One of these things is not like the others

Say you've got three cards in front of you on a table, all three of which feature the same credit card logo and bank name. One has the customer's name and the word debit or ATM, the second has the word prepaid, and the third has just the name. Though these may all look like basically the same thing, they are actually quite different. One is a debit card, one is a prepaid card, the last is a credit card, and they all have distinct characteristics. 

Debit cards vs. Prepaid cards

Debit cards are linked to your bank account, even if they have a credit card logo on the front and can be used as such. Prepaid cards, on the other hand, only allow you to access the money you've pre-loaded. In most cases, financial institutions won't allow you to spend more money than you have already put into the prepaid card's account. On the other hand, overspending can occur with debit cards when used for certain transactions, and if you've signed up for the bank's overdraft program. This usually means that your bank will charge a fee just for covering the difference on a transaction, between the amount you actually have in your account and the total price of your purchase. The bank will also require you pay the actual difference, also called an overdraft. 

Credit cards vs. Prepaid cards

Prepaid cards work very differently from credit cards. Though they may both have a credit card logo, credit cards essentially allow customers to borrow money on credit, which they then have to repay at the end of the month, or they must pay interest on their balance. The logo really just indicates which specific credit card company is processing the transaction.

Some confusion may arise due to the existence of secured credit cards, which also require that customers deposit a certain amount into their account. However, the difference is that secured credit cards use that deposit as a sort of backstop for the issuer, in case you default, and covers them against any losses. Secured credit cards are monitored by the credit bureaus, so they can help users build their credit. Prepaid cards don't allow you to borrow a bank's money like a credit card does. You use your money to load a card, and then spend it down.

Fees & Rewards

Another one of the main differences between all three types of cards mentioned is that prepaid cards usually come with a whole host of associated fees and penalties, which can vary a lot between issuers. They can include point of sale fees (a charge whenever the card is processed), reloading fees, monthly maintenance fees, in-network ATM fees, decline fees, dormancy fees, paper statement fee...the list can go on and on, and occasionally it does. This is essential to look at when comparing cards and deciding which is best for you.

A last key thing to consider is the relative lack of rewards that users can obtain with prepaid cards. Some do offer modest rewards, but nowhere near the level that credit cards do. Secured cards are more limited than regular credit cards, but they build up credit, and after some time of responsible financial behavior, you can graduate to a reward-filled credit card. 

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