16 January, 2025
Synopsis
Prepaid Cards and Gift Cards are both plastic money. However, they are intended for different purposes and specific benefits depending on their type.
Prepaid Cards are more versatile, can be reloaded (case-basis), and are secured by the issuers. Conversely, Gift Cards come preloaded with limited usability and are meant for the recipient and not for the buyer's usage.
The main Prepaid Cards vs Gift Cards distinction includes usage limitations, balance and expiry, fees, security and the intended end user.
Today, you can conveniently use plastic money like Debit and Credit Cards for making purchases conveniently instead of cash. Prepaid Cards and Gift Cards fall under a similar category but serve different purposes. In this blog, we explore their distinct functions and decode the difference between Prepaid Cards and Gift Cards to help you pick the right one for your needs.
What is a Prepaid Card?
A Prepaid Card is a form of payment card you get from banks and financial institutions that come preloaded with a specific amount. They are not linked to bank accounts or do not require a credit check to use. You can use them for various transactions based on the preloaded amount. The type of transactions depends on the variety of cards. For example, Prepaid Cards come in categories like:
General Purpose Reloadable (GPR) Cards
Travel Cards
Meal Cards and also
Gift Cards.
What is a Gift Card?
A Gift Card is a type of Prepaid Card. This means all Gift Cards are Prepaid Cards but not all Prepaid Cards can be Gift Cards. With a Gift Card, you can fulfil the specific purpose of gifting a particular amount of money to the recipient to spend on their favorites products and services. The various types of Gift Cards include:
Open Loop accepted at various networks and
Closed Loop used only at specific stores or brands.
The other categories are based on issuers like banks, financial institutions, independent retailers, and brands.
Prepaid Cards vs Gift Cards: Main Differences
Some of the major differences between Prepaid Cards and Gift Cards are explained as follows:
Usage Limitations
Gift Cards come with limited usability as they are accepted only on stores and e-commerce sites. Cash withdrawal are restricted on these cards with a validity of upto 3 years. In contrast, Prepaid Cards make room for more flexibility in terms of usage. You can use them in multiple point-of-sales terminals, online portals and can withdraw cash from ATMs. Prepaid cards have come with a greater validity of upto 5 years.
Balance Treatment
You can typically use the Gift Card until you exhaust the balance on it, which is typically for a limited period. Once you use up all the balance, the purpose of the card ends. On the other hand, Prepaid Card has a comparatively longer life as you can use it until the balance runs out but also reload it. Reloadability helps in the long-term use of the card.
Security
Most Prepaid Cards are issued by banks and financial institutions, which boosts their security. If you lose the card, there are mechanisms in place to get it back or block it to prevent fraud. Gift Cards, on the other hand, are not necessarily bought exclusively from banks or financial entities. You can also get them from stores and retailers, in which case they don't have the same level of protection. If you lose the card, there are limited means to retrieve it.
Fees
Depending on the type of Prepaid Card, you may incur a range of fees including issuance, annual maintenance charges, ATM withdrawal fees, etc. You need to regulate your spending based on such charges. On the other hand, Gift Cards come with limited charges. They include issuance fees and balance inquiry fees. You may also incur a reissuance fee if you lose the card and the issuer can help you replace it.
End User
With Prepaid Cards, if you have purchased the card, you automatically become the user. The card is in your name, which is printed on the card, and you are solely authorised to conduct the transactions on it. Contrastingly, you buy Gift Cards for another person. In this case, the recipient becomes the end user. You can also personalise the card to include their name and a customized message.
Get a Prepaid Card that also Sorts your Gifting with HDFC Bank Prepaid Gift Card
As clear by now, Prepaid Cards have a variety of purposes and one of them is gifting. If you get a Prepaid Gift Card, you can make someone close to you feel special on their birthday, anniversary or another special event. These cards are the best way to sort out the hassle of finding the right gift. They take out the uncertainty from the gifting process. To make it better, you can get a Gift Card that accommodates multiple spends like shopping, dining, entertainment, and more. If you are on the lookout for such a card, your search ends with HDFC Bank Prepaid Card. You can choose from the variants you like and all of them cater to a variety of expenses.
Apply now!
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
Reference:
https://www.hdfcbank.com/personal/resources/learning-centre/pay/know-what-is-a-gift-card
https://www.hdfcbank.com/personal/pay/cards/prepaid-cards/giftplus-prepaid-card
https://www.icicibank.com/blogs/cards/difference-between-standard-prepaid-cards-and-gift-cards
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