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A prepaid credit card is a versatile option that works like a regular credit card. What makes it different is that the credit card limit is determined by the money you’ve loaded into it. 


So, you get to decide the spending limit, which puts you in control of your expenses. Shop and pay securely, without worrying about having a bank account or any high-interest debt.

How Does a Prepaid Credit Card Work

Similar to a debit card, you can load the prepaid credit card with your own money. This preloaded amount of money acts as your maximum spending limit. Since the spending limit is not borrowed on credit, you don’t incur any debt. So, there is no need to pay interest or worry about clearing an outstanding bill on time. Simply put, you can only spend the money you already have on your prepaid card.


Remember, using prepaid cards will not boost your credit score. Instead, they are handy when you need to make online purchases or pay your bills.

Benefits of Prepaid Cards

Here are a few advantages you get to enjoy when you have a prepaid credit card: 

  • Eliminates the need to carry excess cash 

  • Can be used to make instant  ATM cash withdrawals

  • Convenience of online shopping without linking to your bank account

  • No need to stress about interest accruals and credit card bills 

  • Easy-to-meet eligibility criteria 

  • Simplified prepaid credit card application process

  • An ideal gift that you can give your friends and family

Types of Prepaid Credit Cards

Here are the different types of prepaid credit cards: 

  • Open-looped Cards

These prepaid virtual credit cards, also known as open-system cards, are branded with the network they are affiliated with. Some of these networks include Visa, MasterCard, or Amex. The respective card will carry the logo of the affiliate brand, and is usually accepted across all merchant stores.

  • Closed-loop Cards

Closed-loop credit cards are accepted at affiliated merchant outlets only. This means that you can buy goods and opt for services only at that merchant’s outlets with this credit card type. 

  • Semi-open Looped Cards

These are hybrid prepaid cards with features of both open- and closed-loop card types. A semi-open looped card is accepted at various chains or merchant outlets affiliated with the card’s issuer.

  • Reloadable cards

With reloadable prepaid cards, you can reload funds once the original fund limit is exhausted.

  • Non-reloadable cards

With non-reloadable cards, you cannot reload funds once the original fund limit is exhausted. Generally, gift cards fall under the non-reloadable prepaid card category.

Some of the Top Prepaid Cards from Different Banks

Here are some of the most popular prepaid cards from leading card issuers:

Name of the Credit Card Issuer

Prepaid Credit Card

SBI Prepaid Card

State Bank Gift Card

State Bank EZ Pay Card

State Bank Foreign Travel Card

State Bank Achiever Card

Axis Bank

Axis Bank Meal Card

Axis Bank Gift Card

Axis Bank Smart Pay Card


ICICI Bank Expressions Gift Card

ICICI Bank Multi Wallet Card

ICICI Bank PayDirect Card

ICICI Bank Gift Card


HDFC Bank Millennia Prepaid Card

HDFC Bank GiftPlus Card

HDFC Bank FoodPlus Prepaid Card

HDFC Bank SmartHub Vyapar Prepaid Card

HDFC Bank MoneyPlus Card

Kotak Mahindra Bank

Kotak FASTag Card

Kotak Spendz

Kotak Best Compliments Card

Prepaid Card vs Debit Card

The difference between prepaid credit cards and credit cards is the spending limit. But, you may find these to be similar to debit cards. 


While there are some similarities, here’s a look at the key differences between a prepaid card and a debit card: 


Prepaid Card

Debit Card

Source of funds

Funds have to be preloaded

Funds are directly debited from your linked bank account

Need for bank account

Not required

Requires a linked bank account


Can be reloaded online, with cash or by cheque

Can be used for as long as you have funds in your bank account

Potential fees

May include fees for reloading, inactivity,  encashment, certain customer service requests or transactions

May include fees for ATM withdrawal, overdraft, or other charges

Spending limit

Limited to amount of funds preloaded in the card

Limited to available balance in your linked bank account

From convenient purchases to secure finance management tools, a prepaid credit card can be your go-to option. Reap the benefits of a credit card, like shopping on-the-go and secure payments, without worrying about debt.


Whether you're looking to budget better, avoid carrying cash, or give a thoughtful gift, there's a prepaid card option that can suit your needs.  Compare features and fees before choosing a card that suits your needs!

FAQs on Prepaid Credit Cards

Is a prepaid card similar to a credit card?

A prepaid card is a type of card in which funds are directly added to the card. The purchase limit of a prepaid card is restricted to the amount of funds added to it. 

On the other hand, credit card utilisation depends on the total limit sanctioned by the card issuer. You can use a prepaid card to initiate transactions like a regular credit card.

Is a prepaid card similar to a debit card?

No, prepaid cards and debit cards are two different types of cards. A debit card directly debits the money from your account. On the other hand, you need to preload your prepaid card before you can use it.

What are the benefits of a prepaid credit card?

Here are some of the benefits of a prepaid card:

  • Avoid the hassle of carrying cash everywhere

  • Shop and pay your bills easily

  • Manage expenses better

  • Transact online in secure manner, without linking to your bank account

Is applying for a prepaid credit card a good idea?

When you apply for a prepaid credit card, you do not have to stress about incurring high interest charges on your transactions. Opting for this card is a good idea if you do not have a bank account or you want to give gift cards to your employees or family members. 

The card does not affect your credit score and the limit is restricted to the available funds loaded into the card.

Is a prepaid card the right option for me?

A prepaid card may be a suitable choice if you want the ease and convenience of a credit card but do not want to run the risk of overspending. 

What is the difference between a gift card and a prepaid credit card?

Much like a prepaid credit card, a gift card comes with preloaded funds that can be used to make purchases. The only difference between the two is that you may be able to accrue reward points on purchases made with prepaid credit cards.

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