Though gift cards and credit cards look similar and spend similarly, there are some distinct differences that you should be aware of when purchasing or using either. The first is that with a credit card, prepaid or otherwise, you are able to spend the money or balance of the card on whatever you want. This means that they can be used on-line, in store, and at just about any location that accepts the card that is being offered. This versatility is what makes credit cards appealing to many people. They can be used like cash rather than being focused on one location. With a gift card you are limited to spending the balance in one place that is specified by the type of gift card that you chose, you may also be limited in what you can buy with the gift card depending on the policies of the establishment that issued the card.
Another difference is that with a credit card that is issued to a user through a credit card company you can use it to build up your credit and increase your spending limit. Each time you pay on time and you keep to your pay schedule you have the opportunity to increase your credit score and better your standing with major lending companies. With a gift card, though it looks like a credit card and may spend like one, you are not increasing any credit score. Another difference is that a gift card can be transferred and used by anyone. A credit card on the other hand is linked to one user and cannot be transferred to another therefor protecting the money and balance that is on the card. Each of these differences serves to make credit cards and gift cards unique in their own right.