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Gift Card Vs. Credit Card Prepaid: Which is the Best Gift?
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Gift Card or. Prepaid Debit Card: What's the Best Gift?
The gift card is the obvious winner when it comes to giving a gift of cash. Prepaid debit cards function than bank accounts.
By Spencer Tierney Senior Writer | Certificates of deposit and ethical banking, as well as banking deposits Spencer Tierney is a consumer banking writer at NerdWallet. He has been writing about finances for individuals since the year 2013, with a focus on certificate of deposit as well as other banking-related subjects. His work has been covered by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. The location of his work is Berkeley, California.
Updated Dec 22, 2022
Written by Sara Clarke Assistant Assigning Editor | Banking Sara Clarke is a Banking editor at NerdWallet. She has been an editor and project manager in newsrooms for two decades, most recently working for U.S. News & World Report. She managed projects such as The U.S. News education rankings as well as rankings for the Best States rankings. Sara has been featured as a guest on SiriusXM Business Radio and iHeartMedia's WHO Newsradio and has been quoted by The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other outlets. She lives near Washington, D.C.
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Cash is a simple option for a gift, but what format it should be in is a different matter.
Putting bills into an envelope could work however it's not the best idea: There's no way to recover cash if it is stolen or lost. Additionally, it's easy to forget the cash was a gift once it's placed in a wallet.
The storage of cash in plastic cards is more secure when you make the right choice between gift cards and prepaid debit cards. Here's what to be aware of.
Gift cards vs. prepaid debit cards
Let's look at how they're similar they're both pre-paid cards, which means you put money on the card prior to purchases at both online and physical stores. They also offer protections against loss if you register them in your name. There are two types of cards in the same area of a shop, such as Walgreens Make certain to know which you're picking up.
The main distinction between a gift card and a prepaid debit cards is that it is a card that can be used only once and a prepaid card can be reloaded as a payment option that has most features and charges associated with a checking account as well as linked debit cards do.
Gift cards have one job: to buy goods in a store that is branded or in any other store that accepts a payment network like Visa, Mastercard or American Express. They do not allow cash withdrawals and are not reloadable.
Prepaid debit cards can be used for a variety of tasks: purchase items; withdraw cash from ATMs, banks or retailers; as well as also use web features such as bill pay. They're also reloadable.
Because of their flexibility, prepaid debit cards can be used as budgeting tools, or even replacements of checking accounts. They've traditionally been for curbing spending, however lately, there's been more (a typical cost associated with spending too much) and also to track expenditure.
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Winner Prize: Gift cards
Gift cards are true to their title: gifts. Their simplicity is the reason they are a better choice to present. But there's another reason: Prepaid debit cards usually are subject to monthly fees, similar to checking accounts, and the fees, often between $5 and $10, can add up to $120 over the course of a year. There may be as well the transaction fees or inactivity fees.
Gift cards are the most effective choice, but they're not all equally good deals.
Gift cards for general use like those offered by Visa and Mastercard, tend to have one upfront charge, commonly called a purchase fee, which the gift-giver is expected to have to pay. The fee might be $2.95 to $5.95, depending on the amount added to the credit card based on an assortment of gift card websites. There aren't a lot of fees following purchase.
There are exceptions, however. A bank may offer general-use gift cards with replacement card fees or inactivity fees. These could be charged monthly following a year of no card use.
It is possible to avoid most of, if not all fees by buying a specific store brand gift card. You should be aware of the conditions and fees of gift cards before you buy it so that your holiday gift brings pleasure without fees.
The author's bio: Spencer Tierney is a writer and NerdWallet's official authority on certificates of deposit. His work has been featured in USA Today and the Los Angeles Times.
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