How Prepaid Card is different from Credit Card ?


Prepaid cards are the payment cards which come with money preloaded by you or someone else and are issued by a bank or a non-bank institution.

It is a ‘PayNow, Use Later’ type of Card, which means it needs to have a balance of a pre-loaded amount on it. The money has to be loaded onto the card via cash, checks, direct deposit or a transfer from another account before paying for transactions.

Sometimes, a prepaid card may also offer overdrafting facility which means the holder can use more than the balance available in the card. However, extra charges or interest may be charged for this.


Credit Cards are a ‘Use Now, Pay Later’ type of cards. In simple words, a credit card is a payment card that enables the cardholder to shop goods and services or withdraw advance cash on credit.

When the customer makes any payment using the credit card they are creating debt and borrowing the funds from the card-issuing financial company. These funds have to repayed by the holder to the bank within the due date.

In case he delays the payment after the due date, an interest will be charged on the outstanding amount.


Prepaid cards are very different from credit cards.  This can be confusing because both types of cards may have a card network logo such as Visa, MasterCard, American Express, or Discover on them.

  • Prepaid cards that are linked to a specific business can only be used at that place of business or one of its affiliates whereas credit cards can be used in any store or place of business that accepts Visa or Mastercard
  • Prepaid cards do not help to build the credit whereas credit cards may help in building credit.
  • Money is required to be loaded on the prepaid card before using whereas in case of credit card the holder can use the card upto its limit & has to repay the borrowed credit amount within the due date.

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