Ace Your Finances! EverFi Financial Literacy Challenge 2026 – Elevate Your Money Savvy!

A prepaid card is primarily characterized by the funds stored on the card itself. This means that the cardholder loads money onto the card before they can use it for purchases. The amount available for spending is limited to the balance that has been preloaded onto the card. This feature distinguishes prepaid cards from credit cards, which allow the user to borrow up to a certain limit and pay it back later, and debit cards, which are linked to a bank account and draw funds directly from there.

The nature of prepaid cards allows users to manage their spending within their means, as they can only use the amount that has been loaded onto the card. This can be particularly useful for budgeting purposes and for those who may not have access to traditional bank accounts or credit cards.

In contrast, the other options do not accurately represent the traits of prepaid cards. A balance stored in a bank account and direct linkage to a checking account are features associated with debit cards, while a high credit limit is relevant to credit cards, which are fundamentally different from prepaid cards.