Gift Card Vs. Prepaid Debit Card: What's the Better Gift? Advertiser disclosure You're our first priority. Each time. We believe everyone should be able to make financial decisions without hesitation. And while our site does not include every company or financial product available on the market, we're proud that the guidance we offer and the information we offer and the tools we develop are objective, independent, straightforward -- and completely free. How do we earn money? Our partners compensate us. This may influence which products we review and write about (and the way they appear on the website), but it in no way affects our suggestions or recommendations which are based on hundreds of hours of study. Our partners are not able to promise us favorable reviews of their products or services. . Gift Card Vs. prepaid debit card: Which is the Better Gift? Presenting gift cards is the obvious winner for a straightforward present of money. Prepaid debit cards are more similar to banks accounts. By Spencer Tierney Senior Writer | Certificates of Deposit, ethical banking, banking deposit accounts Spencer Tierney is a consumer banking writer at NerdWallet. He has written about the personal financial sector since, with a focus on certificate of deposit as well as other banking-related issues. His work has been covered in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is located in Berkeley, California. Dec 22nd, 2022 Edited by Sara Clarke Assistant Assigning Editor | Banking Sara Clarke is an editor who joined NerdWallet with over two decades of experience in newsrooms, including U.S. News & World Report. She started her journalism career with The Washington Post and later worked at Roll Call, McClatchy-Tribune and The Seattle Times. Sara has been featured in SiriusXM Business Radio and iHeartMedia's WHO Newsradio and has been quoted by The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other publications. She graduated in the U.M.'s Philip Merrill College of Journalism. Email:<br>. A majority or all of the items featured here come from our partners who compensate us. This influences which products we feature as well as the place and way the product appears on a page. But, it doesn't affect our assessments. Our opinions are our own. Here's a list of and . Cash is a great gift option, but what format it should be in is a different matter. Putting bills into an envelope may be a good idea, but it's not ideal It's impossible to get cash back if it gets lost or stolen. Additionally, it's easy to forget that cash was a gift once it's placed in a purse. The storage of cash on plastic cards is a better option, provided you choose wisely between gift cards and prepaid debit cards. Here's what to know. Gift cards vs. pre-paid debit cards Let's start with how they're similar They're both pre-paid cards, which means you pay for the card in advance for shopping at both stores both in person and online. They also provide protection against loss if you register them under your name. There are two kinds of cards in the same area of a retailer, like Walgreens and Target, so make sure you know which one you're purchasing. The main distinction between a giftcard and prepaid debit card is that the gift card is a one-time spending card, and a prepaid debit card is a reloadable payment choice that comes with all the features and charges associated with a checking account as well as linked debit cards do. They are used for one purpose: to buy goods at the brand of a specific store or in any other store that accepts payment networks like Visa, Mastercard or American Express. They do not allow cash withdrawals and the majority aren't refillable. Prepaid debit cards have many jobs: make purchases; withdraw cash from ATMs, banks or shops; or use web features such as bill pay. They're also reloadable. Because of their flexibility the prepaid debit cards could be used as budgeting tools, or as a replacement for checking accounts. They've been traditionally used to reduce spending, however in recent years there have been more (a typical cost associated with overspending) as well as to track spending. >> MORE: Winner: Gift cards Gift cards are true to their title as gifts. Their simplicity is part of what makes them better to give. However, there's an additional reason. Prepaid debit cards typically are subject to monthly fees, similar to checking accounts do and the fees, often $5 to $10, can add up to $120 over the course of a year. There may be as well, such as transaction or inactivity fees. The gift card is the best choice, but they're not all equal in value. Gift cards for general use such as those issued by Visa and Mastercard, tend to have an upfront fee, commonly called a purchase or activation fee, that the gift giver would have to pay. The cost could range from $2.95 to $5.95, depending on the amount added to the credit card based on an assortment of gift card websites. But there aren't usually other fees after purchase. There are some exceptions. Banks may provide general-use gift cards, which have replacement card fees or inactivity fees. These could be charged on a monthly basis after a year of no card usage. You can avoid the majority or all costs by purchasing a store brand gift card. In general, understand the terms and fees on the gift card prior to you purchase it to ensure that your holiday gift brings happiness without any fees. About the author: Spencer Tierney is an expert on certificates of deposit at NerdWallet. His work has been featured by USA Today and the Los Angeles Times. Similar to... 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