Gift cards are considered which type of payment card?

Gift cards are classified as prepaid debit cards. They are loaded with a specific amount of money that can be spent at designated retailers or for certain services. Unlike traditional debit cards, which are linked to a bank account, gift cards are preloaded with funds at the time of purchase and do not require linking to a bank account to use.

The essence of a gift card lies in the idea that the cardholder has prepaid for goods or services, making it distinct from other payment methods that involve direct access to a bank account or credit. Since they can only be used until the balance on the card is depleted, they function similarly to prepaid debit cards, which are also not connected to checking accounts. This understanding highlights that gift cards provide a set amount of money for spending, thus categorizing them accurately in the realm of prepaid cards.