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Prepaid credit cards in Canada

Learn how prepaid credit cards work and how to find the best prepaid card for your needs.

Compare prepaid credit cards

1 - 3 of 3
Name Product Monthly Fee Cost per transaction Foreign transaction fee Rewards Feature
EQ Bank Card
$0
$0
0%
0.5% cash back
Get 2.50% – 4.00% interest on your money and get 0.5% CashBack on every purchase.
Neo Money Account Prepaid Card
$0
$0
2.5%
5% cash back
Earn 2.25% interest on your balance + get up to 15% cashback on first-time purchases with your Neo Money card.
BMO Prepaid Card
BMO Prepaid Card
$6.95 annually
$0
2.5%
N/A
Get a reloadable and secure card with the same benefits as a standard credit card.
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Prepaid credit cards can be used to make in-store and online purchases just like a regular credit card. But there’s one key difference: instead of spending with borrowed credit, you spend your own money. This makes them very handy to help you avoid overspending, and it’s easy to qualify for a prepaid card even if you have bad credit.

Keep reading to find out how prepaid credit cards work, where to get them, and how to choose the right card for you.

What is a prepaid credit card?

Prepaid credit cards aren’t really credit cards at all. Instead of buying on credit, you load money from your bank account onto the card and then start spending.

Prepaid credit cards let you shop without taking on any debt, and without impacting your credit score. They’re sometimes also called reloadable credit cards, and you can use them to shop in-store and online anywhere regular credit cards are accepted.

How do prepaid credit cards work?

A prepaid card lets you set your own credit limit. Instead of borrowing funds, you load money you already have onto the card. You can then use your prepaid card to make all the purchases you can make with a traditional credit card — shopping online, booking hotels, paying for gas and the like.

Because you’re spending your own money, you don’t need to worry about paying interest on your card balance. Many prepaid credit cards also let you earn rewards or cash back, and some may even come with additional benefits such as purchase protection or extended warranty insurance.

Once you’ve spent all the money you loaded onto the card, it becomes unusable until you reload it with more money. There are multiple ways to load money onto your card, including direct deposit, e-Transfer, at ATMs and at bank branches, but the range of loading methods accepted varies depending on the card issuer.

Types of prepaid cards

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. Options include prepaid Mastercards, prepaid Visa cards and prepaid Amex cards.
  • Prepaid credit cards with rewards. Some prepaid cards let you earn rewards as you would with a typical credit card. These rewards can be earned as points or cash back, 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 prepaid 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 prepaid cards can be purchased from 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.
  • Business prepaid 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.

Where to buy prepaid credit cards

It’s easy to get a prepaid credit card online directly from the issuer, whether that happens to be your bank, a fintech or some other financial institution. Simply fill out an online application with your name, personal details, contact information and proof of ID.

Alternatively, you could apply in person with some card issuers. For example, you could visit your nearest bank branch or get a prepaid Visa or Mastercard from your local post office.

Finally, if you’re looking for a prepaid gift card that’s designed to be thrown out once the balance has been spent, you can find them online or at locations such as grocery stores and gas stations.

Why get a prepaid card?

There are several reasons why a prepaid credit card could be a good idea:

  • No debt. Prepaid cards are a convenient way to shop online and in-store without getting into debt.
  • No interest charges. You won’t have to worry about paying interest with these cards.
  • Earn rewards and benefits. Some prepaid cards let you earn cash back or rewards points when you spend with your card.
  • 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. This also makes them a suitable option for newcomers to Canada with no credit history.
  • Helps you budget. You can load a preset amount of money onto a prepaid credit card to make sure you stick to a predefined budget.

What to watch out for

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

  • Some cards come with fees. Some prepaid credit cards come with annual or monthly fees, activation fees, reloading fees and fees for specific transactions.
  • No access to credit. You can’t use these cards to spend money that you haven’t already loaded into your account, which may limit your spending power.
  • Not designed to build credit. 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 to be rewarded for your spending.

Prepaid credit card fees

One important factor to consider when you compare prepaid credit cards is the cost of using a card. While some cards don’t have fees, others do, so read the fine print to check for charges such as:

  • Activation fee. You may be charged a one-off fee when you sign up for a card.
  • Reload fee. Some cards charge a fee every time you load more money onto your card.
  • Ongoing fee. Check whether the prepaid card comes with a monthly or annual fee.
  • ATM fee. You may be charged a fee if you use your card to withdraw cash at an ATM.
  • Foreign transaction fee. Check whether you’ll be charged a fee when you use your card overseas, and find out what exchange rate you’ll get when you perform a foreign transaction.
  • Inactivity fee. Will a fee apply if you don’t use your card for a specified amount of time?

