Have you ever received one of those preloaded gift cards with a credit card logo on it? What do you do with them? I’m willing to bet that many of you have one lost in your wallet or forgotten in a drawer somewhere, with no idea how much money the card has left to spend.

Prepaid cards are VISA, Mastercard, or American Express cards that come with a preloaded balance. They function as debit cards that you can use anywhere. You can buy them yourself on the gift card rack at many stores, and they are also a common tool for companies to pay out rewards and incentives.

In this post, I’m going to show you my hassle-free “two-minute strategy” for getting the money off of these cards by loading it onto your Amazon account. I’ll also share some other ideas and some Dos and Don’ts on how to use them without running into problems.

How do you get prepaid cards?

Many businesses offer prepaid cards as incentives to sign up for services, buy products, and refer other customers.

Here are two recent personal examples. I earned three of these cards by signing up for Internet service with AT&T. I also just received one from my web hosting company, HostGator, thanks to their referral program (using my wife’s existing website to refer my new business).

In addition to business incentives, other ways you might come across prepaid cards include winning one as a prize or receiving one as a gift. You can even get one for test driving a car!

Why Are These Cards a Hassle?

Prepaid cards aren’t part of our normal shopping routine, so just remembering to use them is the first challenge. It’s also not easy to keep track of how much money remains on one of these cards, which is stressful when you’re hurrying through a checkout line. These cards often have fees for everything (including the simple passage of time), customer service can be annoying to deal with, and there are a few other nuisances I talk about below.

For all of these reasons, when you get a card, I encourage you to immediately make a plan to use it up and get it off your plate.

The Two-Minute Amazon Strategy

My strategy is to immediately dump the full value of a prepaid card into my Amazon gift card balance. If you’re an Amazon shopper, this strategy lets you activate, spend, and forget about prepaid cards in as little as two minutes. Here’s how it works.

First, what is an Amazon gift card balance? It’s just a balance of stored money on your Amazon account. When you get an Amazon gift card, you can redeem the code to add its value to your balance, but you can also add to your balance by charging a credit or debit card — including a prepaid card!

This balance gets automatically drawn down as you shop on Amazon. Any money there will be used before they charge your usual payment method.

So, for example, let’s say I receive a prepaid card for $40. I activate the card, then hop over to Amazon and charge $40 to it, loading the funds into my gift card balance. I’m now done forever with the prepaid card.

Weeks later, I find a great deal on Amazon, spending $15.37. Amazon draws down my balance without any thought from me. In a later purchase, I buy something for $50. Amazon uses up the remaining $34.63 from my gift card balance and charges my default credit card for the rest. All automatic.

Best Practices for Prepaid Cards

Do: Use it all at once, if you can

If you spend a prepaid card in a single transaction, you’ll never have to think about how much balance remains on the card, and you’ll never have to remember to carry it with you.

Aside from the Amazon strategy above, I recommend the grocery store and dining out as two great opportunities to spend a prepaid card cleanly and completely. These are also situations where the staff is accustomed to splitting payment across multiple cards, which is helpful.

If you’re lucky enough to have a card with a high value, using it all at once might not be possible. In this case, make life easier by sticking a Post-it note to the card to track the remaining balance. I’d still advise that you spend the card down in just two or three large chunks rather than a lot of little transactions.

Do: Use it quickly

There are two reasons for this. First, many of these gift cards charge monthly “account maintenance” fees (rolls eyes). Second, the longer you have it, the more likely you are to lose or forget about it.

Don’t: Use it for purchases you might need to return

When you return a purchase, the merchant will often want to credit back to whatever card you used for payment, which will be inconvenient if not impossible when a prepaid card is involved. Focus on purchases you won’t  return, such as groceries.

Note: If you follow the Amazon strategy, don’t worry. Amazon will refund your gift card balance in the event of a return.

Don’t: Use it for purchases where you have to present the card later

The classic example is reservations and travel: you make a booking now and will be asked to show the card at check-in. There are two problems with this. First, you might not have the card when you need it later. Second, if a merchant is asking to see the card, they’re security-conscious, and a prepaid card doesn’t inspire confidence in these situations.

Don’t: Use it for recurring purchases or subscriptions

This one should be pretty self-explanatory. Unless you like dealing with customer service headaches, stick to one-off purchases.

Don’t: Use it when you need the benefits of your primary card

Many credit cards have perks like extended warranty, travel insurance, or zero foreign transaction fees. Your card may also earn extra points on certain types of purchases. Try to use a prepaid card on transactions where you don’t need these benefits.

Don’t: Treat it as free money

Money is money. You may have earned a prepaid card as a “reward”, but that can be deceptive. For example, as I mentioned above, I collected three of these cards from AT&T by signing up for Internet service with them, but if it hadn’t been for those “rewards”, another company would have been cheaper. Treat a prepaid card the same way you would any other income, and stick to your budget!

Bonus tip: Chase rewards down

When a company promises you a prepaid card as an incentive for signing up, referring someone, or completing some activity, make sure you get what they promised. In my experience, it often requires a little follow-up to chase cards down in these situations. Take screenshots and notes about the offer when you sign up, then get in touch with customer service if the card hasn’t shown up in a reasonable amount of time. I’ve had more than one customer service representative not know anything about a reward card only to miraculously “find” it when I mention I have the documentation.

Nice and Easy

I hope these tips help you use the prepaid cards you come across more effectively and efficiently.

Do you have any other strategies for using prepaid cards? I’d love to hear about them in the comments!