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Cash Cards Explained: What They Are and What They're Used For

Cash Cards Explained: What They Are and What They're Used for
Jason Steele
Jason SteeleUpdated May 24, 2024
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
While some say that “cash is king,” there’s no doubt that holding and using physical currency has numerous disadvantages. One solution to these problems is a cash card, which holds many of the advantages of carrying cash with fewer of its drawbacks.You can use a cash card, such as a bank debit card or a gift card, to make electronic payments or withdraw cash from an ATM. Read on to learn more about what a cash card is and how a cash card works.

What Is a Cash Card?

While you may not be familiar with the term “cash card,” you’ve almost certainly come across many types of them. A cash card is a payment card that has a stored value, rather than drawing on a line of credit. Cash cards include bank debit cards, prepaid debit cards, gift cards, and payroll cards.Credit cards and charge cards aren’t considered cash cards because they incur debt rather than drawing on funds that are already deposited.

How Cash Cards Work

To get a cash card, you don’t need to apply for credit or have your credit history checked. Instead, you simply deposit funds in advance. For example, a bank debit card will draw on your checking or savings account, while a prepaid debit card or gift card is purchased in advance with cash, credit, or another form of payment. With a payroll card, another form of cash card, an employer will deposit money into the account.Cash cards belong to payment networks, such as Visa, Mastercard, Discover, or American Express. They can be used at any merchant that participates in the same payment network. When you use a cash card to make a purchase, the value of the purchase is deducted from the remaining balance. If you attempt to make a purchase for more than the remaining balance, it will be declined. Some cash cards are reloadable, which means you can add additional value to them as needed. Other cash cards, like gift cards, are non-reloadable and are typically disposed of once there’s no value left. 

What Cash Cards Are Used For

There are several types of cash cards, and each can have different uses. For example, you can use bank debit cards and prepaid debit cards to make purchases at retailers, online, or over the phone. Some people may also consider these as an alternative to credit cards, such as if they have a thin credit history and aren’t interested in a credit-building card.While gift cards are typically used as gifts, they can also be used to quickly offer a payment card for friends, family members, or employees to use. And payroll cards are commonly used to compensate employees who may not be able to easily deposit or cash a check or receive direct deposits.

The Difference Between a Debit Card and Cash Card

A debit card is a type of cash cash card. But since there are many types of cash cards, it’s helpful to understand the difference between debit cards and other kinds of cash cards.
Debit cardsCash cards
Includes gift cardsYes, some gift cards are debit cardsYes
Includes payroll cardsYes, a payroll card is a kind of debit cardYes
ReloadableUsuallySometimes (gift cards are typically non-reloadable)
Attached to a bank accountBank-issued debit cards are attached to a bank accountGift cards and payroll cards aren’t attached to a bank account

Types of Cash Cards

There are several types of cash cards, including bank debit cards, reloadable debit cards, gift cards, and payroll cards. Bank debit cards are attached to a checking or savings account, while reloadable debit cards have a stored value held by the card issuer. Gift cards are non-reloadable debit cards that are purchased, and payroll cards are debit cards that employers can load and reload. 

Payroll Cards

Payroll cards are prepaid cards where the stored value is added by an employer. These cash cards are sometimes used as an alternative to payments made by check or direct deposit. Someone could also use a payroll card to access cash from an ATM if they needed physical cash. Some payroll cards also offer electronic bill payment features.

Square Cash Card

Square is a company that offers cash card and prepaid cash services. The Square debit card is called Cash Card, and it’s accessible through Square’s mobile payments app to make several types of electronic purchases.

Cash Card Example

A good example of how cash cards are used involves those who avoid credit cards, but prefer not to carry cash. For example, consider a recent college graduate who is living on their own for the first time. They might use their bank debit card to make purchases. And because it’s not a credit card and there’s no loan involved, they know they won’t incur debt. Another example could be a recent immigrant who hasn’t opened a bank account yet. They could use a reloadable debit card to store cash and make payments. They could also use some cash cards to pay bills electronically. As another example, a payroll card may be how a teenager is paid for their summer job at an amusement park. With a payroll card, the teen will have instant access to their paycheck to make purchases without needing a bank account or having to cash checks. 

Alternatives to Cash Cards 

Cash cards are just one form of payment, and there are many other alternatives. Here are some options you may consider instead of a cash card.

Personal Loan

A personal loan is an unsecured loan that consumers can apply for based on their personal credit history and credit score. Like there are credit cards for good credit and bad credit, there are personal loan options for different credit score ranges.Some personal loans can include payment cards, but they aren’t cash cards. Most personal loans are installment loans that require the payment of a fixed amount, over a set period of time, including interest charges. Personal loans can also have fees. Recommended: Types of Personal Loans: Pros and Cons of Each


Cash is a very simple form of payment that is almost universally accepted for in-person transactions. And while some retailers and other service providers prefer cash, there are an increasing number that don’t accept it.  

Credit Card

Credit cards are payment cards but they aren’t cash cards. Every charge you make with a credit card is a loan based on a revolving line of credit. Another difference between a cash card and a credit card is that you must apply for a credit card using your personal credit history and credit score. Additionally, if you choose not to pay your statement balance in full, you will incur interest charges.You can get cash from a credit card at an ATM, but you’ll usually incur expensive fees and a higher cash advance interest rate to do so. And with credit cards, your balance and payment information is reported to the major consumer credit bureaus.Depending on how responsibly you manage your credit card accounts, this could help or hurt your credit score. Your credit score will influence your future borrowing opportunities, such as if you can qualify for a top travel rewards card or only get a card for fair credit with a higher rate and more limited rewards.Recommended: How to Find the Right Credit Card

The Takeaway

Cash cards are a popular and valuable method of payment, but they are not ideal for every purpose. By understanding what a cash card is and how a cash card works, you can decide if a cash card is right for your needs.  If you decide that a credit card makes more sense, Lantern offers a variety of cards within its marketplace. This makes it easy to compare credit cards and determine which one may be a good fit for you.

Frequently Asked Questions

What is a cash card used for?
What is the difference between debit cards and cash cards?
Is a cash card a bank account?
Photo credit: iStock/Sneksy

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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