Prepaid Cards vs. Gift Cards: What’s the Difference?July 2021
Prepaid cards and gift cards are both pieces of plastic that can be used to make purchases. They make popular presents as well: A versatile way to give a recipient the funds to buy whatever they like that seems safer and a touch classier than giving a whole wad of cash. The biggest difference between the two reflects their permanence: prepaid cards can be reloaded and used indefinitely, while gift cards can generally only be used until the rand amount on them is exhausted.
What is a Prepaid Card?
Prepaid cards are technically a type of debit card. Issued by a financial institution or credit card company—Visa and/or MasterCard all offer them—they are deposited or “loaded” with a certain amount of money. They then can be used in person or online to purchase items or pay bills. They can also be used at ATMs to withdraw cash.
Just like regular credit cards, prepaid credit cards have a number and an expiration date printed on the front or back, and they generally can be used in the same places. The amount of money deposited or “loaded” onto the card represents the card’s credit limit—that is, how much can be charged on it. Once the balance on the card had been exhausted, the card is worthless, unless more funds are deposited on it. In fact, a prepaid debit card can be used repeatedly, so long as the cardholder keeps adding money to the card.
Although the terms are often used interchangeably, these prepaid cards are not the same as credit cards.
What is a Gift Card?
A gift card is also a type of stored value card loaded with funds for future discretionary use. Only it contains a specific amount of money. Once this amount is used, the card can no longer be used. Gift cards also have expiration dates, which are often much shorter than that of prepaid cards.
Gift cards can be purchased in several different formats. The most familiar type is what’s technically known as a closed loop card: It is good only at a particular merchant or certain retailer and bears that outfit’s name and logo. Some retail groups will allow the same gift card to be used at any of their affiliated stores.
Gift cards began with specific stores. Now, many of the major shopping centres like Sandton City, Mall of Africa and Gateway are also offering gift cards. Known as open-loop cards, these are most easily confused with prepaid debit cards, especially since some of them are reloadable as well.If you are interested in purchasing retail gift cards, please get in contact with Cards Plus on 011 894 3914