Prepaid gift cards usually don’t come with any fees; however, some prepaid credit cards do charge an activation fee or a non-activity fee. Be sure to read the fees section of the agreement — either online or on the back of the prepaid credit card — before purchasing.

Are prepaid credit cards accepted everywhere?

Prepaid cards are typically accepted everywhere credit cards are accepted. With this in mind, check the card’s payment network.

For example, if you choose a prepaid Mastercard, it will be accepted anywhere Mastercard is accepted. If you opt for a prepaid Visa, you can use it anywhere you use your regular Visa credit card. American Express prepaid cards aren’t as widely accepted, but you can still use them at a wide range of retailers.

Prepaid Mastercard vs prepaid Visa?

There’s very little difference between a prepaid Visa and a prepaid Mastercard. The only time you may want to choose a specific prepaid Visa or prepaid Mastercard is if you shop regularly with a vendor that only accepts one type of card. For example, Costco shoppers can only use Mastercard to pay for their purchases at Costco.

Prepaid credit card options

Check out the table below for details of a selection of Canadian prepaid credit cards.

ProviderCardNetworkRewards/benefitsAnnual fee
BMOBMO Prepaid Travel MastercardMastercardExtended warranty and purchase protection$6.95
KOHOPrepaid MastercardMastercard on groceries and transportationNo annual fee (plans with higher rewards earn rate charge monthly fees)
NeoNeo Money CardMastercardEarn an average of 5% cash back at over 10,000 partners, earn 2.25% interest on your account balanceNo annual fee
EQ BankEQ Bank CardMastercardEarn 0.5% cashback on purchases, free ATM withdrawals, earn up to 4.00% interest on your account balanceNo annual fee
STACKPrepaid MastercardMastercardEarn cash back at over 140 retailers, earn cash back on foreign exchange fees and overseas ATM withdrawalsNo annual fee
Canada PostCash Passport Prepaid MastercardMastercardCarry up to seven currencies on one card$15 to purchase, $3 to reload plus transaction fees
Canada PostPrepaid Reloadable Visa CardVisaN/A$15 to purchase, $3 to reload plus transaction fees
MydohSmart Cash CardVisaDesigned for parents to teach kids how to manage money$0 ($0 per month)
WealthsimpleCash CardMastercardEarn 1% cash back on purchases, earn 4% or more interest on your account balanceNo annual fee

How to choose the best prepaid credit card

Consider the following factors when choosing a prepaid card in Canada:

  • Payment network. Visa, Mastercard and American Express are your prepaid card network options. If there are any retailers you regularly shop at, make sure they will accept your card.
  • Fees. Read the fine print for details of any fees that will apply when you sign up for, use or reload your card.
  • How to load your card. Check whether the card offers convenient ways for you to load cash, such as via a mobile app, online banking or even having your paycheque direct deposited to your card.
  • Card limits. Read up on any limits that apply to your card, such as a maximum daily load amount or transaction limit. There may also be a limit on how much cash you can withdraw at an ATM.
  • Rewards and other perks. If the prepaid card offers rewards or cash back, check the earn rate and whether any limits apply. Check for other perks such as budgeting tools, spending trackers, purchase protection and extended warranty protection.
  • Earn interest on your balance. Some Canadian prepaid credit cards allow you to earn interest on your card balance.

Learn more: Best prepaid credit cards in Canada

How to get a prepaid credit card

Because you’re not accessing credit, you won’t need to complete a credit check to get a prepaid credit card. However, you will need to meet the following basic eligibility criteria:

  • Be a Canadian resident
  • Be the age of majority in your province or territory

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 you.
  2. Apply for the card of your choice. Apply for a card of your choice by visiting the website of the provider you’re interested in and filling out an online application. You’ll need to provide personal details such as your full name, address, email and phone number to start your application.
  3. Wait for your card to arrive. When your application is approved, your provider will send your card out in the mail or allow you to pick it up at a branch location. Some providers also offer a virtual card you can use to make online purchases.
  4. Load your card. Load money onto your card and then use it anywhere credit cards are accepted.

Bottom line

Getting a prepaid credit card is a good option if you want the benefits of a credit card without the worry of getting into debt. 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. Make sure you compare a wide range of options to find the best prepaid card for you.

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