Best Prepaid Credit Cards for Canadians

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  • Max credit Ingen kreditgräns
  • Yearly fee 0 CA$
  • Interest rate 0,00 %
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  • No Foreign Transaction Fees - no additional fees are charged on foreign transactions.
  • Free WiFi - receive free internet around the world.
  • Rewards - earn points and redeem them for cash back or rewards.

About Prepaid Credit Cards

Prepaid credit cards in Canada do not require you to have a good credit score. This is because they only allow you to use the amount that has been loaded onto the card. 

There is also no overdraft with a prepaid credit card. Therefore, if you put $1,000 onto a prepaid card and try to spend more than that, your purchase will be denied. This feature can be seen as a benefit, as it limits spending. 

The benefits of a prepaid credit card include:

  • Accessibility - allows cardholders to access credit card networks without a high credit score.
  • No interest - since prepaid funds are deposited directly onto the card, there is no interest charged.
  • No overdraft fees - a prepaid credit card does not offer an overdraft, therefore there are overdraft fees.
  • Secure payment method - this option is safer than cash or cheque and cardholders can use their prepaid credit card online.
  • Convenient - prepaid cards are accepted anywhere that the credit card network is accepted, including online and in-stores.
  • Encourage responsible spending - with a set limit, cardholders are unable to spend beyond their means.

In Canada, there are two credit card networks that offer prepaid credit cards.

  1. Visa
  2. Mastercard

In the past, American Express also offered a prepaid credit through the Amex Bank of Canada. Amex no longer issues prepaid cards.

There are two variations of prepaid credit cards in Canada, including:

  1. Prepaid credit cards bought at a retailer - you can purchase these cards at grocery stores and gas stations. These cards come with predetermined amounts on them (e.g. $25, $50, etc.). 
  2. Prepaid credit cards issued by a bank or financial institution - you must apply for these cards. Once approved, you can deposit any amount of credit onto the card. 

You can load money onto a prepaid credit card via the following methods:

  • E-transfer
  • Direct deposit
  • Retail location 
  • Financial institution

Prepaid credit cards also make great gifts. Cards that are preloaded with a given denomination provide a great alternative to cash. This allows the recipient to spend the money as they please, including using the prepaid credit card online. 

Mastercard provides prepaid gift cards in the following denominations:

  • $25
  • $50
  • $60
  • 3 x $20
  • $100
  • $200

Visa offers prepaid gift cards in the following denominations:

  • $25
  • $50
  • $75
  • $150
  • $250

Determining the Best Prepaid Credit Card

To determine the best prepaid credit card in Canada, we took into consideration the following:

  • Mobile app capability
  • Cash back and rewards benefits
  • Money-saving capacity
  • Fees
  • Card limits
  • Travel bonuses

Mobile App Capability

Some prepaid cards come with mobile app capability. This feature can help you track your spending and manage your card. A mobile app can also be used to reload your card with more funds. 

When choosing the prepaid credit card that is best for you, look for one with a mobile app. This will ensure you can manage your money on the go. 

Cash Back and Rewards Benefits

Look for prepaid cards that allow you to enjoy the same perks as traditional credit cards. For example, it’s possible to find a prepaid credit card in Canada that offers cash back and rewards. 

These cards function like a chequing account. They require you to deposit a predetermined amount onto them. After depositing funds, you can use the card for purchases and earn up to 2% cash back - just like an unsecured credit card. 

Money-Saving Capacity

Some prepaid cards also have features that allow you to enhance your savings. Look for a card that has the option to round up purchases. 

This type of prepaid card will round up your purchases to the nearest dollar amount. The rounded portion will then be transferred to your savings account. 

For example, if your purchase comes to $15.20 and you choose to round up to the nearest dollar, $0.80 will be transferred to your savings account (i.e. $15.20 is rounded to $16.00. $16.00 - $15.20 = $0.80).

You will generally have the option to round up to any of the following:

  • $1
  • $2
  • $5
  • $10

Fees

Pay close attention to card fees when choosing the best prepaid credit card. Several fees can be associated with prepaid credit cards, including:

  • Purchase fee - you may be charged a flat fee just to purchase the card. For example, when buying a prepaid credit card at a grocery store, consumers are often charged an additional fee on top of the prepaid amount.
  • Reload fees - some prepaid credit cards will charge cardholders a fee each time the card is reloaded.
  • Monthly or annual fees - some prepaid cards will also charge a monthly or annual maintenance fee. If you purchased a prepaid card as a gift keep this in mind, as these fees can eat away at the prepaid amount that you intended for the recipient.
  • Transaction fees - a transaction fee may be charged each time the cardholder uses the card to make a purchase.

