How Is Your Prepaid Balance Maintained?

To maintain prepaid debit card balances, cardholders can add funds through bank transfers or have employers directly deposit paychecks, says Alternatively, people can add funds through PayPal or through retail outlets, such as Wal-Mart or Walgreens.

Prepaid debit cards are banking alternatives for people who don't use traditional bank accounts, says Though debit cards never charge interest like credit cards do, prepaid debit card issuers typically boost their profits by charging usage fees to customers. These fees include initial setup fees, monthly usage fees and charges for loading.

Prepaid card fees vary greatly from card to card, according to Prepaid cards provide many of the theft and loss protections associated with traditional credit cards. The Federal Deposit Insurance Corporation insures all prepaid debit cards, providing each cardholder with up to $250,000 in coverage in case of bank failures.

The prepaid debit card is the successor to the prepaid phone card, which appeared in the 1980s, says the Federal Reserve Bank of St. Louis. People can use open-system prepaid cards at nearly any business, while closed-system prepaid cards are company-specific financial instruments. Open-system cards are connected with major electronic payment networks such as Visa. Prepaid card value is maintained within the issuing bank, not in the card itself.