Gift Cards vs Prepaid Cards: Which One Makes a Better Gifting Option?

The new era of gifting is no longer about assuming what the recipient would love to have as a gift. On the contrary, it has everything to do about it. This paradoxical maze comes with the newfound freedom of choice which is a prominent gift option. Be it a $50 gift card from your favorite retail store or something as specific as a subscription to an OTT platform, gifting is back to its heritage values, where it’s the thought that counts. Now gift cards vs prepaid cards? That’s simply a part of the debate.

Prepaid Cards & Gift Cards: The battle of versatile gifting options

When it comes to a dynamic gift that can be used anywhere and is as liquid as cash, these two options are the ones that come into our minds. Gift cards and prepaid cards have everything that it takes to be personalized gifting instruments with a thought, a nice message, and the purchasing power to top it off.

Would a prepaid card feel too salesy when gifted to a friend because it has a fee attached to it? What if the gift card is worth too less—even as a gift? Which would be a better option? While gift cards are more inclined towards a use-till-it-dries-out approach, prepaid cards are nifty debit cards, in which balances can be refilled and the card can be used for a long time. While some think it’s about perspective, it’s more about the functionality.

Before moving on to which one’s a better gift, let’s understand their utilities for a clear description.

What is a gift card?

A plastic/virtual card fuelled up with certain amounts of currency to be spent on a single store or a chain of stores, a gift card lives up to its name. To put it into perspective, it’s your aunt’s go-to gift for Christmas—statistically. 76% of adults purchased at least one gift card for the holiday season. These gift cards are mostly closed-loop, and they can only be cash in at a store or a chain of stores.

Advantages of gift cards

Gift cards are an exemplary substitute mode of payment in case you don’t want to pay upfront in cash or with a credit card. Besides the fact that they make a handsome gift for holidays and any other special occasions, gift cards can curb the problem of overspending and avoid bank overdrafts. They are easy to use and are now a conventionally acceptable mode of gifting. The advantages of gift cards sound rather amazing.

Disadvantages of gift cards

In most scenarios, it’s not possible to make a purchase exactly worth the gift card’s value. There would either be an overdraft wherein the person would have to pay via cash or card, or the remainder money ends up as waste.

While many gift cards give the option of reloading it with more purchasing power, it’s not the case with closed-loop gift cards. As it is a physical piece of plastic or a code sent over email, there’s always a possibility of it being lost or stolen. That’s why major Disadvantages of Gift Cards tend to address their insecurities.

What is a prepaid card?

Technically known as debit cards, prepaid cards are an amazing escapade from the web of credit card debt. Perspective time: This is an amazing gift for a young adult/teenager to give them the purchasing power with responsibility.

A nifty instrument to curb the epidemic of overspending, prepaid cards are loaded with money and the card user can only spend as much as the balance in the prepaid card. Some cards do come with an overdraft balance, and these prepaid cards come with an annual or monthly fee attached to them.

Advantages of prepaid cards

There’s no need for a bank account to own a prepaid card. These cards are free from credit checks or inquiries by credit unions and they aren’t a part of the user’s banking history—except the transactions where they bought the card/reloaded it. For users who don’t have access to credit cards or bank accounts, prepaid cards are a great way to learn finance management.

Disadvantages of prepaid cards

There’s a fee involved in prepaid cards and that is not just a nominal fee. Many prepaid cards, when gifted, don’t have an applicable fee, but if the user wants to use it after exhausting the balance, the prepaid card fee will be charged for services like initial setup, monthly maintenance, reloading the prepaid card, using an ATM, and more. Of course, the disadvantages of prepaid cards exemplify its financial fallacies.

Weighing up the utilities

In the below section, we will explore the practical utility and widespread applications of both gift cards and prepaid cards—exploring how they are used, their roles in different contexts, and why they are gaining popularity.

Gift cards

• Typically seen as a gifting tool or a token of appreciation for occasions or achievements.
• Used as incentives or rewards in both personal and professional settings.
• Their utility is expanding because many people now buy gift cards for themselves to simplify spending or budget better.
• The gift card market is booming, with growing demand and adoption worldwide.

Prepaid cards

• Already well established, and they help people manage spending and avoid debt.
• Serve as an alternative to bank accounts, particularly important for the unbanked population (highlighting that about 6% of US households are unbanked).
• Seen as financial learning tools for younger users, helping them manage money responsibly.
• Offer security and convenience as a substitute for cash, reducing risks linked to carrying physical money.
• It is increasingly recognized as a practical gift option because of their flexibility and financial benefits.

Gift cards vs prepaid cards: What’s the difference?

Now that we are well aware of the difference between gift card and prepaid card, let’s compare the traits of gift cards and prepaid cards on the factors that matter the most to a holder. While both of them are locked abroad with a set value of money, here are some distinctions in their utility.

Who’s the clear winner? Freedom of choice!

No matter what you choose as a gift for an occasion, one thing’s for sure—with both gift cards and prepaid cards, you are presenting your giftee with the freedom of choice. And when it comes to that, both methods of gifting are clear winners. However, there’s a third one too—which unlocks both gift cards and prepaid cards as a gift to your special ones—and they can choose what they want.

Xoxoday Plum is a huge marketplace with tons of gift vouchers, prepaid cards, perks, and experiences, all of which can be presented as a gift to your beloved. Gift your employees, colleagues, peers, or friends Xoxo Points which they can cash in at the Xoxoday Plum Store. This is a great avenue to ensure that your recipient can choose what suits them best from the choice of gift cards vs prepaid cards.

Explore the best gift card and prepaid card solutions

Gift cards and prepaid cards have carved a solid place in modern corporate gifting strategies. While both options bring their unique strengths to the table, real success lies in choosing a partner who can offer flexibility, variety, and ease of use.

No matter which path you choose, Xoxoday Plum has you covered.
Whether you prefer offering specific brand experiences through gift cards or complete spending freedom with prepaid cards, Xoxoday Plum delivers the best of both worlds with one powerful platform.

Why choose Xoxoday Plum for gift cards?

Gift cards are perfect when you want to offer thoughtful, brand-specific experiences to your recipients. Xoxoday Plum offers:

• Extensive global catalog: Access 20,000+ gift cards from top brands across retail, food, travel, experiences, wellness, and more.
• Personalization at scale: Customize gift cards with your brand logo, messaging, and personalized notes to make your rewards feel truly special.
• Instant, multi-channel delivery: Distribute gift cards instantly via email, SMS, WhatsApp, or even in-app experiences, ensuring seamless reach worldwide.
• Localized gifting: Gift cards are available in multiple currencies and tailored to regional preferences, making global gifting easy.
• Campaign integration: Embed gift cards into loyalty programs, sales promotions, employee rewards, customer referral campaigns, and more.

Why choose Xoxoday Plum for prepaid cards?

When flexibility and universal acceptance matter most, prepaid cards are the ideal choice. Xoxoday Plum empowers you with:

• Virtual Visa® and Mastercard® prepaid cards: Offer recipients cash-like flexibilityv usable at millions of merchants worldwide, both online and offline.
• Freedom of choice: Let your recipients decide how and where they want to spend their rewards—giving them full purchasing freedom.
• Secure and quick setup: No need for recipients to link to bank accounts. Cards are securely delivered and easy to activate.
• Reloadable and non-reloadable options: Choose between one-time reward cards or reloadable prepaid cards based on your program needs.
• Custom branding: Prepaid cards can also be customized with your company’s branding for a more polished and memorable experience.
• Trackable and compliant: Monitor spending, manage budgets, and ensure compliance with financial regulations globally.