What is a Prepaid Debit Card and How Does it Work

Updated 2/27/2025

Trying to avoid credit cards or don’t have a checking account? Comparing prepaid debit cards (also known as reloadable debit cards) vs. regular debit cards? Read this guide to learn how a prepaid debit card allows you to enjoy the ease of digital payments while staying within your budget.

What are prepaid debit cards?

A prepaid card isn’t linked to a credit card company. Instead, think of it as a reloadable debit card. You can load money onto it and spend that amount wherever debit cards are accepted. When you’ve used up the money on the card, or if your balance is getting low, just load more funds for future purchases.

How do I get a prepaid debit card?

Several places offer prepaid cards. You can apply for the ACE Elite^® Visa^® Prepaid Debit Card, for example, at any of our stores or online.¹ Using the card is subject to card activation and ID verification.¹

Where can I load money on my prepaid debit card?

Load money onto your prepaid card at our ACE Cash Express stores.² You can also enjoy no-fee cash withdrawals³ using your card when you have qualifying Direct Deposit activity.

What should you look for in a prepaid debit card?

When you want to get a prepaid card, it’s important to find one to make your life easier. Some of the top features you should look for include:

Convenient reloading - Adding funds to your reloadable debit card should be convenient. ACE, for example, has a network of over 750 stores, so you won’t have to travel far to reload your card. You can also add funds through direct deposits or by bringing in a paper check to any of our locations and cashing it.
Multiple plans - Look for a prepaid debit card that offers multiple fee plans to find the plan that works for you. The ACE Elite Card, for example, offers different fee plans to fit your financial needs, including the Pay-As-You-Go fee plan,⁴ Monthly fee plan,⁵ and a Reduced Monthly Plan.⁵
Mobile app options - Taking control of your money means knowing what is happening with it. Your ACE Elite Card includes an easy-to-use mobile app, online account access through your browser, and AnyTime Alerts^TM. You can use these features to stay on top of your money and catch any problems quickly.
Account extras - Many prepaid card issuers include extra perks with their cards. With the ACE Elite Card, for instance, you can also enroll in an optional savings account,⁶ enjoy cash back rewards⁷ when you use your Card at select merchants, and use FlashPay⁸ to send and receive money from friends and family who also have an ACE Elite Card, Flare Account^®, or Netspend card.
Security - when looking for a financial service, you want to know that your money is safe. Upon activation of your ACE Elite Card, your funds are FDIC insured up to the current coverage limit through Pathward^®, National Association,⁹ leaving you with one less thing to worry about.
Withdrawal fees - Many prepaid card issuers allow ATM withdrawals with no cost for in-network transactions. When looking for a prepaid card, it may be best to find one that offers low ATM withdrawal for out-of-network transactions. With ACE, we offer a network of stores across the United States that act as ATMs for all ACE Elite Cardholders, limiting the frequency in which you may pay out-of-network transaction fees.²
Direct Deposit options - Look for a prepaid card that offers Direct Deposit features. You may have to opt-in to this feature, but having it available will make for a better experience. With the ACE Elite Card, when you set up a Direct Deposit of $500 or more, you’ll get access to the $5 Reduced Monthly Plan that offers unlimited purchase transactions, with no signature or PIN transaction fees.⁵

How do prepaid debit cards work?

You can get a prepaid card simply by signing up; there is no need to worry about credit scores. For example, with the ACE Elite Card, there are no credit checks. Once you’ve loaded money onto the card, you can use it anywhere debit cards are accepted, subject to card activation and ID verification.¹ Just swipe it in-store or enter the card info online.

What are the benefits of a prepaid debit card?

There are many benefits to using a debit card, including:

It’s a convenient alternative to a bank account - If you can’t open a checking account due to poor banking history or want to avoid credit cards, a prepaid card may be the right choice for you. With the ACE Elite Card, you won’t have to carry cash or miss out on online payments, and your balances are FDIC insured.⁹
You can use direct deposits - From paychecks to refunds on tax returns, getting access to your money without having to cash checks is essential. Our ACE Elite Card can help you get paid up to two days early¹⁰ when you enroll in Direct Deposit.
It can help you stick to your budget - With credit cards, you may be tempted by consumerism and overspend or go over your budget. A prepaid debit card can help you limit your spending and keep you on track for the future.

Ready to enjoy all of these benefits and more? Sign up for our ACE Elite Card!

This blog is not intended to provide any tax, legal, financial planning, insurance, accounting, investment, or any other kind of professional advice or services. To make sure that any information or suggestions in this blog fit your particular circumstances, you should consult with an appropriate tax or legal professional before acting on any suggestions or information that we provide.

Disclaimers

1. IMPORTANT INFORMATION FOR OPENING A CARD ACCOUNT: To help the federal government fight the funding of terrorism and money laundering activities, the USA PATRIOT Act requires us to obtain, verify, and record information that identifies each person who opens a Card Account. WHAT THIS MEANS FOR YOU: When you open a Card Account, we will ask for your name, address, date of birth, and your government ID number. We may also ask to see your driver’s license or other identifying information. Card activation and identity verification required before you can use the Card Account. If your identity is partially verified, full use of the Card Account will be restricted, but you may be able to use the Card for in-store purchase transactions. Restrictions include: no ATM withdrawals, international transactions, account-to-account transfers and additional loads. Use of Card Account also subject to fraud prevention restrictions at any time, with or without notice. Residents of Vermont are ineligible to open a Card Account.

