Securing a credit card requires you to meet certain eligibility requirements, such as having a decent credit score and a healthy income. Unfortunately, many Canadians are not able to qualify for a credit card, leaving them to resort to using only cash to make their purchases.
Luckily, there is another financial tool available to those who may not be able to get approved for a conventional credit card, while still benefiting from the perks that paying plastic offers: prepaid credit cards. Offering similar flexibility as traditional credit cards, prepaid credit cards can be used to shop online, book hotels, and purchase airfare tickets
You don’t need to have a strong credit score to get one, nor do you even need a bank account in many cases. As such, prepaid credit cards are very easy to get your hands on.
Below we’ll take a look at some of the best prepaid credit cards available to Canadians to help make your choice a little easier.
How Do Prepaid Credit Cards Work?
As mentioned, prepaid credit cards can be used similar to how regular credit cards are used. Not only can you use your card to make in-store purchases, but you can also make purchases online or over the phone. Some cards may even offer you points or cash back rewards with every purchase you make.
The biggest difference between prepaid credit cards and traditional credit cards is that with the former, no credit is extended. Instead of having a credit limit to spend within, a prepaid credit card requires that you deposit a certain amount of your own money, then spend up to that limit. In this way, you’re spending your own money rather than borrowing it.
Criteria Used to Evaluate Prepaid Credit Cards
In order to help us round up the best prepaid credit cards, we’ve assessed each based on the following criteria:
- Fees
- Rewards
- Perks
- Credit limits
- Card features
Summary Of The Best Prepaid Credit Cards In Canada
Here is a quick overview of some of the best prepaid credit cards in Canada:
| Annual fee | Maximum card balance | |
| Neo Money™ Card | $0 | CDIC insured for up to $100,000 |
| KOHO Prepaid Mastercard | – KOHO Easy: $0 – KOHO Essential: $4/monthly or $48/annually – KOHO Extra: $9/monthly or $84/annually – KOHO Everything: $19/monthly | $40,000 |
| Mogo Visa* Platinum Prepaid Card | $0 | $10,000 |
| Stack Prepaid Mastercard | $0 | $10,000 |
| Scotiabank SCENE Prepaid Reloadable Visa | $10 | $2,400 |
| CIBC Air Canada AC Conversion Visa Prepaid Card | $0 | $20,000 |
| CIBC Smart Prepaid Visa Card | $0 | $10,000 |
| Canada Post Visa Prepaid Card | $0 | $10,000 |
Neo Money™ card
If you’re looking for a prepaid card, but don’t like the idea of having to remember to load funds onto it, check out the Neo MoneyTM card. Neo has solved this common issue with prepaid cards by providing direct access to the full balance with no card loading required. This card offers high cashback on spending and high interest on your account balance
The Neo Money™ card is a feature of the Neo Money™ account, which is a hybrid of a spending and savings account. When you open an account, you’ll get free access to the Neo Money™ card. With it, you can:
- Earn an average of 5% instant, unlimited cashback
- Earn 2.25% interest on every dollar in your Neo MoneyTM account
- Get free everyday transactions and no monthly fees
- Withdraw cash from any ATM worldwide
Already have a Neo Money™ account? You can get a Neo Money™ card by logging into your account and selecting “card” from the main menu.
KOHO Prepaid Mastercard
KOHO offers four full-service accounts, which all come with a prepaid Mastercard. The KOHO Prepaid Mastercard allows cardholders to earn cash back rewards on specific categories and extra cash back when they shop with KOHO partners. Simply load your funds onto your account via a direct paycheck deposit or through an Interac e-transfer (you can send yourself an e-transfer or you can send/accept one from a third party, like a friend or family member), then start spending.
Depending on your financial habits, you can choose between four account types to find one that best suits your needs.
KOHO Easy Account & Prepaid Mastercard
- No annual fee
- 1% cash back on groceries, transportation (gas, parking, rideshare apps, etc.)
