The 7 Best Canadian Prepaid Credit Cards in 2024

A typical prepaid card, even those that are referred to as prepaid or reloadable credit cards, will not help you improve your credit score as a result. Since you are not gaining access to credit, there is nothing to accumulate, and card issuers typically do not report your credit history or card usage to the credit bureaus in Canada.

Despite the fact that the two terms refer to distinct things, consumers and some prepaid card issuers frequently use the terms “prepaid card” and “prepaid credit card” interchangeably. This does not imply that providers disseminate misinformation regarding the usage of prepaid cards; rather, providers of prepaid cards make it abundantly clear how these cards function.

How are prepaid cards used and why should you use it?

In the same way that debit cards do, prepaid cards only let you spend the money you already have. Prepaid cards can be used wherever Visa, Mastercard, or American Express are accepted; however, the card you use will determine which credit card network you use. Prepaid Visa cards, for instance, can only be used in countries where Visa is accepted.

Prepaid cards of two kinds of cards are available for purchase:

A reloadable card that enables you to add additional funds and a prepaid card that has a predetermined amount loaded.
Your spending limit is the current balance on your credit card in both cases.

Open-loop cards versus closed-loop cards are another significant distinction to take into consideration.

Like some store credit cards, closed-loop Canadian prepaid cards, also known as gift cards, can only be used at a select number of establishments or a network of establishments. A prepaid card from Starbucks, for instance, is a closed-loop card because it can only be used in Starbucks locations.

Prepaid cards with an open loop are more adaptable because cardholders can use them at any establishment that accepts the prepaid card’s payment network (Visa, Mastercard, or American Express).

What is the cost of a prepaid card in Canada?

Shut circle cards, for example, gift vouchers and a few web-based pre-loaded cards, by and large have no expenses: You will only need to purchase them and load the amount onto the card.

However, open-loop cards typically levy some kind of fee. Some may require you to pay a fee each time you reload funds onto the card, charge an annual or monthly fee regardless of whether you have used the card, or come with an activation fee. Prepaid cards similar to these are typically sold at gas stations and grocery stores.

Some open-circle pre-loaded cards accessible on the web, like KOHO and STACK, charge insignificant expenses — at times none by any means. You would need to place an online order for a card through one of these Canadian fintech businesses. You can activate and load funds onto your card when it arrives. While using the standard features is almost always free, some of these cards may charge a fee for premium features.

Before purchasing a prepaid card, you should always investigate the specifics and consider the various features that might pique your interest.

The most important aspects to take into account are:

Utilized network The Visa, Mastercard, or American Express networks are utilized by each and every prepaid card in Canada. You should select a network that works at the majority of the places you shop because not all merchants accept cards from all networks.
Costs incurred. Monthly fees and activation and reloading fees may apply to some prepaid cards. Additionally, common credit card fees like foreign exchange, bill payment, and ATM use fees may apply.

Limits on funds. There are daily load, spending, cash withdrawal, and transaction limits on many prepaid cards. Additionally, balance and point-of-sale restrictions may limit your spending capacity.

Earned rewards Rewards like cash back or points can be earned with a few prepaid cards. Some offer accelerated rates with specific merchants or a flat percentage on all purchases, while others, like the MogoCard Prepaid Visa and the Wealthsimple Card, may function like cryptocurrency credit cards and offer cryptocurrency as a reward.

insights into spending. Pre-loaded charge cards presented by online-just banks and fintech organizations might give you spending experiences to assist you with understanding where your cash is going. Additionally, they might provide tools to help you better manage your money, such as round-ups, which round up your purchases to $1, $2, $5, and so on. and deposit the additional sum into a savings account with a high interest rate.

is there any Bonus for prepaid card referrals?

When you sign up for and load funds on some prepaid cards, you can get a cash referral bonus. Most of the time, both the referee and the referrer are rewarded.
Direct store. You can set up direct deposits on some prepaid cards to have payments, like your paycheque, sent directly to your prepaid card.
Options for paying. Prepaid cards can typically be used to make purchases both online and in-store. You can use them to pay bills, send Interac e-Transfers, use foreign currencies, and send money to other users directly, just like you would with a mobile payment app.
Options to load There are various load options for each prepaid card. Using an e-Transfer online is the most common way to add funds, but some cards let you add money with credit cards or even in person at participating stores like pharmacies, gas stations, and grocery stores.

ATM access Prepaid cards can be used to withdraw funds from any ATM if you need cash. Keep in mind that there might be charges.
Features for safety You can freeze your card and use enhanced security features like a chip and PIN on some prepaid cards. However, gift cards typically lack security features, so if you lose one, you are out of luck.

Insurance. 

Prepaid cards are issued by some member institutions of the Canada Deposit Insurance Corporation (CDIC), which insure eligible deposits up to $100,000. However, insurance is not provided by the majority of prepaid cards, including those found in grocery, drug, and gas stations. To get insurance and security features (like fraud protection), you usually have to buy your prepaid card from a bank or fintech company that is regulated by the federal government.

Additional advantages Prepaid cards from fintech typically come with a virtual card that can be accessed through the app, eliminating the need to carry a physical card. Google Pay and other digital wallets are compatible with some.