While credit cards are useful for online purchases and bookings, there are times when you might need an alternative. This is where prepaid credit cards come in. They’re more like debit cards or gift cards because you’re not borrowing money or paying interest. Instead, you tap into the funds that you’ve loaded onto the card.
If you’re looking for a prepaid credit card in Canada, we’ve got you covered with our round-up of the top prepaid cards on the market.
Overview of the best prepaid credit cards in Canada
Card Main Benefits Annual Fee More Info KOHO Visa Save/spend hybrid; 1.20% interest on deposits; 0.5% cash back $0 Visit Site
Mogo Visa* Platinum Prepaid Card Free credit monitoring + a tree will be planted for every card transaction $0 Visit Site
STACK Prepaid Mastercard® No foreign exchange fees; No ATM fees; cash back/discounts at selected retailers; can load hard cash $0 Visit Site CIBC Smart™ Prepaid Travel Visa* Card Load foreign currency to avoid exchange surprises See terms below Visit Site
Why use a prepaid credit card
Prepaid cards in Canada are supported by Mastercard or Visa so you can use them wherever those cards are accepted, which is usually a wider range of places than a simple debit card.
For example, you can use a prepaid card for hotels, flights and spending in foreign countries. You can also get perks like cash back, protection for unauthorized purchases and the ability to freeze your card (usually instantly through an app) if it is lost or stolen. And you can always withdraw cash from an ATM if you need to.
Prepaid cards in Canada have the additional advantage of being extremely accessible—they are not linked to a traditional bank account and you don’t need to submit your credit history. However, at the same time, they also won’t build up your credit score.
Prepaid credit cards come in handy as an alternative or addition to a debit or credit card. They’re especially useful for:
- Newcomers who don’t have a Canadian credit history
- Canadians with low credit scores who don’t qualify for a traditional card
- Parents who want to give their children an allowance
- Spouses or business partners who want to use a card to track expenses
- Those who deal primarily in cash and don’t want to deposit funds in a traditional bank account
- Travellers who don’t want to worry about carrying around cash
- If you want a separate account for your monthly recurring bills like utilities
But all prepaid cards are not made equal—each one has different perks and fees. Let’s look at the best prepaid credit cards in Canada:
KOHO offers several prepaid, reloadable cards, which also function as an integrated app that gives real-time insights into your daily spending. There are three KOHO cards:
- The KOHO Visa doesn’t have an annual fee and gets you 0.5% cash back on all your purchases—a feature that’s unique to KOHO prepaid cards so far. Read our full KOHO Visa review.
- The KOHO Premium comes with an annual fee of $84 (or $9/month), but you’ll get 2% cash back on transportation, groceries, and restaurant purchases and 0.5% on everything else. Plus there’s free financial coaching and you won’t pay any foreign exchange fees when you shop outside of Canada. Read our full KOHO Premium review.
- The KOHO Joint Card ($0/year; 0.5% cash back on everything) is perfect for spouses or business partners who want to track savings and expenses through a joint account. It even notifies you when your partner spends and allows you both to track everything through the app.
All are hybrids of a chequing account and a credit card. Like a chequing account, you can deposit money into your KOHO account, earn interest on deposits, and debit purchases. Like a credit card, you can use your KOHO card anywhere Visa is accepted, and get cash back (and other perks!) on your purchases.
Another plus: KOHO’s prepaid Visa cards are connected to their high-interest Earn Interest savings account, which has a interest rate. They are a great option for those who like to keep a lot of funds in their chequing account for bills, shopping or joint expenses.
You can add funds to your account using Interac e-Transfers, Visa Debit or direct deposit. However, there are no third-party e-Transfers allowed, so you may not want this card for your dependants if you plan to transfer money to them often.
There are no ATM fees, however, you’ll be charged a $0.75 fee to load money into your account through Visa Debit if the amount is under $500.
Mogo Visa* Platinum Prepaid Card
Mogo Visa* Platinum Prepaid Card is a prepaid Visa presented by Mogo, a Canadian-based FinTech company that offers free credit score monitoring, free identity fraud protection, an easy way to buy and sell bitcoin, and personal loans. And for every card transaction, a tree will be planted.
