A stored value card holds money you load onto it, like a prepaid gift card for your own cash

A stored value card is a card that holds money you put on it yourself. You load cash onto the card at a store, online, or through a bank, and then you can spend that money by swiping or tapping the card at checkout. The money sits on the card until you use it — nothing is borrowed, and no credit is involved. It is different from a debit card (which pulls from a bank account you own) and different from a credit card (which borrows money you pay back later).

Stored value cards are sometimes called prepaid cards or reloadable prepaid cards. They work the same way a gift card does, except you control how much money goes on them and you can add more money whenever you want. Some people use them as a first step toward banking, some use them to budget by loading only the amount they plan to spend, and some use them because they do not have a traditional bank account.

Key Takeaways

  • You load your own money onto a stored value card before you can spend it, so you cannot spend more than you have deposited.
  • Most stored value cards charge fees for loading money, checking your balance, or making withdrawals, so compare cards before choosing one.
  • Stored value cards do not build credit history the way a credit card or bank account does, because no borrowing is involved.
  • You can reload money onto most stored value cards multiple times, making them different from single-use gift cards.
  • Some banks and credit unions offer stored value cards as a stepping stone to a full checking account once you have used one successfully.

How you load money and spend it

Loading money onto a stored value card usually happens at a retail location, through a bank teller, or online through the card issuer's website or app. At a store, you hand cash to a cashier and tell them how much to load onto your card number — this is similar to buying a gift card. Online, you link a bank account or debit card and transfer money to your stored value card. Some cards also let you have your paycheck deposited directly onto the card, which is called direct deposit.

Once the money is on the card, you spend it like any other card: swipe it at a store, tap it at a contactless reader, or use the card number online. The transaction goes through when ready if you have enough money loaded. If you try to spend more than you have on the card, the transaction will be declined — you cannot go into debt or overdraft with a stored value card.

Fees you should know about

Stored value cards often charge fees that a regular bank account might not. Common fees include a monthly maintenance fee (usually $2 to $10), a fee to load money onto the card (sometimes $1 to $5 per load), a fee to check your balance by phone, and a fee to withdraw cash at an ATM. Some cards charge a fee if you do not use the card for a certain period, or a fee to close the account.

The fees vary widely depending on which card you choose. Some cards marketed to people new to banking have lower fees or no monthly fee. Others charge more but offer features like ATM access or the ability to reload at many locations. Before you get a stored value card, look at the fee schedule — it is usually available on the card issuer's website — and add up what you would actually pay based on how you plan to use it. A card with no monthly fee but a $2 loading fee might cost less than a card with a $5 monthly fee if you only load money once a month.

Stored value cards versus bank accounts

A stored value card and a checking account both hold your money and let you spend it, but they work differently. A checking account is held at a bank or credit union and is insured by the federal government up to $250,000 through the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration). A stored value card is usually issued by a company that is not a bank, and the money on it may or may not have the same insurance protection — this depends on the specific card.

A checking account also builds your banking history. Banks look at how you manage a checking account when you later ask for a loan or credit card. A stored value card does not build this history because no credit is involved — you are only spending your own money. Some banks offer stored value cards as a first account for people who are new to banking, with the idea that you can move to a checking account once you have shown you can manage money responsibly.

Who uses stored value cards and why

People use stored value cards for different reasons. Someone without a bank account might use one to avoid carrying large amounts of cash or to have a way to pay online. Someone who is rebuilding their credit or has had banking problems in the past might use one because there is no credit check and no risk of overdraft fees. Parents sometimes load money onto stored value cards for teenagers as a way to teach budgeting — once the money is spent, it is gone.

Stored value cards are also useful for people who receive money in ways that do not fit a traditional bank account. Someone who is paid in cash for gig work or informal jobs can load that cash onto a card instead of keeping it at home. Immigrants who are new to the country and do not yet have the documents needed for a bank account sometimes use stored value cards as a temporary solution while they work toward opening a full account.

How to choose a stored value card

Start by listing how you plan to use the card: Will you load money once a month or multiple times? Will you withdraw cash from ATMs? Will you use it mostly online or in stores? Then look at cards offered by banks, credit unions, or prepaid card companies and compare their fee schedules against your expected use.

Some cards to research include those offered by major banks (which may have lower fees if you already bank there), cards from credit unions (which sometimes have lower fees for members), and cards specifically designed for people new to banking (which often have reduced or no monthly fees). Read the terms and conditions to understand what happens if you lose the card, how you report fraud, and whether the money is insured if the card company fails. A card that seems cheap at first might cost more once you add up all the fees for how you actually use it.

What happens if you lose your card or spot fraud

If you lose a stored value card, contact the card issuer right away — most have a customer service number on their website or on statements. The card issuer can freeze the card so no one else can use it. Depending on the card and how quickly you report it, you may be able to recover the money that was on it, though this varies by issuer and by how the card is insured.

If you see a transaction on your card that you did not make, report it to the card issuer as soon as you notice it. Federal law protects you against unauthorized use of debit and prepaid cards, but you have to report it within a certain time frame — usually 60 days — to get the full protection. The sooner you report it, the better your chances of recovering the money.

Frequently Asked Questions

Can I use a stored value card to build credit?

No. Stored value cards do not report to credit bureaus because you are spending your own money, not borrowing. To build credit, you would need a credit card or a credit-builder loan. Some banks offer both a stored value card and a path to a credit card once you have used the card responsibly.

What if I load money onto a card and never use it?

The money stays on the card until you spend it, but some cards charge an inactivity fee if you do not use the card for a set period — often 12 months. Check the card's terms to see if this applies. If a fee is charged, it comes out of the balance on the card.

Is the money on a stored value card protected if the company goes out of business?

It depends on the card. Some stored value cards are issued by banks and the money is FDIC-insured up to $250,000. Others are issued by non-bank companies and may not have the same protection. Check the card issuer's website or terms to see what protection applies to your specific card.

Can I get my money back if I change my mind about the card?

Most stored value cards let you withdraw your money by visiting a store location, calling customer service, or using an ATM — though ATM withdrawals often have a fee. Some cards may charge a fee to close the account. Check the card's terms before you load money to understand your options for getting it back.

Do I need a bank account to get a stored value card?

No. That is one reason people use stored value cards — you do not need an existing bank account, credit history, or even a Social Security number on some cards. You typically just need to be at least 13 years old (or have a parent or guardian sign up for you if you are younger) and have a valid ID to load money in person.