- Up to 5% extra cash back when you shop with certain KOHO partners
- Earn 0.5% saving interest on the entire balance in your KOHO account
- Free e-transfers
- No NSF fees
KOHO Essential Account & Prepaid Mastercard
- Has a monthly fee of $4 or an annual fee of $48
- 1% cash back on groceries, transportation (gas, parking, rideshare apps, etc.), and eating and drinking
- 0.25% cash back on all other categories
- Up to 5% extra cash back with select merchants
- Earn 1.5% saving interest on the entire balance in your KOHO account
- Free e-transfers
- No NSF fees
KOHO Extra Account & Prepaid Mastercard
- Has a monthly fee of $9 or an annual fee of $84
- 2% cash back on groceries, transportation (gas, parking, rideshare apps, etc.), and eating and drinking
- 0.50% cash back on all other categories
- Up to 5% extra cash back with select KOHO partners
- 2% interest on the entire balance of your KOHO account
- No foreign transaction fees
- 1 Free International ATM withdrawal each month
KOHO Everything Account & Prepaid Mastercard
- Has a monthly fee of $19
- 2% cash back on groceries, transportation (gas, parking, rideshare apps, etc.), and eating and drinking
- 0.50% cash back on all other categories
- Up to 5% extra cash back with select KOHO partners
- 4% interest on the entire balance of your KOHO account
- No foreign transaction fees
- 1 Free International ATM withdrawal each month
Mogo Visa* Platinum Prepaid Card
The Mogo Visa* Platinum prepaid card is one of Mogo’s bestsellers. It is often referred to as the MogoCard. This prepaid card has no annual fee and is available to download on IOS and Android. Users can also add their MogoCard to their digital wallets like Apple Pay or Google Pay.
This card comes with a 2% cashback in bitcoins on all transactions, making it a great option for those interested in investing in bitcoin. It also offers a budgeting tool through its app so you can monitor your spending. You can also top up your card balance through the app. As a Mogo member, you’ll also gain access to your credit score and their identity fraud protection program for free.
Stack Prepaid Mastercard
Stack offers consumers a hassle-free way to spend and save money thanks to its prepaid credit card. Cardholders can track their expenditures with the Slack app to help them budget appropriately and manage their finances. The Stack Prepaid Mastercard allows you to deposit funds into your account and use the card much like a regular credit or debit card to purchase goods and services.
With this card, you can take advantage of discounts at participating merchants across the country. Plus, there are no monthly or annual fees to pay, nor any foreign exchange fees. You can automate your savings by rounding your purchases up to the next $1, $2, $5, or $10, and save the difference.
No credit check is necessary to secure a Stack card and funds can be easily added to your account via online payment, Interac e-transfer, or direct paycheck deposit.
Scotiabank SCENE Prepaid Reloadable Visa
The SCENE Prepaid Reloadable Visa from Scotiabank allows consumers to work toward accumulating SCENE points with every purchase. You can earn one SCENE point for every $5 spent, or one point for every $1 spent on purchases made at Cineplex. Rewards points start at 500 points, and when you’ve accumulated enough, you can use them for free movies and other rewards.
Before you take advantage of these points, you’ll need to be a SCENE member first. Your SCENE membership card will be connected to your Prepaid Reloadable Visa to earn points, which can be redeemed at SCENE.ca or at Cineplex theatres. You can earn as much as 600 points per day and 300 points per transaction. The card comes with an annual fee of $10, though that’s quite affordable compared to most credit cards.
CIBC Air Canada AC Conversion Visa Prepaid Card
For the avid traveller, perhaps the CIBC Air Canada AC Conversion Visa Prepaid Card might be something to look at, especially if you’re partial to flying with Air Canada. If so, this particular prepaid credit card might be a great option. You can fund your card with 10 different currencies, including the following:
- Canadian dollars
- US dollars
- Mexican pesos
- Euros
- Swiss francs
- British pounds
- Australian dollars
- Japanese yen
- Hong Kong dollars
- Turkish lira
By using your card in a local currency, you can avoid the often expensive exchange rate when converting from Canadian to another currency. Locking in at your exchange rate when you load the card means you won’t be subject to inflated rates when the need to convert your currency is required. This card offers a great alternative to carrying cash in different currencies when you travel and instead allows you to make purchases in the local currency of the location you’re in.
