True or False: A prepaid card has the same overdraft protection as a debit card.

Prepaid Card vs Debit Card

False

When it comes to overdraft protection, prepaid cards and debit cards differ significantly. While both prepaid and debit cards allow you to make purchases without using cash, they do not offer the same level of overdraft protection.

Prepaid Card: A prepaid card is not linked to a checking account. This means that you can only spend the amount of money that has been loaded onto the card. When the balance runs out, you will not be able to make any more purchases until you reload the card with more funds. Since there is no overdraft protection, you cannot spend more money than what is available on the card.

Debit Card: A debit card is linked to a checking account. While debit cards do not offer the same level of protection as credit cards, they do have overdraft protection. If you try to make a purchase that exceeds the available funds in your checking account, the transaction may be declined or your account may be charged an overdraft fee. Some banks may offer overdraft protection services that allow you to link a savings account or line of credit to your checking account to cover overdrafts.

In conclusion, prepaid cards do not provide overdraft protection, whereas debit cards may offer some form of overdraft protection depending on your bank's policies. It is important to read the terms and conditions of your card to understand the level of protection it offers.