You can deposit funds through Visa Debit or Interac e-Transfer. While it doesn’t have an annual fee, Mogo does charge a 2.5% foreign exchange fee, $1.50 for using a Canadian ATM, and $3 for foreign ATMs. The inactivity fee after a year is $1.99 a month, so don’t forget you have this card!
When you create a Mogo account, you also get access to free credit score monitoring and free identity fraud protection, as an added bonus.
STACK Prepaid Mastercard®
The STACK Prepaid Mastercard® is a digital, reloadable credit card available through the Stack app (they don’t offer physical cards). What’s unique about this card is that you can load cold hard cash—simply go to any Canada Post’s location, or select convenience stores and gas stations. This is fantastic for those who don’t have access to traditional bank accounts or for those who get paid primarily in cash, such as servers.
Of course, you can always send an Interac e-Transfer or get a direct deposit as well.
On the one hand, Stack is great for travel. You get 20% cash back when booking select hotels with STACK Travel and you won’t be charged foreign exchange fees or international ATM fees.
On the other hand, what happens when your phone dies or is stolen? You won’t have access to the card anymore. It’s probably best to bring a backup credit card just in case.
And while there is no set cash back on spending, except on hotels, you do get discounts at certain retailers.
CIBC Smart™ Prepaid Travel Visa* Card
The CIBC Smart™ Prepaid Travel Visa* Card is a fantastic option for those who are travelling to America, Europe, Mexico or England because you can load each respective country’s currencies on the card. It’s a convenient way to shop for those on vacation who don’t want to carry cash—you can lock in your foreign exchange fee at the time of deposit.
If you’re a current CIBC customer you can load it at any bank branch or transfer funds online. Otherwise, you can purchase and load funds to a card from Pearson airport with any debit or credit card. You also get free cash withdrawals at CIBC ATMs within Canada and one free international ATM withdrawal a month. There is a fee of $5.95 (one time customization fee).
Prepaid credit cards versus secured credit cards
A secured credit card is a way for borrowers to build or repair credit. You “secure” the amount you want to borrow by offering the lender that amount as a cash deposit. By using your card and proving you can make payments on time you slowly build your credit to the point where eventually you can qualify for a traditional, unsecured credit card. If you fail to pay off your balance you will be charged interest. If you default on payments the bank lender will take your security deposit.
The Plastk Secured Credit Card is a good example. Once your application is approved you provide a collateral deposit in the same amount as the credit limit you want. Then you simply spend normally. It has a competitive interest rate of 17.99% and provides a monthly credit score update from Equifax so you can track your progress. The fees are steep—$120 ($48/annual fee + $6/maintenance fee per month)—but getting a card like this is a short-term stepping stone that’s meant to be used for a year or two as you improve your credit.
Another option is the Refresh Financial Secured Card, which works the same way as the card above, but comes in at a lower price point of $48.95 ($12.95/annual fee + $3/maintenance fee per month). The interest rate is also 17.99%. It doesn’t come with notable perks, however it’s an excellent option if you’re looking to rebuild your credit with a basic card.
In contrast, a prepaid credit card does not require you to borrow money, and since you don’t have payments to make, you won’t be charged any interest. These cards also don’t affect your credit score. You aren’t depositing funds as collateral. Instead, you are depositing the funds you want to spend.
How to pick the right prepaid card
To pick the right prepaid card, ask yourself what you’ll be using the card for the most, and then find one with corresponding perks. Are you a big traveller? Then, get a card without a foreign exchange fee or one that comes in the currency of the country you’re visiting. Want a card to save money while tracking spending? Then go with an associated high-interest savings account, like KOHO Earn Interest.
For consumers comfortable with digital banking it’s probably best to choose a prepaid card from one of the Canadian FinTech companies because these cards often come with low fees and bonus rewards.
The Big Five banks and other more traditional lenders also offer prepaid cards, but these usually come with high fees and have limited features. Plus, you must usually already have an account with the bank in order to load funds. Still, consumers may feel more comfortable with these established institutions, or they may prefer to have all their financial products in one place.
Remember: the basic functionality of each prepaid card is the same—it’s the extra benefits and fees that make up the difference.