Differences between Secured Credit Cards, Prepaid Debit Cards and Visa Gift Cards

by Lynnette Khalfani-Cox, The Money Coach on June 14, 2013

in Credit Cards


secured debit cards vs prepaid cards

Secured credit cards, prepaid debit cards and Visa gift cards are all alternative methods of payment to a traditional unsecured credit card. But which one of these cards is the right match for you?

Understanding the key differences between secured credit cards, prepaid debit cards and gift cards can help you make the most informed decision when choosing alternative payment methods. Each card has its pros and cons, and many people are surprised to find out that using a particular card results in some type of fee posted to their account.

It’s always important to review the terms and conditions on your card agreement so that you’re well aware of how much you might be paying for the use of the card – and even inactivity charges – before you pick up the card and start making purchases.

Primary Differences between Secured Credit, Prepaid Debit and Visa Gift Cards


People who are trying to build or repair their credit often turn to a secured credit card that requires making a security deposit that acts as a line of credit. Secured credit cards look just like credit cards, so retailers and merchants will never know that the balance on the card is actually money you paid as a deposit. These can help you build up some credit history, but you could incur annual fees, maintenance fees and even fees for each purchase you make.

Prepaid debit cards work a lot like a gift card, where you load up the card and carry a balance.

You can reload these cards at any time, adding funds as necessary to make additional purchases. Many people use prepaid cards as a convenient alternative to a checking account and just keep track of their spending as they make various purchases.

These types of cards can be useful for travelers who don’t want to carry a lot of cash or checks, and the cardholder can still withdraw cash if they need to from an ATM machine. That’s because a prepaid card does allow the cardholder to set up a PIN.

Banks issue Visa gift cards and these cards are not reloadable. Gift cards – as the name suggests — are often given as a gift, instead of a gift certificate or a retailer’s gift card. The biggest benefit of giving a Visa gift card over a regular gift card is that the recipient can use the funds wherever Visa is accepted. The amount is just deducted from the balance, but the cardholder still needs to authorize the transaction as a “credit” transaction because they cannot set up a PIN.


No matter which type of card you choose to purchase, apply for or set up an account with, make sure you’re fully aware of the fees that you might incur when you use the card, and if there are any maintenance charges or inactivity fees imposed on the account.

Some cards may be worth less than you think when you factor in fees, so you’ll need to make a decision that really is right for you.


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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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