Furthermore, with the CIBC Air Canada AC Conversion card, you can spend like a local while travelling and while at home. Shop on global e-commerce sites using your foreign currency and avoid exchange fees.
Have a friend who might be interested? Refer a friend and you’ll both get $10 once your friend successfully applies for the card.
CIBC Smart Prepaid Visa Card
CIBC also has a Smart Prepaid Visa Card, which offers consumers a convenient and secure way to shop without the need for a conventional credit card. Simply load your funds online, at any CIBC location, or through the app and start spending.
This particular prepaid card is also great for those who travel, as four different currencies are available to be loaded, including US dollars, British pounds, Euros, and Mexican pesos. You can lock in at an exchange rate when you load your card and not have to deal with any spikes in foreign exchange rates when you shop.
Canada Post Visa Prepaid Card
The Canada Post Visa Prepaid Card allows consumers to take their money with them without having to carry cash. The card can be preloaded with funds and then spent wherever Visa is accepted. It can be used to make purchases both in-person and online but doesn’t come with the typical sky-high fees of your average credit card.
Funds can be loaded onto the Canada Post Visa Prepaid Card online or at any Canada Post location. The card costs $15 to buy, then requires a $3 monthly fee. But there are no transaction fees and foreign transaction fees are very competitive at a low 2.5%.
Pros And Cons Of Prepaid Credit Cards
Pros
- Easy to get approved for. You don’t need a strong credit score or a high level of income to secure a prepaid credit card.
- Can be used like a traditional credit card. You can shop online like you would with a regular credit card.
- Helps you avoid overspending. If you’re prone to spending way more than you should, you can use your prepaid card to place a very low limit that you won’t be able to spend over.
- Can be a great tool for kids. Prepaid credit cards are a safe way for children to learn how to manage their money.
Cons
- Cannot be used to build credit. Your payment history is not reported to the credit bureaus.
- Small credit limits are typically only allowed. While some prepaid credit cards may allow you to add up to $20,000, most have a much lower limit. Make sure you keep this in mind when choosing a card.
- May come with various fees. Certain prepaid cards have transaction fees or even monthly fees that need to be paid.
- Some locations may not accept prepaid credit cards. Prepaid credit cards are not as widely accepted as traditional credit cards.
When Is A Prepaid Credit Card Necessary?
Consumers who have good credit and a strong income will likely be able to get approved for a conventional credit card. But those who either have no credit built yet or have a bad credit history may find it difficult to get approved. Further, a strong income is also typically required for unsecured credit card approval, so anyone who does not meet these criteria may find themselves unable to get their hands on this type of financial tool.
In this case, a prepaid credit card may be a great option. While it cannot be used to build credit because your payments will not be reported to the credit bureaus, they can be used much like a credit card, such as using them to shop online.
So, if you don’t have good credit and have had trouble trying to get approved for a regular credit card, then a prepaid card may be appropriate.
Additional Reading
How Do Prepaid Credit Cards Differ From Secured Credit Cards?
Traditional credit cards are considered “unsecured,” which means there is no collateral to secure the credit limit provided. As such, the risk is higher for the creditor because there is nothing of value backing up the credit, which is why interest rates on credit card balances tend to be very high compared to secured loans, like mortgages.
On the other hand, prepaid and secured credit cards are not unsecured. Instead, they both require you to deposit money into the account, so you’re spending your own money rather than the credit card issuers. They’re both also suitable for consumers who have no credit or low credit scores. So, what’s the difference between these two?
Perhaps the biggest difference is that secured credit cards can be used to build or improve credit, while prepaid cards cannot. How responsible or irresponsible you are with your secured credit card will have an effect on your credit score, which is not the case with prepaid credit cards.
Secured credit cards also come with interest fees on outstanding balances, and will be charged penalty fees if you miss a payment. This is not the case with a prepaid credit card.
Final Thoughts
Prepaid credit cards make it convenient for low-credit consumers to get access to a credit card without having to meet the stringent criteria required to secure a traditional credit card. If you lack the credit strength and income needed to get approved for a regular credit card, but still want the convenience of shopping with plastic, then a prepaid credit card may be right for you.
