Prepaid credit cards in Canada

Prepaid credit cards function just like regular credit cards with one important difference. You won’t get access to credit, which means you’ll need to load money onto your prepaid card from your bank account in order to spend it.

Find out more about how prepaid cards work, compare your options to find the best fit for your unique set of needs and budget and see a list of prepaid credit cards to choose from.

What is a prepaid credit card?

A prepaid credit card function just like credit cards in almost every way. The only difference is that you won’t get access to actual credit. Instead, you’ll need to load your prepaid credit card up with money from your bank account to make purchases. This allows you to avoid paying interest and keeps you from getting sucked into a cycle of debt that can be difficult to get out of.

Many let you earn rewards and some may even come with additional benefits such as purchase protection or extended warranty insurance. These cards can be a good fit for customers with bad credit, students or those who are having trouble qualifying for a regular credit card. They can also be a good option for customers who want to shop on a budget or set spending limits for their children or employees.

How do prepaid credit cards work?

Prepaid cards are similar to debit or credit cards and can be used to make online and in-person cashless purchases. However, unlike a bank debit card that’s linked to a chequing account, a prepaid card comes with a pre-set balance that acts as a spending limit. Once you reach the limit, the prepaid card becomes unusable until more money is added to the card. Though pre-paid cards are often referred to as prepaid credit cards, they are not the same as traditional credit cards since the payments made and the account history are not used to build a credit history.

Prepaid credit card vs debit card

There are a couple of main differences between a prepaid credit card and a debit cards:

• Prepaid credit cards. These cards let you spend money online and earn rewards just like a credit card. That said, you have to load money onto them from your bank account and you can’t use them to withdraw money from ATMs.
• Debit cards. Debit cards don’t typically let you spend money online or earn rewards. They’re directly linked to your bank account so you won’t need to load money onto them. You can use them to make ATM withdrawals and to carry out purchases in-store. Learn more about debit cards.

Types of prepaid cards in Canada

There are several types of cards you can choose from depending on what you want to use them for. These include the following:

• Reloadable cards. Reloadable cards can be used to control spending for yourself or others. Simply load a balance and the cardholder can access it to make purchases wherever credit cards are accepted, both in-person and online.
• Prepaid credit cards with rewards. These cards are prepaid but let you earn rewards as you would with a typical credit card. These rewards can be earned as points or cashback, depending on your preference.
• Secured credit cards. Secured credit cards let you use your own cash to secure a credit card balance. You can then make regular payments to rebuild your credit score, which is a feature that’s not available with other types of pre-paid cards. Learn more about secured credit cards.
• Prepaid gift cards. Prepaid gift cards are typically not reloadable, which means once the balance is spent the card can be thrown out. These types of pre-paid cards can be purchased with vendors such as grocery stores and aren’t suitable for ongoing use.
• Prepaid travel cards. Travel cards are designed for spending money overseas. They may come with travel benefits such as no foreign transaction fees or the ability to load foreign currencies onto your card. A great example if this is the CIBC AC Conversion Prepaid Travel Card.
• Business pre-paid cards. Prepaid business cards can be handed out to your employees if you want to control their spending. This can give them an allotted budget for business expenses such as travel, accommodation or office supplies. Read our guide on non pre-paid business credit cards.

Prepaid credit card options by provider

You can sign up for a prepaid credit card with several providers. These include big banks, digital banks and private companies. It’s easy to compare the prepaid cards offered fby different providers by expanding the links below:

• Big Five banks

  The Big Five banks offer a number of prepaid credit cards to choose from. These prepaid credit cards tend to come without rewards or benefits.

  Provider	Card	Rewards/Benefits	Annual fee
  BMO	BMO Prepaid Travel Mastercard	15-20% off admission to Cirque du Soleil	$6.95
  CIBC	CIBC AC Conversion Prepaid Travel Card	No benefits (but AC Conversion Card lets you load up to 10 currencies)	No annual fee
  TD	TD Connect Reloadable Prepaid Card	No benefits	$5.99 per month ($71.88 per year)
  RBC and Scotiabank don’t seem to have dedicated prepaid cards except for business use.

• Smaller banks

  Smaller banks offer mostly secured cards, which let you prepay your balance to build up your credit. Examples include the following:

  Provider	Card	Rewards/Benefits	Annual fee
  Rogers bank	chatr prepaid Mastercard (secured)	0.5% cashback on all purchases and builds your credit	$5 monthly fee ($60 per year)
  Capital One	Capital One prepaid Mastercard (secured)	Builds your credit	$59
  Vancity	enviro Visa Reloadable Prepaid card (not secured)	Extended warranty and purchase protection	$14.95 to purchase ($4.95 per month but free for members)

• Digital banks

  Digital banks tend to stay out of the credit card space for the most part. That said, there are a handful of prepaid cards by digital banks that are worth looking into:

  Provider	Card	Rewards/Benefits	Annual fee
  KOHO	KOHO Easy Prepaid Mastercard	0.5% cashback on all purchases	$0	Go to site
  STACK	Stack Prepaid Mastercard	No foreign exchange fees, cashback and discounts at select retailers	$0
  Mogo	Mogo Visa Platinum Prepaid Card	Carbon offset rewards, spending insights	$0

