How to Budget Using Gift Cards and Prepaid Cards

Quick Answer

Budgeting with gift cards or prepaid cards can help you avoid accidental overspending, prepay for expenses and take advantage of store-specific perks, such as discounts and points. To budget with gift cards and prepaid cards, start by creating a budget, choosing when you’ll use cards and selecting which cards you’ll use.

Woman paying with prepaid card in restaurant

You're not alone if you find it difficult to budget while using a credit or debit card, since plastic can make it easy to overspend. Some shoppers find using cash rather than cards is a helpful way to keep spending in check, but it's not always possible or convenient to use bills.

While it's not a common strategy, using gift cards or prepaid cards can be a powerful tool to help you stick to your budget. Here's how these cards can help you budget and when they may or may not be the best choice.

Why Use Gift Cards to Help You Budget?

While using credit or debit cards is usually the most convenient way to shop in-person or online these days, the swipes, taps and "buy now" buttons make it all too easy to spend beyond your means. Studies have shown that paying with credit cards makes it feel less like you're spending real money, leading to inadvertent overspending.

One solution could be to shop only with cash: When it's gone, it's gone, which means no overdrafting or going into debt. But you can't use cash online, and some retailers no longer accept it. Plus, it requires regular stops at the bank or ATMs, and if you lose it, it's gone.

There's another option you may not have thought of for keeping your budget in check: using gift cards or prepaid cards. Gift cards can be for specific retailers or issued by companies like Visa that can be used like a debit card. When the money runs out on gift cards, the card goes in the trash. Prepaid cards, on the other hand, require you to load money onto them. They can be reloaded, but they don't require being linked to a bank account like a debit card.

Here are a few reasons why this method can be helpful:

  • It allows you to use a cash-based budgeting method without carrying cash.
  • You can't spend more than what's on the card, preventing overdraft fees or spending beyond your means and creating debt.
  • It helps you stick to your budget in certain categories, such as eating out or gas, if you get gift cards in those categories.

How to Budget Using Gift Cards or Prepaid Cards

If you've never budgeted with gift cards or prepaid cards before, here's how to get started:

  1. Create a budget. If you haven't already created a basic budget, do that first. It establishes how much money goes in and out each month, then gives you the opportunity to map out how that money should be spent. You can set limits by category and designate money for savings goals. There are multiple budgeting styles depending on your personality and habits.
  2. Choose when you want to use cards. Determine whether you want to use gift cards and prepaid cards for all of your spending, or just some (for example, only using them for discretionary spending like restaurant and entertainment purchases to limit how much you spend on those each month).
  3. Decide what type of cards to use. Figure out whether you want to use prepaid cards that can be used anywhere, or gift cards at specific merchants you buy from often. The latter typically makes the most sense if there's a store you frequent regularly, like the grocery store you always shop at or a gas station chain you use. If your shopping locations are variable, prepaid cards or cash-like gift cards such as Visa cards could be more convenient—just know they might bring more temptation to spend beyond your budget.
  4. Calculate your card limits. Now that you know how you want to use these cards, you need to know how much to buy or load. Calculate your spending limits for each category based on your budget and use that to plan how much should go on each card.
  5. Plan when and where to buy the gift cards. If you get paid once a month, you may prefer to buy all gift cards or reload prepaid cards once you get paid and plan to have them last the month. If you get paid biweekly or in another rhythm, you may need to spread out when you purchase and use the cards. For those new to this budgeting style, it helps to find your favorite spots for buying these cards so it's a no-brainer when it's go time. Many grocery stores, drug stores and big box retailers have large gift card sections where you can buy a variety of them at once.

Pros and Cons of Using Gift Cards to Budget

Before you pursue a strategy of budgeting with gift cards or prepaid cards, consider these pros and cons first.


  • Help limit spending: Prepaid cards can help you limit spending since you're not borrowing money—you're spending your money that you've loaded onto cards. Also, having cards for specific retailers can help regulate your spending.
  • Prepay for predicted expenses: For example, if you get a bonus or windfall, you could purchase gift cards at places you frequent for necessities. This reduces the temptation to spend the money elsewhere, and you can set aside the cards for months when your budget is tighter.
  • Easily customizable: You can choose whether to budget some or all of your money this way, and whether you want to use prepaid cash cards that can be spent anywhere or gift cards for specific retailers. You can adapt your strategy as you give it a try and see what does and doesn't work well for you.
  • Extra perks: Some vendors, such as Starbucks, have digital gift cards that are reloadable and come with rewards that can save you money.
  • Money may go farther: Certain retailers, such as Costco, sell gift cards at a discount, so you can make your dollars go further.


  • Limited uses: With retail gift cards, any leftover money can't be spent elsewhere.
  • Small balances may limit options: Once prepaid card balances get down to a few dollars, you may not be able to spend the amount left unless a merchant takes cards for very small transaction amounts or you reload it.
  • Lose out on perks: Using a prepaid card means you're missing out on cash back or points on rewards credit cards.
  • Don't help build credit: Prepaid cards are not debt accounts, so they won't appear on your credit reports and can't help you build credit, like credit cards can.
  • May have fees: Some prepaid cards and gift cards have fees for activation, reloading, inactivity and the like, which can make them more expensive than other payment methods.
  • Potential expiration: If you forget to use the card, it might expire (though gift cards can't legally expire for five years after they're activated).
  • Mindset shift: If you're used to gift cards being presents meant for splurging, it could be hard to make the mental shift that these are for budgeting for regular purchases.

Don't Neglect Your Credit

If you start budgeting with gift cards or prepaid cards, or even with cash, it's key to understand that while you're reducing chances of getting into debt unnecessarily, you're also missing out on opportunities to build credit. Regularly using and paying off a credit card, even for a small purchase each month, can help you establish and build credit.

Additionally, you can use Experian Boost®ø, a free way to quickly improve your credit score by getting credit for on-time telecom, utility, rent and streaming service payments that don't normally count toward your score's calculation.