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.
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.
In order to help us round up the best prepaid credit cards, we’ve assessed each based on the following criteria:
Here is a quick overview of some of the best prepaid credit cards in Canada:
| Annual fee | Foreign currency conversion rate | Maximum card balance | |
| KOHO Prepaid Mastercard | $0 ($84 yearly for premium version) | 1.5% | $40,000 |
| Mogo Visa* Platinum Prepaid Card | $0 | 2.5% | $10,000 |
| Stack Prepaid Mastercard | $0 | 0% | $10,000 |
| Scotiabank SCENE Prepaid Reloadable Visa | $10 | 2.5% | $2,400 |
| CIBC Air Canada AC Conversion Visa Prepaid Card | $0 | 2.5% | $20,000 |
| CIBC Smart Prepaid Visa Card | $0 | 2.5% | $10,000 |
| Canada Post Visa Prepaid Card | $0 | 2.5% | $10,000 |
The KOHO Prepaid Mastercard allows cardholders to earn rewards on all purchases without having to pay any pesky monthly or annual fees. 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.
Foreign exchange fees are very low at 1.5%. You can also use the handy app to keep tabs on your spending and automate your savings. Plus, you can take advantage of 5% cash back rewards at participating merchants, and 0.5% cash back rewards on all other purchases.
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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.
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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.
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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.
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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:
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 local with travelling and while you’re 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.
Load at least $500 to your AC Prepaid Card using online banking or mobile banking app and get a chance to win a prize of $250 on your card.
Offer available from September 15, 2022 12:00:00 am ET to November 15, 2022 11:59:59pm ET.
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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.
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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%.
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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.
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.
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.
Rating of 5/5 based on 2 votes.
Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.
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