What is a Prepaid Card?
A prepaid card is a type of card that allows its cardholders to load certain amounts of cash onto the card for later use. These types of cards come in two types, namely the non-reloadable type and the reloadable type. Non-reloadable prepaid cards come pre-loaded with a certain amount, which can usually be bought at a lower price than the value it holds. However, once consumed, the card is disposed and cannot be used again. On the other hand, reloadable prepaid cards are reusable. Money can be reloaded onto the card once it’s depleted.
Prepaid cards may also be classified as open-loop and closed-loop. Open-loop cards contain brand logos such as Visa, MasterCard, American Express, and Discover and can be used at establishments or merchants that accept those brands. Closed-loop prepaid cards can be only be used at limited locations.
Examples of prepaid cards are payroll cards, government benefit cards, and cards that release student loans.