The best reloadable prepaid cards may be used to get cash from an ATM, pay bills, make online purchases, and send money to friends and family, just like your bank's debit card.
Even better, some prepaid credit cards come with budgeting tools that also give rewards. If you are looking to curtail impulse spending and minimize your access to easy credit and debt, a prepaid card could be for you.
What is a Prepaid Credit Card?
A prepaid credit card is comparable to a preloaded gift card that can be used to make payments in the same way that a credit card can.
Banks, shops, and other financial organizations use the Visa, Mastercard, or American Express payment networks to issue prepaid credit cards.
You'll need to transfer money to your card after you've received it. You can load the card with Interac e-Transfer, payroll, direct deposit, or online banking bill payment.
You may be able to load money onto the card even if you do not have a bank account by visiting a designated outlet, such as Canada Post.
A prepaid card only allows you to use the money you've loaded on it. When you make a payment, it is subtracted from your balance until it is zero. Prepaid cards, unlike ordinary credit cards, do not provide you with a line of credit from which to draw.
As a result, they're frequently referred to as prepaid debit cards.
When applying for a prepaid card, your credit score is irrelevant. So, regardless of how bad or good your credit is, you can simply qualify.
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Prepaid Visa Cards in Canada
While large banks, such as CIBC and Scotiabank, offer prepaid Visa cards, the best deals come from emerging financial technology companies, such as
- MOGO, and
KOHO Prepaid Visa Card
KOHO has a reloadable Visa card that you may use to pay for things online, in stores, and wherever else Visa is accepted. It is without a doubt one of Canada's greatest prepaid cards.
This card also comes with a smartphone app that you can use to manage your finances, automate your savings, and make stress-free payments with Apple Pay or Google Pay.
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You may receive cash back on all purchases with a KOHO prepaid Visa, which sets it distinct from other prepaid cards. Depending on the account type, cardholders earn 0.50 percent to 2.00 percent cash back on purchases.
Here are some of KOHO's most important features:
- $0 monthly account fee
- 0.50% cash back on purchases
- Automatic savings using the roundup feature
- Real-time insight into your spending patterns
- Access to KOHO Credit Builder
- Access to KOHO Early Payroll (get $100 from your paycheque 3 days early)
When you join KOHO through this exclusive link, you'll get a $20 bonus when you make your first purchase with your card.
A KOHO Premium Visa card is available to power users. It also gives you an extra 1.5 percent cash back on selected categories of expenditure, for a total of 2% cash back.
You also get price matching at a number of retailers, free financial counselling, and no foreign exchange transaction costs.
A KOHO Premium Account has a $9 monthly or $84 annual fee.
- Monthly fee: $0 or $9 for KOHO Premium
- Reload methods: Interac e-Transfer, direct deposit, online bill payment, Canada Post cash load
- Promo: Use CASHBACK for an extra $20 bonus (code applies automatically)
- Best for: Earning cash back
Mogo Prepaid Visa Card
The Mogo Visa Platinum prepaid card is free (no monthly cost) and can be used for online and in-store purchases.
It's linked with a flexible app that gives you insights into how you spend your money.
The app also provides these benefits:
- Automatic savings using auto-transfers. For example, you can choose to save $50 every week
- Set spending goals and find ways to cut your expenses
- Easy payments using Apple Pay, Google Pay, and Samsung Pay
- Easily freeze your card via the app if you lose it
To acquire the Mogo Visa Platinum prepaid card, you must first sign up for an account. You may join or sign up for a free Mogo account here.
Perks of membership include access to free Equifax credit scores every month and Identity Fraud Protection.
- Monthly fee: $0
- Reload methods: Direct bank transfer, Interac e-Transfer, Canada Post
- Best for: Free credit scores
Wealthsimple Cash Visa Card
This reloadable Visa card is free and offers 1% cash back on all purchases. It is available to customers of the Wealthsimple Cash Program, a free money transfer app that, like the Cash App in the United States, allows you to claim your unique Dollar $ign.
The Wealthsimple Cash Card and app also come with the following features:
- Send cash instantly to people on your contact list
- No monthly account fees
- No fees for deposits or withdrawals
- Add the Card to your preferred digital wallet (Apple and Google Pay)
- Easily request money from friends or split a bill with them
The 1% cash back you earn is added to your account balance. Alternatively, you can choose to use your cash back to buy stocks on Wealthsimle Trade or cryptocurrency on Wealthsimple Crypto.
