What is a prepaid card? A simple guide for families

A prepaid card might look and swipe like a debit or credit card, but behind the scenes, it’s doing something different. There’s no checking account behind it. No credit line. Just the money you (or a parent) load onto the card, and that’s the only money that can be spent.

For families, prepaid cards can be a game-changer. Instead of the risk of overspending, bounced checks, or credit card debt, a prepaid card provides clear limits. It’s a safe and low-risk way for kids and teens to practice managing money, while parents can keep an eye on how it’s used.

How prepaid cards work

To get started, a parent or cardholder loads money onto the prepaid card. You can do this through a bank transfer, direct deposit, or mobile app, depending on the card. Once the money is available, use the card anywhere the issuer’s network is accepted, whether online, in stores, or for services like subscriptions or ride-sharing.

But… if there’s no money on the card, it won’t work. This limit is one of the reasons people use prepaid cards in the first place. They offer the ability to make card-based payments, and you can’t accidentally spend more than you have.

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Some prepaid cards come with features like spending categories, safety and parental controls, and balance alerts. Others offer just the basics. 

Who uses prepaid cards?

Some parents use prepaid cards when their kids are ready to start handling money on their own. It’s an easy way to let them spend within the amount loaded onto the card. And parents can stay involved. You can see where the money’s going, help set limits, and use real purchases as a way to teach good habits.

Prepaid cards are also helpful for people who don’t have a traditional bank account. They offer a way to receive paychecks, pay your bills, or shop online without relying on cash or checks. Even for adults who have checking accounts, some choose prepaid cards to help stick to a monthly budget, such as loading grocery money or vacation funds onto a separate card to avoid the risk of overspending.

What you need to know about prepaid cards

Considering using prepaid cards for your kids or to keep your spending in check? Here are a few things to know going in:

• Some cards come with fees. There may be activation fees, monthly fees, or even fees for reloading money. So, always read the fine print.

• You can only spend what’s on the card. Once the money on the card runs out, the card stops working. There are no overdrafts or debt.

• They’re not all the same. Some prepaid cards are bare-bones, while others (like Greenlight) include parental controls, chore management, and financial education tools.

• They provide a way to learn about managing money. For kids and teens, prepaid cards offer a low-risk way to learn smart habits through hands-on experience.

Why prepaid cards are great for families

Kids need practice with money, but most parents don’t want to hand over complete control. A prepaid card gives them a way to try things out, while you still keep an eye on what’s happening. Here’s why it works for a lot of families:

• There’s a spending limit. Kids can only spend what’s on the card. There are no overdrafts and no surprise bills. Just a set balance they can track on their own.

• They learn by doing. Kids aren’t going to get it right every time. And honestly, that’s the whole point of letting them try. It’s not fun in the moment, but it tends to leave an impression.

• You’re still part of the process. You can stay involved (by noticing patterns and having quick check-ins) without constantly looking over their shoulder.

It’s not about perfection. It’s about helping kids figure things out while you’re close enough to step in when they need it.

What sets Greenlight’s debit card for kids apart

Plenty of prepaid cards exist, but most aren’t built with families in mind. Greenlight is. You get a real debit card for kids they can use in stores or online, but the real magic is what comes with it: 

• Saving goals kids can set themselves

• Automated chores and allowance

• Beginner-friendly platform to safely explore investing when they’re ready

You still call the shots. You’ll get notifications for every swipe, flexible spending limits, and the ability to send money instantly when you need to.

Some families keep it simple, just loading gas or grocery money. Others go deeper, using Greenlight to teach big-picture skills like budgeting, goal-setting, and giving back. However you use it, it’s a hands-on way to build real money habits while your kids still have you in their corner.

If you're looking for a prepaid debit card that grows with your family, Greenlight is a great place to start.

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