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Gift cards vs. prepaid debit cards

By Aaron Small|5 min read|Updated Jun 21, 2024

A scale with a prepaid debit card on one side and a gift card on the other.

You want to send a gift to your employees for a great quarter, or give every attendee at your conference a little something for visiting your booth. Should you send them gift cards or prepaid debit cards?

Both have advantages over physical gifts. Recipients can use them to pick out their own gift, so they aren't saddled with something they don't want. It's easy to give out both types of gifts in bulk, and recipients can use them right away. But there are important differences.

In this article, we'll clarify the advantages and disadvantages of gift cards vs. prepaid debit cards so you can decide which reward or gift is right for your needs.

Gift card vs. prepaid debit card: Key differences

A gift card and a prepaid debit card are not the same. They serve different purposes entirely, and they come with their own advantages and disadvantages. Let’s take a closer look at what makes them different.

Advantages of gift cards

Gift cards let you buy goods at a specific store or chain that accepts a payment network like Visa or Mastercard. They don’t allow cash withdrawals, and once they’re used up, they’re done.

Buying a gift card is convenient for the buyer. And it sends a message to your recipient that’s thoughtful and significant. Gift cards say: I know you like this retailer, and I want you to spend your money on something you like.

You can also exchange or trade gift cards on website platforms.

Disadvantages of gift cards

You can’t redeem a gift card into cash. Another obvious answer is that gift cards can be applied only to one specific store. You can’t use a J.Crew card at Jamba Juice. (Believe us, we've tried.) 

Advantages of prepaid debit cards

Prepaid debit cards have a number of functions. You can make purchases,and withdraw cash at ATMs, banks, or even certain stores like gas stations. Some credit card companies offer reloadable cards – but you should know that prepaid debit cards from Tremendous are not reloadable.

Prepaid debit cards are flexible and multi-purpose. They can stand in as budgeting tools or as replacements for checking accounts. 

Prepaid debit cards have become popular to curb overspending or help children and others new to the banking system learn helpful money habits. Think of them as practice credit cards, where you can monitor activity with budgeting apps.

Disadvantages of prepaid debit cards

So what are the downsides? Processing fees.

Prepaid debit cards usually come with built-in monthly fees like checking accounts do. The fees often range between $5 to $10, which can add up over a year. You may get hit with transaction, activation, or inactivity fees too. So know what you’re signing up for. 

Which is better, a gift card or a prepaid debit card?

Selecting the card depends on the gifting occasion, and what pain points bother you most. Do you want to give ultimate flexibility? Is security your top concern? Are you worried about extra costs? 

Let’s look at each.

From a flexibility perspective

Prepaid debit cards give you wider spending options by far. You can take out cash and spend it at nearly any retailer. On the other hand, gift cards can be versatile, too: some brands have sister companies that happily accept the same gift card.

From a security standpoint

Here, prepaid debit cards have a slight edge. Digital gift cards are harder to misplace – just don’t forget your email password. Prepaid debit cards include a code and a PIN. If one gets stolen, you could disable it remotely. But if you misplace an activated Target gift card, you’re in the hole.

Associated costs

Prepaid debit cards may have associated fees, so it’s worth checking to see how much you’ll pay annually. Gift cards do not have associated fees. You buy it for $50, and you’ve got fifty to spend.

Making the most of your gift choice

Whether it’s to say thank you or sorry, show your customers and employees you care by sending them rewards they can redeem however they want. 

Tremendous makes it easy to send digital gift cards and prepaid Visa cards for free.

With Tremendous, you can also offer recipients gift cards to their favorite retailer too, if you want to make it more personal. Choose from over 2,000 redemption options we offer across 200 countries. 

You can instantly send cards that recipients can redeem however they want, wherever they are. And if they run into a problem when redeeming their reward, you can trust they’ll have a smooth experience with our customer service team. 


Wherever you stand on the great debate between gift cards or prepaid debit cards, Tremendous has your back. Our platform makes it easy to send your preferred type, in a format that’s secure, simple, and easy to deliver.

Sign up for a free account or take a demo with us to learn more.

Published June 21, 2024

Updated June 21, 2024

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