Closed Loop Prepaid Card

A “closed loop” prepaid card is a type of prepaid debit card that can only be used at certain merchant locations. Closed loop debit cards are also referred to as “store cards”, and are different than “open loop” prepaid cards which can be used at many different merchant locations.

An example of a “closed loop” prepaid card is the GAP gift card. The GAP gift card can only be used at GAP stores (including stores affiliated with GAP, such as Old Navy and Banana Republic).

Closed loop prepaid cards often have lower fees than open loop cards. For example, most closed loop cards do not charge a monthly maintenance fee.

However, closed loop cards have some limitations (which may or may not be a concern to you, depending on how you intend to use the card). For example, closed loop debit cards typically can not be used to withdraw cash at ATMs. Also, as discussed above, they are limited to use in the stores associated with the company that issued them.

On, the cards in the “prepaid debit card” category are generally open loop prepaid cards, while the “gift cards” are closed loop prepaid cards.

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