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Gift Card vs. A Prepaid Credit Debit Card What's the Best Gift?
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Gift Card or. Credit Card Prepaid: What's the Better Gift?
The gift card is the clear winner for a straightforward cash-based gift. Prepaid debit cards function than bank accounts.
by Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposit accounts Spencer Tierney is a consumer banker at NerdWallet. He has been writing about personal finance since 2013 with a particular focus on certificates of deposit and other banking-related issues. The work he has written for him was featured on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.
Updated Dec 22, 2022
Editor: Sara Clarke Assistant Assigning Editor | Banking Sara Clarke is a Banking editor at NerdWallet. She has been an reporter and editor in various newsrooms for over two decades, most recently at U.S. News & World Report. She was in charge of projects like U.S. News's U.S. News education rankings as well as the Best States rankings. Sara has been featured as a guest on SiriusXM Business Radio and iHeartMedia's WHO Newsradio and has been quoted on The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other outlets. Sara is located near Washington, D.C.
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Cash is an easy gift option, but what form it should take is a different issue.
Placing bills in an envelope could be a good idea, but it's not ideal The reason is that there's no way to retrieve cash in the event that it gets lost or stolen. Additionally, it's easy to forget the cash was a present once it's in the wallet.
Cash on plastic cards is better when you make the right choice between gift cards and debit cards. Here's the information you need to know.
Gift cards vs. prepaid debit cards
Let's begin by describing what they have in common: Both are credit cards that are prepaid, meaning you pay for the card in advance for spending at physical and online shops. They also offer protections against loss when you sign them under your own name. There are two types of cards in the same section of a shop, such as Walgreens So make sure to recognize which you're buying.
The main difference between a gift card and a prepaid debit card is that the gift card is a single-use credit card while a prepaid debit card can be reloaded as a payment option that comes with all the features and charges that checking accounts and linked debit cards do.
The purpose of gift cards is they are used to purchase goods from a specific store brand or in any other store that accepts payment networks like Visa, Mastercard or American Express. They do not allow cash withdrawals, and most aren't reloadable.
Prepaid debit cards perform a range of tasks: purchase items; withdraw cash at ATMs, banks or certain shops; or also use web features such as bill pay. They are also reloadable.
Due to their versatility, prepaid debit cards can serve as budgeting tools or even replacements to checking account. They've traditionally been for curbing overspending, but lately, there's been increased (a typical cost associated with overspending) as well as to help track expenditure.
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Winner Prize: Gift cards
Gift cards live up to their name: presents. Their simplicity is the reason they are a better choice to present. But there's another reason: Prepaid debit cards generally are subject to monthly fees, similar to checking accounts, and the fees, often between $5 and $10, can be as high as $120 annually. There could be other fees as well the transaction fees or inactivity fees.
Gift cards are the best choice, but they're not all equal bargains.
Gift cards for general use like those issued by Visa and Mastercard are typically charged one upfront charge, commonly known as a purchase or activation fee that the gift recipient is required to have to pay. The cost could range from $2.95 to $5.95, depending on the amount added on the card as determined by an assortment of gift card websites. However, there aren't many charges after the purchase.
There are exceptions. A bank may offer general-use gift cards with replacement card fees or inactivity fees. These may get charged monthly after one year without card use.
You can get around most or all charges by purchasing a gift card from a store. It is important to know the terms and fees on gift cards before you buy it so that the gift you give your loved ones brings happiness without any fees.
Author bio Spencer Tierney is a writer and NerdWallet's official authority for certificates of deposit. The work of Spencer Tierney has been highlighted by USA Today and the Los Angeles Times.
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