If you’re still making your list for this holiday season, you might want to check it twice before giving one particular gift: the prepaid gift card. These global gift cards, emblazoned with logos from Visa or MasterCard (just to name a couple) are touted to work just like cash or a normal debit card. You can use them wherever other debit or credit cards with their logo is accepted, and they’re generally regarded to be safer than cash as they’re seemingly harder to lose and, if stolen, can be reported. The problem with giving a prepaid gift card is that it is not like cash and not like an ATM card. These cards carry more complications than either of the aforementioned methods of payment, and can cause the recipient headaches when shopping post-holiday season. Here are a few of the reasons you should not give this gift for the holidays.

Prepaid gift cards are not really like cash.

Prepaid gift cards — which are not store specific, such as Starbucks cards — are said to be able to be used at almost any store wherever the Visa or MasterCard logo is accepted. Unfortunately, this is not always the case. Most prepaid gift cards can’t be used at ATMs to get cash out, or used on cruise lines, which can be frustrating for recipients or are receiving a prepaid card as part of a gift to use for an upcoming vacation. For those headed to Vegas on vacation soon, or just happening to live near tribal land, these prepaid debit cards can’t be used at casinos. This is especially frustrating since many casinos now offer luxury spas and shopping centers, which really put you out of luck when hoping to use a prepaid card to shop or hit the spa.

Prepaid debit cards aren’t really like debit cards, either.

Prepaid debit cards luckily do work at most major retailers, but they don’t function like debit or credit cards. This means that if you need to return an item, you won’t be able to receive your refund back on your card — even though this may only be the store’s policy. (Many stores will only offer a refund via the same method from which you made your payment.) The money will technically be returned to your card, but you will not likely ever have access to it again. (It essentially goes into a Visa/MasterCard/Amex financial black hole, as I experienced when returning items purchased using a prepaid card last holiday season.) If you have no choice but to return an item purchased via a prepaid card, be sure to speak with a manager and explain the situation. Ask if you can place the refund back onto your real debit or credit card — or at least get it back in cash.

Buying gas?

One of the worst things you can do with a prepaid debit card is to purchase gas for your car. When you swipe your prepaid card at the gas station, the merchant may hold whatever your remaining balance is on your card for up to four days — regardless of how much you paid at the pump, and regardless of your remaining balance. This can be a severely detrimental surprise for the broke recipient of a prepaid card who purchases just a few gallons of gas and gets left without any cash for up to four days — even if they had most of their balance remaining. A representative at a call center for one of these prepaid cards — who advises users to look at the terms of the card before using it (even though it doesn’t mention this hold for pumping gas) — told me that if you go inside a gas station to prepay your gas for a specific amount, this hold will not occur.

Prepaid cards have a purchase fee.

Prepaid cards cost more than cash. Surprised? Amex and its cohorts need to make money for selling prepaid cards via some method. Most prepaid cards cost $5, and you won’t find many cards priced for more than $50 each. If you are considering giving the gift of cash, consider purchasing a card for a specific retailer that your recipient needs, such as Starbucks (because who doesn’t need coffee?), iTunes, or one of dozens of other brands, retailers, or restaurants. These cards usually don’t have a purchase fee, and don’t come with all the above mentioned problems. Additionally, these cards can actually be reloaded, and some even have perks for using them at these stores. At Starbucks, for instance, customers can get discounts for choosing soy milk or syrups in their mochas or lattes.

You better watch out…

The final problem with prepaid cards is the risk of theft. While prepaid card distributors offer the ability to help if your card is stolen, you must know your card number and expiration date. There is no guarantee that your funds will be recouped. The gift of a prepaid card is generous, especially for those going through hard times during the holiday season. Should this card be stolen, the funds will likely be gone for good. Many other types of gift cards offer registration in the event of theft, allowing the recipient to lock down the card immediately after realizing the card has been stolen and ask for a replacement. The impact of theft from a prepaid card is the same as cash: Once it’s stolen, it’s likely gone for good.

If you’re considering giving a gift card this year, avoid a prepaid gift card and choose a gift card for a specific restaurant or retailer. These cards offer more security and even bonus features like discounts and perks for continuing to use the card beyond the holiday season. If all else fails, there’s nothing wrong with giving a thoughtful card with a little cold, hard cash.

Have you ever received or given a prepaid debit card as a gift? Would you ever give or use one again? Let us know your thoughts in the comments.