What are Prepaid Visa and Mastercard Gift Certificates? Prepaid cards and gift cards sound alike, since you can stash cash on each of them. Nevertheless they have some key differences. To begin with, prepaid cards are winning the popularity contest. The cards, that are reloadable, are adding more prepaid gift card balance, though you may pay dearly for the privilege. Meanwhile, gift cards, which are generally for more limited one-time uses but have few fees, are losing favor, Mercator Advisory Group says.
“Gift cards have limited functionality and they are very straightforward,” says Aleia Van Dyke, a research consultant at Javelin Strategy and Research. “But prepaid cards are definitely more complicated and multifunctional.” She expects gift certificates to eventually fall from the wayside as prepaid cards grow in popularity, with their uses. For the time being, both cards get some overlap simply because they can both be used to control spending. “They can be a bank checking account alternative,” Van Dyke says.
Here are some key differences to find out when searching for either card. Prepaid Gift Card Flexibility. Gift cards are usually limited to purchases with a retailer, says Greg McBride, CFA, chief financial analyst at Bankrate.com. Typically, big retailers – and even smaller ones in departmental stores – provide you with the cards for purchases at those locations. The cards are good deals for your buyer or even the recipient, says McBride. The reason why: A $100 gift card translates into $100 of getting power.
“So you do have a whole lot more flexibility within your spending,” adds Harrine Freeman, a monetary counselor at Maryland-based H.E. Freeman Enterprises. However they are more inclined to carry fees, based on CreditCards.com, which is properties of Bankrate.
You may also easily buy, sell or trade gift cards online, Freeman says. And following the Charge Card Act was passed in 2009, gift card expirations were extended to 5 years following the activation date. On the downside, gift cards can be overly simple. They generally don’t include account management tools and may be used just once, Van Dyke says.
Conversely, McBride says, prepaid cards can be used as a wide range of transactions including making withdrawals from ATMs. To enable them to sometimes be utilized for bank account substitutes, which explains why their popularity is quickly rising. Prepaid cards can also be loaded online or at retail locations.
More and more banks, like PNC, U.S. Bank and JPMorgan Chase & Co., offer their particular prepaid cards, in accordance with the Consumers Union. The cards are generally simple to get because you don’t need to have a banking accounts or a credit rating.
People counting their pennies are able to use prepaid cards as budgeting tools by loading vacation funds onto them, McBride says. Some prepaid cards also provide free online bill pay, which can save consumers money, in accordance with Consumers Union. In order to collect points for shopping, some prepaid cards even offer rewards programs. “But I’ve never seen a gift card that offers rewards,” Van Dyke says.
Prepaid Cards Fees. For your budget-minded, gift certificates will often have only low or no fees. However, prepaid card fees vary widely and may quickly ding you. “Some prepaid cards work like good debit cards, because they have low fees or waived fees,” Javelin’s Van Dyke says. “However, if you pick the wrong card, you might end up getting a lot of fees.”
McBride says by far the most prevalent prepaid fees are activation fees, ATM access fees and monthly service fees. Based on Bankrate’s 2014 Prepaid Card Survey, 83 percent of the cards surveyed charged monthly maintenance fees. And 53 percent have activation fees, which range from $2.95 to $9.95. Unlike gift cards, www.prepaidgiftbalancebalance.com that sit unused in a drawer uryelx start logging fees. “So, you need to evaluate how you’ll be using the card,” McBride says.
Gift certificates which can be lost or stolen may mean the customer loses out. “A thief can access each of the money on the card,” says Freeman. However, if you’ve registered the credit card, you can find a number of a refund, however you also may be charged a fee, she says. One caveat: Gift cards issued with Visa or MasterCard logos are protected by credit card laws. And state laws governing gift certificates may also put in a layer of protection, including requiring more disclosures or the right to redeem a card for money, in accordance with the Consumers Union.
Prepaid cards may offer more consumer protections than gift cards, but rules vary. Often times, fraud protections are only “vaguely defined,” according to the Consumers Union report. And prepaid card protections can be voluntarily withdrawn anytime.