Reloadable Debit Cards: How They Work

 Reloadable Debit Cards: How They Work

If you don’t have a bank account, these cards can make your life easier

Reloadable debit cards allow you to periodically add money to the card’s balance, which you can then spend as needed. If you’re considering getting a reloadable debit card here are some important things to know, including how they differ from regular bank debit cards.


  • A reloadable or prepaid debit card is not the same as a debit card linked to your bank account.
  • A reloadable debit card allows you to add funds to it as needed.
  • Some reloadable debit cards charge a fee to add more money to your balance. They may have other fees.
  • Many reloadable debit cards have consumer protection features in case your card is lost or stolen and used to make unauthorized charges;

What is a reloadable debit card?

A reloadable debit card, also known as a prepaid debit card, is a card that you can use to make purchases. They are sold in grocery stores, pharmacies, convenience stores, and other retailers. The key difference between this type of debit card and one issued with a bank account is where the money comes from.

When you open a checking account, your bank may provide a debit card that you can use to make purchases or withdraw money from ATMs. When you use a debit card, the money is withdrawn directly from your checking account;

On the other hand, a reloadable debit card is not associated with a bank account. So unlike bank debit cards, which generally allow you to spend as much money on your account as possible, reloadable cards limit the amount of money you can put on your account.

If you received an economic impact payment as part of the CARES Act, it may have been issued as a prepaid debit card. An estimated 4 million stimulus payments will go to eligible taxpayers in this way in 2020. 1 

How Reloadable Debit Cards Work

Using a reloadable debit card is fairly simple. You buy the card and follow the activation instructions that came with it. Once the card is activated, you can put money on it. Depending on the credit card, you can buy online, over the phone, using direct deposit, or in person.

Once you add money to the card, you can use it like a regular debit card. For example, you can use a prepaid reloadable debit card:

  • pay the bill
  • Online Shopping
  • gas or groceries
  • pay for dinner
  • Pay for ride-sharing or taxi fares


Some reloadable debit cards also allow you to use an ATM so you can withdraw cash from the card when needed;

How to Choose a Reloadable Debit Card

Not all reloadable debit cards have the same terms. Here are some differences to consider when choosing:


While free reloadable debit cards can be found, others charge various fees for using them. For example, you may only need to pay the activation fee, reload fee, and/or monthly service fee to get the card. There may be additional charges if you use your card to withdraw money from an ATM.

reload option

Cards are also loaded differently. Again, your options may include adding funds over the phone, online, direct deposit, or in person. If you add the money in person, you can use cash. However, if you are adding money online then you will need a bank account to transfer money unless you have the option of using a Mobile Check Deposit.

Loading, Buying, and Extraction Restrictions

Reloadable debit cards can impose different limits on your one-time, daily, or weekly balance. There may also be limits on the amount you can spend or withdraw in a single transaction or per day;


When considering a reloadable debit card, it is important to check where the card is accepted. You choose a card that can be used where you spend your money the most. Many reloadable cards are issued with major credit and debit card networks such as American Express, Mastercard, and Visa, so they are widely accepted.

deposit insurance

Like money in a bank or credit union account, some refillable debit cards come with Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) insurance. The money you have on the card may be held in pooled accounts with the institution’s financial with other cardholders’ money. If that financial institution fails, the deposit insurance company can step in so you don’t lose any money. Interchangeable debit card issuers are required to let you know if your money is insured before you buy their card. 

Additional Card Features and Benefits

Some prepaid debit cards offer additional benefits. For example, the Blue Bird card from American Express comes with features like emergency assistance and fraud protection. Not every card is like this though, so it’s helpful to see what else you can get before you sign up.

If you’re buying a reloadable debit card, you might also want to consult Abcexchange’s Top 5 Best Prepaid Debit Cards of 2020.

When choosing a reloadable debit card, check to see if the card has an expiration date. If so, find out what you need to do to get a new card so you don’t lose access to your balance;

Benefits of using a reloadable debit card

There are several reasons why someone might choose to use a reloadable debit card. The first is convenience. For example, a reloadable debit card could allow people who are currently unbanked or underbanked to conduct everyday transactions without carrying large amounts of cash.

A prepaid card might also be a good fit for someone who needs help overspending or learning how to track their spending. For example, if you’re a parent, a teen debit card can be a useful teaching tool to get kids used to tracking their spending;

Prepaid debit cards also have no negative credit side effects because you don’t take on any debt. However, on the other hand, unlike credit cards, you cannot use a reloadable debit card (or debit card in general) to build positive credit history;

Are reloadable debit cards safe to use?

Regular debit cards linked to checking accounts have certain safeguards in case your card is lost or stolen. Previously, prepaid debit cards did not enjoy these protections, but new federal regulations introduced in 2019 have changed this to some extent;

According to the Consumer Financial Protection Bureau guidelines, reloadable debit cards are now more like checking account debit cards. Major changes include:

  • More transparent fee disclosure.
  • Expanded access to account information, including transaction summaries provided by card issuers;
  • The right to contest fraudulent charges on a registered loadable debit card account.
  • Fraud protection for unauthorized charges.

The last one is especially important if you’re worried about losing your card balance if the card is stolen or used for fraudulent purchases. If your card is lost or stolen, the CFPB recommends contacting your card issuer immediately. Waiting too long to report an Unauthorized charge can cause you to miss out on fraud protection, with your card and cost you money.

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