At first glance, prepaid cards have a number of advantages over credit cards. Since you add money to the card when you purchase it or open the account, you cannot spend money you do not have, and so do not run the risk of ending up in debt due to a mistake, unexpected circumstances, or lack of self-control. The interest rates on credit cards are typically extremely high, so the debt can be very difficult to pay off.
This also means that you can get a prepaid card even if you're ineligible for credit, due to youth or a poor credit score. This enables you to shop online, and more conveniently in person, than if you could not get a card at all.
However, looking closer, prepaid cards have disadvantages.
Credit cards generally charge small usage fees, as the card provider makes their money from interest payments. Used carefully, paying off the balance every month, a credit card can be used for a very low cost. Indeed, many credit cards offer deals like product warranties, loss/damage cover, other forms of insurance such as travel insurance, or reward points.
Prepaid cards providers, on the other hand, do not have this revenue stream, and so must make their money from fees. Examples of fees that may be charged include getting the card in the first place, checking the balance, using ATMs, replacing the card, and even purchase fees or monthly fees. You must carefully check the terms and conditions and work out the true cost of using the card.
Credit cards also usually have strong buyer and fraud protection.
This depends on local laws, but the card provider, rather than the customer, may be liable for losses from stolen or fraudulently used cards, and may even share liability for purchases of defective products - this is the case in the UK.
This is not the case for prepaid cards, however.
If you lose a card, you will likely be responsible for any money spent before you report it missing, though of course money that isn't on the card can't be spent. There may be a fee to return money from the card to your account or have a new card issued, or it may not even be possible! Depending on the card, it may be easier for someone else to use than a credit card, as they may not require PINs or other authentication to use.
Both types of card have advantages and disadvantages, and the costs, risks and benefits must be carefully considered. For most typical uses, a credit card is likely better if paid off in full every month.
Why not pick up a Pockit credit card today and save!