- Monthly fee: $0
- Promotion: Get a $10 bonus when you sign up with promo code WCEYAP
- Reload methods: Direct bank transfer
- Best for: Cash back rewards
CIBC AC Conversion Visa Prepaid Card
This card is unique in that it can contain many currencies at once, eliminating the need for currency exchanges while traveling overseas.
Up to ten currencies, including USD, EUR, GBP, JPY, and others, can be loaded into the CIBC AC Conversion prepaid card. You can then make payments in the currency of your choice after you've locked in an exchange rate. To apply, you do not need to be a CIBC customer, and the bank does not conduct a credit check.
- Monthly fee: $0
- Reload method: Online banking
- Best for: Holding multiple currencies
If you need to make an ATM withdrawal outside of Canada, regular transaction fees apply - the first ATM withdrawal each month is free.
CIBC Smart Prepaid Visa Card
This prepaid Visa card can be readily obtained through CIBC Banking Centres or online or mobile banking.
The CIBC Smart Prepaid Card can be loaded with funds from your CIBC chequing, line of credit, or savings account and is accepted everywhere Visa is accepted.
Ordering this prepaid card is free; however, customizing it to display your information costs $5.95. Each replacement card costs $14.95.
Foreign currency conversions incur a customary 2.5 percent fee.
Other Visa prepaid cards that can be reloaded include:
Canada Post Prepaid Reloadable Visa Card: (costs $15 to purchase; $3 monthly service fee). It offers purchase protection and extended warranty insurance.
Scotiabank Prepaid Reloadable Visa Card: ($10 purchase fee; $10 annual fee). It offers 1 SCENE point for every $15 you spend using your prepaid card.
Prepaid Mastercards in Canada
A prepaid Mastercard is quite similar to a Mastercard credit card in terms of functionality. It can be used to pay for internet purchases, bill payments, and point-of-sale purchases anywhere Mastercard is accepted.
The best prepaid Mastercard reloadable card in Canada is the Stack Mastercard.
STACK Prepaid Mastercard
The Stack prepaid Mastercard isn't the same as a typical prepaid credit card. This card ups the ante with a slew of benefits that mirror those offered by certain travel credit cards.
Its features include the following
- $0 features account fee
- No foreign currency conversion fees (spending limits apply)
- Bill payments
- Free ATM withdrawals (STACK does not charge a fee)
- Cashable offers at participating retailers
- Free STACK-to-STACK money transfers
You get a simple smartphone app that keeps track of your expenditures. It also helps you save automatically by rounding up your purchases to the next $1, $2, $5, or $10 and depositing the difference in your savings account.
- Monthly fee: $0
- Reload method: Interac e-Transfer, Visa Debit, Direct payroll deposit, Canada Post
- Promo: Sign up here for a $5 cash bonus when you load $300 or more to your new account (smartphone link)
- Best for: Waiving FX fees
BMO Prepaid Travel Mastercard
The BMO Prepaid Mastercard has a $6.95 annual fee and is a secured credit card. You can put money on the card starting at $100 and going up to $10,000.
Transfer funds from your BMO chequing or savings account to your BMO prepaid Mastercard. Non-BMO clients can fill the card by adding it to their online banking as a bill payment.
It's worth noting that using your card for cash-like purchases will cost you $5. Foreign currency conversion is also subject to the customary 2.5 percent fee.
Vanilla Prepaid Mastercard
Vanilla Prepaid Mastercard and its Visa counterpart can be used to make purchases at millions of establishments across the world. These prepaid cards are ideal for birthdays, graduations, and other occasions.
Vanilla Prepaid Mastercard and Vanilla Prepaid Visa are available in a variety of denominations, with the following activation fees:
Vanilla prepaid cards aren't good for recurring billing or cash withdrawals at ATMs. A 2.5 percent fee is applied to payments made in foreign currencies.
Vanilla prepaid cards are available at Walmart, Petro-Canada, Giant Tiger, London Drugs, and Best Buy.
