How Do Prepaid Debit Cards Work?

With a prepaid debit card, money deposited into the prepaid debit card account is the money that is available to spend.

With a prepaid debit card, cardholders aren’t borrowing funds to make purchases. Once you are approved, the account requires a deposit in order to have funds available to use, just like a checking account. Unlike a checking account, however, prepaid debit cards never charge overdraft fees. After a cardholder spends all available funds, a prepaid debit card simply declines until the cardholder deposits more funds into the account.

Once a cardholder deposits funds into the account, a prepaid debit card works just like a conventional credit or debit card. Prepaid debit cards can be used for most purchases, including shopping online or by phone.