Get a payday loan on a prepaid debit card

Need fast cash? Borrow money and have it loaded onto a debit card, instead of into your bank account.

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Sometimes there are little roadblocks along the way that prevent you from having enough cash to make it until your next payday. Whatever your emergency, there are ways to get cash quickly. However, if you don’t have a valid bank account that allows direct deposit, this can cause some problems with you getting a loan.

Today, the need to have a valid bank account in order to get a loan is changing. You’ll now find short term lenders who offer fast cash conveniently on a prepaid debit card. These debit cards are typically branded with Visa or Mastercard, offering the flexibility to pay bills or swipe for necessities at retailers around the world.

Our guide covers what you need to know about prepaid debit cards that can help you access your loan. Whether you have poor credit or no bank account, there are options out there for you and a prepaid debit card is one of them.

How does a prepaid debit card loan work?

You can apply for a prepaid debit card loan either online or in a store. Once you’ve completed the application and have been approved, the lender will transfer your approved funds into an eligible loan account. The lender will then register a prepaid debit card with that account, either handing it to you in person or mailing it to your home. You’ll typically need to register the card in your name, either in person, by phone or online.

Since most prepaid debit cards are either Visa or Mastercard, you can then begin using your card just like you would use any other type of credit card. You can use the card at retailers, ATMs to withdraw your cash or even at utility bill companies – wherever and whenever you need it.

Prepaid debit card explained

A common alternative to bank deposits is getting your funds on a prepaid debit card. Prepaid cards can be handy because you can use them in a wide range of stores. You may also be able to withdraw cash at an ATM, though this might incur extra fees. Payday lenders that offer prepaid debit cards will either mail the card to you at your home or let you pick it up at a nearby location after your loan has been approved. You may also be able to use an existing prepaid card. Be sure to check with the lender for any restrictions.

Benefits of prepaid debit cards
  • They’re reloadable. If you’ve already had a payday loan on a prepaid card, you may be able to reload the card with a new loan.
  • They’re reliable. Prepaid cards are often issued under Mastercard or Visa, two trusted and widely accepted brands.

Can I reuse the prepaid card for another loan?

Yes. If you need a loan in the future, you’re often able to receive your funds on the same card for a small fee, sometimes even with a different lender. You’re not limited to receiving only payday loans to your prepaid debit card. You can often set it up to receive direct deposits, providing quick access to your paycheque, government benefits or tax refunds.

Top 6 reasons to consider a prepaid debit card payday loan

A prepaid debit card offers the flexibility to discreetly spend your payday loan funds anywhere your card is accepted. Here’s what we consider the top 6 reasons you might benefit from having your loan on a prepaid debit card:

  • You don’t always need a bank account. With a prepaid debit card loan, the lender deposits your approved funds onto the card, which you can then use immediately.
  • You can easily access your funds. Once the lender transfers the money to your card, you can use it to shop for groceries, clothing and more at stores, pay your bills online or over the phone and even withdraw cash at an ATM.
  • You can set up your card for other deposits. Most prepaid cards can receive direct deposits, offering a way to quickly access your paycheque, tax refunds and government benefits.
  • You could earn rewards with the right card. Some prepaid card providers allow you to earn cash rewards with your spending.
  • You can choose from multiple lenders. There are plenty of different lenders to choose from across all provinces and territories in Canada. Compare the ease of applying and the turnaround time to find the best option for your needs.
  • You can use your money however you’d like. What you do with the loan is up to you. Use it for car repairs, forgotten bills or to get by until payday.

What are the benefits and drawbacks to consider?

How a prepaid debit card can help

  • No bank account required. You’ll find lenders that approve loans for borrowers who don’t have a bank account.
  • Poor credit is OK. As long as you can demonstrate your ability to repay your loan, your credit score isn’t the biggest factor for approval.
  • Quick access to funds. Most lenders can transfer your money by the next business day. If you’re a repeat borrower, you may already have the prepaid card to load your funds.

