How to get money from prepaid card

A prepaid debit card is much like a gift card: It allows you to spend whatever amount of money is stored on the card. Once the balance is used up, you can reload the card online or at an ATM, a participating store, or other physical location. Prepaid debit cards are issued by banks and branded by the major credit card companies, including Visa, MasterCard, Discover, and American Express.

Key Takeaways

• A prepaid debit card can be a useful alternative to cash.
• Prepaid debit cards are an option for people who don't have a credit card or access to a regular debit card connected to a bank account.
• There are many fees associated with prepaid debit cards, so it's important to shop around for the best deal.

Understanding Prepaid Debit Cards

A prepaid debit card is as good as cash—and sometimes better:

• It is a safe way to carry money around—unlike, say, a wad of paper money. Prepaid cards also come with certain consumer protections, while cash does not.
• A prepaid debit card can be used for online purchases.
• It can make a more attractive gift than cash.

Anyone who wants to stick to a strict budget, or who has had trouble managing credit cards, could also consider using a prepaid debit card.

You can use a prepaid debit card for any transaction that you might otherwise use a credit card or regular debit card for. In many instances, the recipient of your payment may even be unaware that the card is prepaid.

Some employers pay their workers with prepaid debit cards called payroll cards (which can be useful if the person doesn't have a bank account or direct deposit). Many government benefits are also available via prepaid debit cards, including Social Security.

Prepaid Debit Cards vs. Regular Debit Cards

With a regular debit card, the amount of money you can spend is tied to how much you have in the checking account it is linked to. So you need to have a bank account to use a regular debit card, while you don't with a prepaid debit card. With a regular debit card, the amount of money you have available to you will also fluctuate from day to day, as money moves in and out of your checking account. With a prepaid debit card, you have a fixed amount of money to spend, which declines as you spend it and rises only if you reload the card.

The Downsides of Prepaid Debit Cards

Prepaid debit cards can come with an assortment of fees that will eat into your cash balance. These may include monthly fees, transaction fees, ATM fees, reloading fees, foreign transaction fees, and more. You may even be charged a fee for checking your balance in the card.

Employees have a legal right to decline being paid through a payroll card because the fees will reduce their take-home pay.

Shopping for a Prepaid Debit Card

If you're shopping for a prepaid debt card, pay particular attention to its fees. Also consider convenience. For example, if the card is free to use at an ATM (as many of the best cards are), how large an ATM network will you have access to, and is there one close to where you live or work?

Important

If your goal is to repair your credit rating, consider a secured credit card instead of a prepaid debit card.

An Alternative to a Prepaid Debit Card

If the reason you want a prepaid debit card is that you have a bad credit history or no credit history and are unable to get a conventional credit card, you might consider a secured credit card instead. Secured cards are easier to qualify for because they require you to put down a refundable security deposit that serves as collateral for the lender.

The advantage of a secured credit card is that your monthly payments can be reported to the three major credit bureaus and help build your credit history. Debit cards, either prepaid or the regular kind, don't report transactions to the credit bureaus and will do nothing to improve your credit.

If you have a traditional gift card, you can use it to make purchases online or in a store, but you can’t use it for much else.

However, if you have a reloadable prepaid card, such as the Visa Vanilla card, you may be able to get cash back during a purchase transaction. These cards, which come with a PIN, can be swiped as “debit” transactions and therefore used to get cash back from the register, an ATM, or other financial institution.

In this article, learn more about:

• Can I get cash back from a prepaid card?
• How does a prepaid card work?
• Ways to use a prepaid card to get cash back
• How much can I withdraw from a prepaid card?
• FAQs

Can I get cash back from a prepaid card?

It is important to read the card’s terms to know if you can use it to get cash back. However, if you have a prepaid card, like a Visa prepaid card, you may be able to use it to get cash back. These cards will come with a PIN, and you can choose which type of transaction to perform at the register, ATM, or financial institution.

If you choose “credit,” the card will be charged as a regular credit card or gift card would. If you choose “debit,” you’ll be given the option to get cash back. In this case, the total of your purchase would be subtracted from the card, as well as the total of the cash back withdrawal.

For example, if you have a $100 prepaid card, your purchase was $50, and you get $25 cash back, your card will have $25 left.

How does a prepaid card work?

These cards are similar to the debit card you get when you open a checking or savings account with a bank. You can sign up for a prepaid card online from the issuer or buy one (for a small fee) from a store that sells the card. While it looks like a gift card, you can reload these cards with more funds.

Prepaid cards are great for those who have low credit scores and can’t qualify for a credit card, but these cards work on a payment network, such as Mastercard, Visa, or American Express.

Use these cards to make a purchase just as you would with a credit or debit card. Tap, insert, or swipe the card, choose “debit” to make a PIN transaction, or “credit” to make a signature transaction. Then, the total amount of your purchase will be taken off the card.

When the funds run low, you can add more in ways like direct deposit from your employer, the IRS, Social Security, or other benefits providers. You can also add cash at designated loading stations, though be aware of fees you may have to pay.

Ways to use a prepaid card to get cash back

Unlike a cash advance using a credit card, getting cash back from a prepaid card avoids high fees and accrued interest. There are also multiple ways you can use a prepaid card to get cash back including:

• At the register. When completing a purchase at a store, you can get cash back from your prepaid cards. Insert, tap, or swipe the prepaid card and ask or choose the option for cash back. You may be charged a fee for each transaction, and some stores set a limit for how much you can withdraw.
• At an ATM. Most prepaid cards come with or allow you to assign a PIN to the card when it’s activated. You can then use this PIN at an ATM to withdraw money. Enter the card into the ATM, enter your PIN, and withdraw an amount up to either the balance on the card, or the maximum daily limit.
• At a financial institution. Any participating bank or institution that accepts Visa cards allows you to get cash back from a prepaid card. Simply show the teller a form of identification and your card. Note that sometimes, these institutions charge a fee for teller cash withdrawal. Some cards have a flat fee, while others charge a percentage of the withdrawal amount.
• At reload locations. Some prepaid cards have a network of reload locations where you can add funds to the card or withdraw cash.

How much can I withdraw from a prepaid card?

You can only withdraw as much as the balance on the card. For example, if you have $1,000 on the card, you can withdraw up to $1,000.

Some cards limit the balances you can have on the card, but the maximum may be as high as $20,000. In other cases, the maximum amount you can withdraw at one time may be limited. For example, you can have up to $20,000 on the card, but can only withdraw $1,999 per day.

FAQs

Can I get cash back with a gift card?

No, you cannot use a gift card to get cash back at the register when you make a purchase. The only way to get cash for a store gift card is to sell it to a gift card reseller. But be careful – many resellers can be scams, so do your research to find one that is reputable.

Are there fees for getting cash back from a prepaid card?

Fees you may face can vary by issuer and method of withdrawing cash. For example, you may be charged a $2 fee withdrawing from a register during a purchase, but a $3.95 fee withdrawing from an ATM.

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