A prepaid cash card is a prepaid debit card. Some owners of prepaid debit cards arrange deposits through direct deposit of a paycheck or a government benefit such as Social Security payments. Some cards also allow deposits at cash registers in retail stores selling the cards. It is not possible to use a credit card to directly fund a debit card, but there is a workaround — albeit an expensive one.
Cash drawn from a credit card is a cash advance, which is a loan charging higher interest rates and fees than standard purchases made with a credit card. Banks issue credit cards and offer cash advances with the help of a teller inside the bank or through an ATM. Credit card cash advances using online banking are also a possibility. Banks do not offer prepaid debit cards because the cards compete with bank debit cards tied to checking or savings accounts. People seeking to place a credit card cash advance onto a prepaid debit card must first take the cash advance and then deposit the money onto the debit card in a separate transaction.
A cash advance is an expensive way of funding a prepaid debit card. The credit card holder is often better off using the credit card for general expenses rather than incurring expensive fees to place the money onto a prepaid debit card. Some people in a financial bind feel they must take cash advances, but the practice can lead to excessive debt.
The Federal Trade Commission reports that excessive credit card debt is a leading cause of bankruptcy — another reason not to load up on cash advances to spend on prepaid debit cards. People regularly borrowing from credit cards to pay debts or for living expenses should seek advice from a nonprofit credit counselor. Credit counseling agencies such as Consumer Credit Counseling Service and others can evaluate a debtor's budget for possible solutions to a cash crunch. Options include debt management plans, which allow a credit counselor to negotiate lower payments on all the debtor's unsecured debts, such as credit cards. Banks and credit unions can offer referrals for local nonprofit credit counselling.
People looking for ways to fund a prepaid debit card should consider alternatives such as earning more money through a second job, or making money through a series of garage sales. A garage sale could net a few hundred dollars or more in profit, especially if the seller convinces family members or others to contribute items to help raise cash.