pay practically everything online, including gambling at

With shoppers drastically reducing their in-store visits, there is huge demand for convenient payment solutions that meet security requirements. Along with the digital shift, contactless solutions are clearly more crucial than ever. Due to the ease and security they offer as payment choices, prepaid cards and gift cards are expected to grow at an exponential rate. But is one superior to the other? We’ve identified a few major distinctions to help you make your decision.



Prepaid cards are generally more flexible. They are accepted everywhere, that is, where credit cards are accepted in an open loop. This applies to in-store and online transactions. Depending on the program, closed-loop maps will have particular restrictions.

The use of gift cards is frequently restricted. They are often personalized for a certain retailer. They can only be used to make purchases from that single merchant if they are not part of a network of multiple retailers.


Although you may have better security than gift cards, each prepaid provider has their own security standards. Visa Zero Liability Policy applies to prepaid Visa cards. These programs generally exempt cardholders from liability for fraudulent purchases if the loss or theft is reported promptly. There are some exceptions, so read the fine print carefully.

Registered gift cards are protected against loss or theft. You should be able to get a new card if the old one hasn’t been used. If the gift card is not registered, lost or stolen funds are unlikely to be recovered.

Filling capacity


The ability to top up prepaid cards is one of the main aspects that makes them attractive. Once the card is purchased, money can be loaded regularly based on user demands.

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


Prepaid cards have no expiration date as they are filled with funds. 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, be sure to read the small print.


Monthly fees are common on prepaid cards, as are various service charges. Topping up money or withdrawing money from an ATM, for example, may incur fees.

When buying gift cards from a retailer, there are frequently fees associated with them. Inactivity fees and monthly fees are generally not charged the first year, although they may be charged thereafter.

Features of the prepaid card and gift card

Characteristics Prepaid debit card Retail Gift Card
Network brand (Visa/Mastercard) Yes No
Monthly fee usually No
Accepted at most merchants Yes No
Comes in predefined denominations No Yes
Refillable Yes No

Main differences:


  • Both prepaid cards and gift cards are loaded with a predetermined amount of money.
  • Prepaid cards are a kind of debit card which 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 primarily intended for use at a specific merchant, although some credit card issuers issue them as well. they can often only be used to purchase products.
  • Prepaid cards, unlike most gift cards, can be used indefinitely as long as money is regularly fed to the card.
  • Both approaches, which can be used as contactless payment solutions, are convenient and meet security requirements.

We can summarize the article by pointing out that the most important distinction between the two is their indefinite use: prepaid cards can be recharged and used indefinitely, but gift cards can generally only be used until the monetary amount is exhausted. .

Michael N. Clark