• Private companies

  If you tend to shop regularly at the same stores, you might want to check out these loyalty-brand prepaid credit card options:

  Provider	Card	Rewards/Benefits	Annual fee
  PC Financial	PC Financial Prepaid Credit Card	Earn 5 points per dollar spent, low introductory balance transfer rate	$0
  Canada Post	Canada Post Prepaid Visa or Prepaid Mastercard	Shop in foreign currencies	$15 to purchase, $3 to reload plus transaction fees
  American Express	American Express Serve Cash Back	Earn 1% cashback on purchases	$7.95 per month plus $3.95 to reload

How to compare the best prepaid credit cards

You can compare a number of features to find the best prepaid credit card for you:

• Monthly or annual fees. Some prepaid credit cards come with no fees while others will charge high monthly or annual fees. Try to avoid cards with fees unless they offer a high return on rewards or benefits to compensate.
• Interest rates. You usually won’t have to pay interest rates on a prepaid card since you prepay the balance. The only time you would typically need to pay interest is on a secured prepaid credit card. Compare interest rates and make sure you’re not paying any interest if your card isn’t secured to help you build your credit.
• Return on rewards. Many pre-paid cards will give you a return on cashback or points, depending on what you’re interested in. Find the prepaid credit card that offers the best return on rewards in combination with a basic level of benefits to lock in the best deal.
• Benefits. Most prepaid credit card options don’t come with any extra benefits but you might get lucky if you’re willing to take the time to compare cards. If you find a prepaid card with additional benefits, it’s definitely worth exploring. Benefits can include purchase protection, extended warranty protection and no foreign transaction fees.
• Provider. When deciding on a prepaid credit card, you can choose from many providers. These include big banks, digital banks and private companies such as Canada Post or PC Financial. Look for a card with an establishment you trust and make sure the rewards are tailored to your lifestyle.

How to apply for a prepaid credit card

You can follow these steps to apply for a reloadable prepaid credit card:

1. Compare prepaid credit cards. Compare cards from a number of providers to find the one with the best mix of rewards and benefits for your personal situation.
2. Apply for the card of your choice. Apply for the card of your choice by visiting the main site of the provider you’re interested in.
3. Fill out application details. Fill out personal details such as your full name, address, email and phone number to start your application.
4. Click submit. Once you’re ready to apply, click submit on your application or call your credit card provider to apply over the phone.
5. Wait for your card to arrive. When your application is approved, your provider should send your card out in the mail or allow you to pick it up at a branch location.

You can also purchase non-reloadable prepaid credit cards and gift cards at grocery stores and with other eligible vendors. These cards aren’t personalized and you can typically load a balance at the till without needing to fill in an application.

Prepaid credit card pros

Prepaid credit cards come with a number of benefits that make them a viable option:

• No interest charges. You won’t have to worry about paying interest with most these cards since you can only spend the money that’s loaded on your account.
• Earn rewards and benefits. There are a handful of cards that let you earn cashback or points.
• Easy to qualify. It’s generally very easy to qualify for a prepaid credit card (even if you have bad credit) since you’re not borrowing money when you make purchases.
• Help you budget. You can load a preset amount of money onto a prepaid credit card to make sure you stick to a predefined budget.

Prepaid credit card cons

There are also a couple of drawbacks to consider before you sign up for a prepaid credit card:

• Some cards come with fees. Many prepaid credit cards come with annual or monthly fees, though there are some decent options for fee-free cards as well.
• No access to credit. You can’t use these cards to spend money that you haven’t already loaded into your account.
• Not designed to build credit. Most prepaid credit cards don’t help you build up your credit score. The exception to this rule is if you take out a secured credit card.
• Limited benefits and rewards. The majority of prepaid credit card options come with limited benefits and rewards, so they may not be a good option if you want an all-inclusive card.

Bottom line

Getting a prepaid credit card is a good option if you want the benefits of a credit card without the worry. These cards can be a particularly good fit if you don’t want to pay interest or you’d like to avoid overspending on your account. Find out more about how prepaid credit cards work and compare prepaid credit cards to find the best fit for your unique personal situation.

FAQs

• Can I qualify for a prepaid credit card with bad credit?

  Yes. You'll usually be able to qualify for a prepaid credit card with bad credit. This is because you can easily load money into your account and you won't have to rely on borrowing money from your provider with these cards.

• Do prepaid credit cards build credit?

  Not usually. The only time a prepaid credit card will help you build your credit is if it's labelled as a "secured credit card." This means you secure the balance you want to borrow with an amount of money that you prepay to your provider. When you pay off your credit card in full and you're ready to close your account, this money gets returned to you.

• Can I get a prepaid credit card with rewards?

  With certain cards, yes. Many prepaid credit cards offer rewards such as points or cashback when you spend money. The only caveat is that the return on rewards that you get will often be lower than what you might receive from a traditional credit card.

• Where can I get prepaid credit cards in Canada?

  It depends on the type of prepaid card you want. If you're looking for a reloadable, secured or business prepaid card, you can usually apply with big banks, digital banks and select private companies. If you just want to buy non-personalized gift cards to load money onto, you can find them at most major grocery stores and with multiple other eligible vendors.

A-Z list of prepaid card reviews

Click on a prepaid credit card provider name to compare offerings.