What distinguishes a debit card from a prepaid debit card?

What distinguishes a debit card from a prepaid debit card?

• A. A debit card borrows money; a prepaid card does not
• B. A debit card withdraws funds from your account; a prepaid card is preloaded with funds
• C. A debit card requires bank approval; a prepaid card does not
• D. A debit card earns interest; a prepaid card does not

Answer: (B)

A debit card is linked directly to a checking account, allowing users to withdraw or spend funds that are already available in that account. When a transaction occurs using a debit card, the amount is immediately deducted from the available balance in the linked account. On the other hand, a prepaid debit card is not linked to a checking account. Instead, it is loaded with a set amount of money in advance. Once the funds on a prepaid card are used up, no additional transactions can be made unless more money is added to the card. This fundamental difference in how funds are accessed and managed is what clearly distinguishes a debit card from a prepaid debit card. This distinction underscores the nature of each type of card regarding where the funds come from and how they are spent.

A debit card is linked directly to a checking account, allowing users to withdraw or spend funds that are already available in that account. When a transaction occurs using a debit card, the amount is immediately deducted from the available balance in the linked account.

On the other hand, a prepaid debit card is not linked to a checking account. Instead, it is loaded with a set amount of money in advance. Once the funds on a prepaid card are used up, no additional transactions can be made unless more money is added to the card. This fundamental difference in how funds are accessed and managed is what clearly distinguishes a debit card from a prepaid debit card. This distinction underscores the nature of each type of card regarding where the funds come from and how they are spent.