The Best Prepaid Cards of 2022 – Summary
- Best for cashback (and best overall): KOHO Prepaid Visa
- Best for cashback and money transfer: Wealthsimple Cash Card
- Best for free credit scores: Mogo Platinum Visa prepaid
- Best for multiple currencies: CIBC AC Conversion Visa Prepaid
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Benefits of a Prepaid Credit Card
Prepaid cards provide several advantages, the most important of which are ease and improved money management.
Budgeting: Prepaid cards like KOHO and Wealthsimple Cash Card come with a phone app that allows you to log your purchases, manage your spending, and automate saves. If you have trouble sticking to your budget, a prepaid card can assist because you can't spend more than you have loaded on it.
Convenience: If you don't have a debit card, you can use a prepaid card to make purchases at millions of places throughout the world. It's a better option than carrying cash.
Credit Score: A strong credit score is not required to apply for a prepaid card. Even if you have a low credit score and are unable to qualify for a standard credit card, you can get one.
Fees and Interest: Prepaid credit cards do not charge interest on balances because you can't spend more than you have. You won't have to pay a big annual charge either. You should be aware that you may be charged fees for ATM withdrawals and foreign currency conversions.
Security: Due to Visa's Zero Liability policy, a prepaid Visa card may provide security against illegal purchases. A prepaid Mastercard with Mastercard's Zero Labiality coverage is the same.
Disadvantages of a Prepaid Credit Card
Despite the fact that the prepaid cards on this list have many of the same characteristics as credit cards, they are not "credit" cards.
Credit Score: Using a prepaid card has no bearing on your credit score. You can't use a prepaid card to improve your credit score if you can't get a conventional credit card.
If this is the case, these secured credit cards may be of interest to you.
Limited or no Rewards: Most prepaid credit cards provide limited or no perks, such as loyalty points or cash back. This means you won't get anything in return for every dollar you spend. In this aspect, the KOHO Prepaid Visa, STACK Mastercard, and Wealthsimple Cash Card excel.
Limitations on Transactions You could have to pay a fee to withdraw money from an ATM, or your card might not even have that feature (e.g. Vanilla Prepaid Cards). They also don't allow you to set up automatic bill payments.
Acceptability: Prepaid cards are not accepted by all vendors.
Prepaid Card Funding: Some prepaid cards are a pain to load. To put funds on your card, you may need to go to Canada Post or a retail establishment. Pay attention to those that accept direct deposit, Interac e-Transfer, or bill payment using your bank's online banking system.
What About Secured Credit Cards?
A secured credit card is similar to a prepaid card, except it can be used to help you build credit.
As part of the application procedure for a secured credit card, you must put down a security deposit. When you end your account or your credit improves and you qualify for a secured credit card, your security deposit is returned to you.
The following are two of the greatest secured credit card alternatives in Canada:
- Plastk Secured Visa Credit Card
- Home Trust Secured No-Fee Visa
Plastk Secured Visa Credit Card
Although this secured card has a reduced purchase interest rate and additional rewards, it comes with a $48 annual fee and a $6 monthly maintenance cost.
Its key features include:
- $17.99% interest rate on purchases
- $300 to $10,000 security deposit (credit limit)
- 0% APR for 3 months
- 25 days interest free grace period on purchases and 3 days grace period on cash advances
- Free monthly credit score
- 5,000 bonus points ($20 value)
Home Trust Secured No–Fee Visa
There is no annual charge on this secured credit card, and your credit limit is determined by your security deposit.
Some of its main features include:
- $19.99% interest rate on purchases
- $500 – $10,000 security deposit (credit limit)
- $0 annual card fee
- Free purchase protection insurance
Payments made using a secured credit card are reported to a credit bureau. You can use these cards to boost your credit rating if you keep up with your payments.
Conclusion on The Best Prepaid Credit Cards In Canada
Even if you prefer not to have a bank account, it's nearly hard to conduct all of your transactions in cash these days. If you've given up credit and debit cards but still want the convenience of cashless payments, prepaid cards can be a good compromise. A prepaid card might also be handy for those who have had trouble repaying credit card charges in the past and want to set stricter spending limitations.
A secured credit card, on the other hand, may be a good choice if you want to set spending limits while also improving your credit score.