2. The ACE Elite Card uses the Netspend Network, which is provided by Ouro Global, Inc. Ouro Global, Inc. is a licensed provider of money transfer services (NMLS ID: 932678). Ouro Global, Inc.’s licenses and related information may be found at www.netspend.com/licenses. Fees, limits, and other restrictions may be imposed by Ouro Global, Inc. and other third parties in connection with use of the Netspend Network.

3. Make up to $100 in no fee cash withdrawals per day using the ACE Elite card at participating ACE Cash Express locations; $100 total is calculated based on all withdrawals performed at all ACE Cash Express locations visited in a day. Card must have been obtained at a participating ACE store or www.acecashexpress.com and a direct deposit (no dollar minimum) made to the card within the immediately preceding 35 days is required. See store for details. Although this feature is available at no additional charge with qualifying direct deposit, certain other transaction fees and costs, terms, and conditions are associated with the use of this Card. Offer subject to change. This optional offer is not a Pathward or Visa product or service nor does Pathward or Visa endorse this offer.

4. The Pay-As-You-Go Plan (“PAYGO”) is automatically effective at the time of Card activation, unless the Cardholder chooses the optional Monthly Plan. These plans include only domestic purchase transaction fees and do not include ATM fees or any other fees associated with the use and reloading of the Card Account. See your Cardholder Agreement in your Account Center for details.

5. The Pay-As-You-Go Plan is the default Plan Fee on the Card Account. Cardholder may enroll in the Monthly Plan to pay a flat fee of $9.95 per month instead of paying a fee for every purchase transaction under the Pay-As-You-Go Plan. If cardholder receives $500 in payroll or government benefit direct deposits in 1 calendar month, cardholder will qualify for the Reduced Monthly Plan. After qualifying, Monthly Plan Cardholders will receive the Reduced Monthly Plan Fee of $5 on their next Plan Fee assessment date. Pay-As-You-Go Cardholders must enroll in the Reduced Monthly Plan to receive it.

6. The optional Savings Account is made available to Cardholders through Pathward, Member FDIC. To participate in the Savings Account program, Cardholder must consent to and continue receiving communications from us in electronic form. If Cardholder is subject to Internal Revenue Service backup withholding at the time of the request to open a Savings Account, the request will be declined. Interest is calculated on the Average Daily Balance(s) of the Savings Account and is paid quarterly.

If the Average Daily Balance is $1,000.00 or less, the interest rate paid on the entire balance will be 4.91% with an annual percentage yield (APY) of 5.00%.
If the Average Daily Balance is more than $1,000.00, the interest rate paid on the portion of the Average Daily Balance which exceeds $1,000.00 will be 0.49% with an APY of 0.50%, and the interest paid on the portion of the Average Daily Balance which is $1,000.00 or less will be 4.91%. The APY for this tier will range from 5.00% to 0.54%, depending on the balance in the account.

The interest rates and APYs of each tier may change. The APYs were accurate as of 2/1/2025. These are promotional rates and may change without notice pursuant to applicable law. No minimum balance necessary to open Savings Account or obtain the yield(s). Because Savings Account funds are withdrawn through the Card Account, Card Account transaction fees could reduce the interest earned on the Savings Account.

7. Netspend Payback Rewards is an optional program. You may opt-out at any time by visiting the Netspend Payback Rewards page in your Online Account Center. Rewards offers are based on individual shopping habits. Rewards are credited to your Card Account and are not available in the form of a check or other direct payment method. Rewards earned through Netspend Payback Rewards are separate from rewards earned through any other rewards program. See the program FAQs and terms and conditions in your Online Account Center for additional details about how and when you get rewarded. Program sponsor: Ouro Global, Inc., Pathward, and Visa are not affiliated in any way with this program and do not endorse or sponsor this program.

8. Services initiated with an external account from an outside third party may incur fees from that third party to your external account. No cost for online or mobile Account-to-Account transfers between Netspend Accounts; a fee may apply to Account-to-Account transfers conducted through a Netspend Customer Service agent or other transfer types. See your Cardholder Agreement or Deposit Account Agreement for details.

9. Once your identity is verified and your account is registered, your funds on deposit in your Savings account are FDIC insured up to $250,000 through Pathward, subject to certain conditions including regulatory requirements for FDIC pass-through insurance and the aggregation of all funds held on deposit in the same capacity at Pathward. Pathward may place your funds at one or more participating FDIC-insured banks (www.pathward.com/programbanks). FDIC insurance protects against the failure of Pathward, not the failure of Ouro Global, Inc. (“Ouro”). Ouro, a financial technology company, is not a bank and is not FDIC insured.

10. Faster funding claim is based on a comparison of the Pathward, policy of making funds available upon receipt of payment instruction versus the typical banking practice of posting funds at settlement. Fraud prevention restrictions may delay availability of funds with or without notice. Early availability of funds requires payor’s support of direct deposit and is subject to the timing of payor’s payment instruction.

The ACE Elite^® Visa^® Prepaid Debit Card is issued by Pathward, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. Ouro Global, Inc. is a registered agent of Pathward, N.A. Card may be used everywhere Visa^® debit cards are accepted. Use of the Card Account is subject to activation, ID verification, and funds availability. Transaction fees, terms, and conditions apply to the use and reloading of the Card Account. See the Cardholder Agreement for details.