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While banking technology is always evolving to be more inclusive, a surprising amount of people still can’t qualify for a basic bank account. In fact, according to a study done by ACORN Canada, about 3% – 15% of our residents are “unbanked” or “underbanked”, meaning they have little to no connection with any of the country’s financial institutions.
Unfortunately, not all of those residents are lacking a bank account by choice. Millions of them are simply getting turned down. Luckily, if you’re dealing with a similar financial crisis, there are ways to access fast cash, like payday loans with a prepaid debit card.
A prepaid debit card is similar to a normal debit card, only it has a specific amount of money preloaded on it, rather than the funds coming straight from your chequing account. Prepaid debit cards are also often compared to gift cards. Many different financial institutions and businesses offer these kinds of cards as products or bonuses. Once the card funds are used up, the card can be reloaded or disposed of.
A payday loan is a small high-interest loan of $100 – $1,500 and a short repayment term of 14-days following the transfer of funds. While these loans are usually given by direct deposit, cash or cheque, many payday lenders now offer debit cards specifically for customers who don’t have bank accounts or are simply looking for more convenience.
You can apply for a payday loan in person or online, depending on the lender you choose. Once approved, the payday loan is loaded onto a prepaid debit card. Now you can use the debit card to make in-store purchases, take out cash from an ATM, and even make online purchases (depending on the types of payment the retailer accepts).
You’ll have to repay the funds, plus interest and fees by a predetermined due date (typically within 14 days) or be subject to certain penalties.
Most payday lenders will request a VOID cheque or pre-authorized debit form when you apply. This would normally allow them to deposit the loan directly in your account but in this case, it’s so they can withdraw the amount you owe automatically from your account on the due date.
Prepaid Card | Direct Deposit | |
Where to Apply | – In-person – Online | – In-person – Online |
Amount | Up to $1,500 | Up to $1,500 |
Funding Time | Up to 3 business days | Same day via e-Transfer (depending on time of day you apply) |
Best Option For | – Consumers without a bank account – Emergencies | – Emergencies – When you need the money right away |
Amount | Prepaid Card | ||
![]() | $100 – $1,500 | Opt+ Prepaid Mastercard | Learn More |
![]() | $120 – $1,500 | Titanium+ Prepaid Mastercard | Learn More |
Despite their downsides, payday loans with a prepaid debit card can come with some notable benefits, including but not limited to:
All benefits aside, don’t forget that payday loans come with a few serious financial drawbacks, even when they’re given to you on a prepaid debit card:
Before applying for a payday loan, know your rights as a borrower.
To apply for a payday loan on a prepaid debit card, you may need to provide the following personal and financial documents:
To qualify for a payday loan of any kind, you must:
Getting a payday loan with a prepaid debit card can be an easy and convenient way of financing an important expense when you don’t have enough savings. However, don’t forget that payday loans come with many risks and costs that can make them harmful to your finances. Only apply for a payday loan if you have no other choice
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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