Look for a Canadian prepaid credit card with low or no fees.

Card Limits

It’s also important to consider the credit limit of a prepaid credit card. Some prepaid cards allow you to load up to $20,000. However, others have a very small credit limit. 

Choose a prepaid card that has a credit limit that works for you. If you are giving the card as a gift, a low credit limit may be suitable. However, if you intend to use the card while you travel, you may require a higher limit.

Travel Bonuses

If you love to travel, be sure to consider which prepaid credit cards are suited best for travel and international payment. 

For instance, it’s possible to find a Canadian prepaid credit card that allows you to load multiple currencies onto the cards. These funds can then be used when making purchases abroad or online. Purchases will be paid for using the currency that the payment is in, as long as that currency has been loaded onto the card. This allows you to save on currency conversion fees.

Foreign currencies that are offered on prepaid credit cards in Canada include:

  • American Dollar (USD)
  • Euro (EUR)
  • Pound (GBP)
  • Japanese Yen (JPY)
  • Hong Kong Dollar (HKD)
  • Mexican Peso (MXN) and more

Prepaid credit cards that cater to travel may also have locked-in exchange rates. This ensures you get the best bang for your buck, especially if you load your card when exchange rates are low.

Travel-centric prepaid credit cards can also provide benefits to those who often shop on overseas websites. Preloading your card with various currencies when rates are low can help curb high exchange rates.

Free international ATM transactions is another perk to look out for when choosing a prepaid credit card. This benefit allows you to save money on ATM fees while travelling. 

If you don’t qualify for a conventional travel credit card, consider a prepaid credit card. Prepaid credit cards that offer travel benefits provide a great alternative to travel credit cards with no foreign transaction fees.

Secured Credit Cards

Secured credit cards are similar to prepaid credit cards. Like prepaid credit cards, secured credit cards are more accessible to individuals with poor credit. However, unlike prepaid credit cards, secured credit cards can be used to build or rebuild credit. 

With a secured credit card, you must provide an initial deposit equal to your credit limit. With this single deposit, you can continue spending up to your maximum credit amount.

Interest fees and fees for missed payments are a downside to secured credit cards. Prepaid credit cards, on the other hand, do not charge these fees. Therefore, depending on what you intend to use your credit card for, a prepaid card may be your best option.

FAQs

How to get a prepaid credit card?

There are two ways to get a prepaid credit card in Canada. You can go to a variety of retailers and purchase a prepaid credit card with a fixed amount on it. Or, you apply for a prepaid credit card through a bank or financial institution. Getting a card through a bank or financial institution gives you more flexibility when it comes to credit limits. Either way, getting a prepaid card is simple and accessible to all consumers. 

What is a prepaid credit card?

A prepaid credit card is a credit card that is preloaded with a set amount of money. The card can be used for purchases online and in-store via the credit card network that the card is associated with (e.g. Visa, Mastercard). Cardholders can only spend the amount that has been preloaded onto the card. However, many prepaid credit cards are reloadable. Prepaid credit cards are easier to get than traditional credit cards because they don’t have income or credit score requirements.

Which prepaid credit card is best in Canada?

There are several superior prepaid credit cards in Canada. When choosing the best prepaid credit card, consider what is important to you. Some prepaid cards have more advantages for travellers and others provide rewards or cashback. Keep in mind the fees that are associated with the card, as well as the maximum credit limit available. 

How do prepaid credit cards work?

Prepaid credit cards allow you to load money onto a card. You can then use the card to make payments online, in-store or by phone. With prepaid credit cards, you are not borrowing money. Rather, you are spending your own money with the convenience of a credit card network. 

What are the benefits of a prepaid credit card?

A prepaid credit card provides you with purchasing power without any prerequisites. With a prepaid credit card, you can take advantage of credit card networks. This provides a safe alternative to cash or cheque and is great for shopping online. Prepaid cards are perfect for those who have low credit scores or need a tool to help them spend within their means. Some prepaid credit cards even come with cash back and reward incentives. 

Emma Tremblay

Emma is responsible for all content on Creditcards360.ca. She has a college degree in economics and a keen interest in personal finance. Get in touch with her by email.

Last updated Mar 2, 2021