4 minutes reading time
MAY 14 2021

What Is a Prepaid Card and How Does It Work?

Prepaid payment cards are exploding in popularity because of their utmost convenience, easy access and easy gifting opportunities. Like a gift card, they allow you to spend a preloaded balance but are more widely accepted. They are also perfect tools for teaching kids about safe spending or adults who want to improve their finances by sticking to a budget or shop online with added security. Whatever the personal reason for giving them a try, prepaid cards are a safe and easy way to manage your money and enhance your budgeting. But not sure which option is right for you? There are a few types of prepaid cards and even more specific brands. So, let’s break it down.

1. Prepaid Debit Cards

Currently available at Dundle:

American Express Gift Card (Amex)


Green Card Mastercard

Most prepaid cards, or “pay-as-you-go” cards, have a unique card number, expiration date, and sometimes even a PIN just like traditional credit cards. They often share the big-name logos of their credit card company counterparts, but there are some differences. The application process is little to none and, as stated above, while they are technically debit cards, they are not linked to any checking account so you can only spend the amount of money preloaded on the card. Meaning, overspending is impossible. Handy right? They're also advantageous in that there are no interest rates, annual fees, or requirements of good credit as with some traditional cards.

Most prepaid debit cards can be used as long as you continue to reload money onto them, and the process to load money is generally quite simple. Keep in mind that some cards are for one-time use. Also, note that some cannot be used for purchases like recurring payments or certain deposits.


  • Safe and convenient - no need to go to an atm

  • Not linked to any bank account, so no relationship with a financial institution needed

  • No overdraft fees

  • Widely accepted online

  • No credit history required

  • Often reloadable

  • Easily obtainable

  • No minimum balance required


  • Some cannot be used for certain purchases (renting a car or hotel) or recurring billing

  • Some may require activation

  • Possible fees

2. Prepaid Vouchers

Currently available at Dundle:





These popular digital prepaid solutions are delivered via email and preloaded with a predetermined balance. Users can pay online with a voucher as they would with more traditional payment methods. Just instead of a card number, you receive a code. Some are used to top up virtual spending accounts or digital wallets making these cards are ideal for people wanting to shop online anonymously or for those who do not have access to a bank account. Keep in mind they are only accepted at partner websites.


  • Secure and anonymous

  • No credit check

  • No bank account required

  • No application process

  • No overdrafts

  • Easily obtainable


  • Limited to partner webshops

  • Regional restrictions

  • Usage fees

3. Prepaid Credit Cards (Secured Credit Cards):

Users and even companies often use this term to refer to prepaid cards, but the differences are plenty. Prepaid credit cards usually have an application process and require approval from the card issuer. Sometimes a credit check is also required. Unlike a traditional credit card, the user pays a sort of security deposit in order to use their card as a revolving line of credit. Other than that, the function is similar to that of a credit card.


  • Helps repair or build credit scores

  • Freedom of a credit card

  • Some cards hold perks or offer reward systems

  • Accepted where credit cards are


  • Requires a security deposit

  • Possible credit checks

  • Usage fees

  • Lower credit limits

  • Application process

So there you have it. Prepaid cards are by far the simplest way to pay without a bank account or line of credit. While they can have their individual limitations, they also give users a great sense of financial freedom and security when making purchases. Make sure to read all of the fine print and instructions when obtaining one to ensure you get the most out of your new prepaid card. Just find the one that’s right for your spending habits and pay with total peace of mind!