How Do Prepaid Debit Cards Work?


Prepaid debit cards work through a system where a card is bought at a retail store, loaded with credit and used like a debit or credit card at locations that accept it. The cards have their advantages, they can be used without a checking or bank account, and their drawbacks; the cards aren't regulated under the Credit CARD Act of 2009, so the fees associated with using them aren't controlled by any governing institution.

In general, American Express issues the best prepaid credit cards for the consumer´s money, offering two different types of cards, reports U.S. News & World Report.

The first option is the American Express Prepaid Card, which doesn't have annual fees and can be loaded via direct deposit. The second, the American Express Bluebird Prepaid Card, it offers holders more benefits that aren´t typically associated with prepaid credit cards.

People who have Bluebird cards are eligible for all the benefits of the American Express credit card. The extensive list covers fraud protection guarantees, discounts for select entertainment options and roadside assistance.

Prepaid credit cards and the fees normally associated with them can be expensive. Some charge for activation, reloading, not using the card in a specified time period, customer service and in some cases, to deactivate the card.