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What Seniors Need to Know About Using Prepaid Cards

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Prepaid cards are more popular than ever. There are several advantages for seniors who use these cards, but, like everything else, there are downsides. You should explore both the pros and cons before deciding to use the cards. Here are some suggestions on what seniors need to know about using prepaid cards.

Prepaid Cards Can Keep You on Your Budget

If you find it extremely difficult to stay on a budget, you can buy prepaid cards to use for expenditures, like clothes shopping or getting your coffee shop fix, without emptying your bank account or running up your credit cards. Prepaid cards do not let you spend more than you load onto them. Of course, you could always buy another prepaid card, if you cannot resist spending more money.

Watch Out for the Fees

The fees can vary quite a bit from one prepaid card vendor to another. For example, the fee to buy a $50 prepaid card from one company, like VISA, MasterCard, or American Express, can cost twice as much for another company.

Prepaid Card Basics

There are several types of prepaid cards. These cards can include:

  • Gift cards have limitations. Let’s say you receive a Macy’s gift card. You can only use the funds at Macy’s, and usually, you cannot reload the card with more money.
  • Commercial prepaid cards look like ordinary debit or credit cards. These cards often have the logo of a financial network, like MasterCard, VISA, Discover, or American Express.
  • Some people receive benefits like Social Security or veterans benefits from the federal government via prepaid cards.
  • Some state benefits like SNAP (also called food stamps) come through electronic benefits transfer (EBT) cards.

If you lose a commercial prepaid card, you might not be able to get your money back. It depends on the type of card and the rules of use for that card. Government benefits cards tend to have the same protections as bank debit cards.

Some people use prepaid cards, instead of a traditional checking account. Companies that sell prepaid cards seldom do a credit check on the buyer. You should compare the fees of using prepaid cards to the bank fees of a checking account to find out which one is the better option for you. People who bounce checks, might be better off using prepaid cards, instead of a checking account.

Using Prepaid Cards for Travel

If possible, you should avoid using prepaid cards when you are on the road. Hotels, rental car companies and gas stations often temporarily block you from being able to use some of the money on your card.

If you budgeted $1,000 for a trip and bought a $1,000 prepaid card to use for this purpose, you might end up stranded quickly. Let’s say you check into a hotel and let the front desk swipe your prepaid card as your method of payment. The hotel will likely put a hold on a considerable amount of the funds on your prepaid card.

They can “hold” as much as $300 or $400 or more, depending on the circumstances. You do not have access to that money until they remove the hold, which can be several days after you check out of the hotel. You planned on using that money on your trip, but because of the hold, you do not have access to your money.

Con Artists Love Prepaid Cards

It can be difficult or impossible to trace funds that get transferred by prepaid card. That fact is why con artists often direct their scam victims to buy a prepaid card and read the numbers to the scammer over the phone.

Every state has different regulations. You should talk with an elder law attorney near you about how your state might vary from the general law of this article.


National Council on Aging. “Using Prepaid Cards: Tips for Seniors.” (accessed October 17, 2019)

Suggested Key Terms: prepaid debit cards, pros and cons of prepaid cards