What to look out for

  • High fees. Payday loans charge considerably higher fees than other types of loans, resulting in a costly form of credit. Interest fees are regulated by the provincial/territorial governments, and rates vary.
  • Short repayment terms. As the name implies, your loan is typically due on your next payday. Make sure it won’t strain your budget too much before you apply and set aside money from your next paycheque to pay off your loan.
  • Disreputable lenders. Plenty of shady lenders are out there trying to take advantage of people at their most vulnerable. Confirm that your lender is licensed and operates legally before signing a contract.

Other considerations to keep in mind

Before you apply for a prepaid debit card payday loan, consider how you’ll repay it. Among the most notorious types of lending, payday loans often come with high fees and high interest rates. Late or missed payments can lead to additional fees and stiff penalties. Defaulting on your loan can result in a lower credit score and long-term damage to your overall credit.

Prepaid debit card payday loans are governed by regulations that limit how much you can borrow and for how long, as well as how much the interest rate and fees charged can be. These laws are designed to protect you against predatory lending. Carefully review the terms and conditions of your specific loan, and ask questions about anything you don’t understand before signing any contract. To protect yourself against an illegitimate lender, confirm that yours is licensed and following all of the government rules.

How to apply for a prepaid debit card loan

Depending on the lender, you’re often able to apply for a prepaid debit card loan online or in person.

To apply for a payday loan:

  • You typically must be a Canadian citizen or permanent resident.
  • You must be at least 18 years old, or the age of majority in your province or territory.
  • You must be able to prove that you have a steady source of income.
When applying, you must usually submit:
  • Your name and personal contact information.
  • Your Social Insurance Number and date of birth.
  • Valid government-issued ID, such as your driver’s licence.
  • Your employment status and income details.

Can’t I have my loan funds deposited into a friend’s account?

No. You need to have an active bank account in your name – not just any bank account. Lenders typically check this before approving your application. If you don’t have a bank account, you may be able to apply for a small-dollar loan loaded onto a prepaid debit card.

What do I do if my application is denied?

Applying through a loan broker service could increase your chances of approval, as these providers have a large network of lenders that offer loans to people with varying eligibility criteria. A lender could deny your application for a number of reasons. One common rejection reason is not having sufficient income. If you’re denied because of insufficient income, consider looking at lenders that accept applicants who are unemployed or receive government benefits or welfare.

In-store cash pick-up explained

Many payday lenders offer cash if you apply in person, and some even allow you to apply online and pick up your loan in person. When you go into a store to apply, be sure you have your proof of income ready as well as a valid ID. Without the ability to show bank statements that confirm your financial situation, you may need to produce pay stubs or other employment details. The benefits of in-store cash pickup include:

  • You can get funding quickly. The in-store application process doesn’t take long, and after approval, you can get the cash within a few minutes.
  • Personal assistance. When you apply in-store, you can work with an associate to craft a repayment plan and get help with the application process.

Prepaid debit card vs. in-store cash pickup

How to apply Turnaround time
Prepaid card Primarily online, sometimes in-store 1–3 business days
Store Primarily in-store, sometimes online As soon as the same day

Bottom line

You don’t always need to have a bank account to get a payday loan. Your options are more limited when you don’t have a bank account, but you can find some lenders who are willing to work with you. Whether you decide to get a prepaid debit card loan or cash from a store, it’s important to consider how you’ll be able to repay it.

Missing payments or defaulting on the loan will lead to extra fees and charges, as well as possibly damaging your credit score. Make sure that you’re able to repay whatever you borrow quickly before you sign a contract.

Are payday loans available in my province or territory?

Payday loans are available in all provinces and territories across Canada. You should be aware that payday loans are regulated by individual provinces, which means costs and fees can vary. Ensure that any lender you choose abides by the laws of the place you live.

At the time of writing in January 2019, Newfoundland and Labrador, the Yukon, Nunavut and the Northwest Territories do not have legislation regulating payday loans at the provincial or territorial level. Payday loans are regulated in these provinces and territories at the federal level only.

Find out how much lenders can charge across Canada

Frequently asked questions

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