6 Best Prepaid Credit Cards in Canada for 2024 (2024)

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A prepaid card, sometimes referred to as a “prepaid credit card”, can serve as a budgeting tool or an easy way to make online or in-store purchases. Some even earn rewards.

Make the most of this widely accepted payment method by learning more about Canada’s best prepaid cards.

Summary of the best prepaid cards

What to know about prepaid cards

In this section, we’ll help you navigate the world of prepaid cards by exploring the following topics:

• What is a prepaid card?
• How do prepaid cards work?
• Where to buy prepaid cards
• Choosing the best prepaid card for you
• Getting the most out of your prepaid card

What is a prepaid credit card?

Prepaid credit cards aren’t technically credit cards because you’re not borrowing the money. Instead, they function similarly to debit cards and gift cards in the sense that you can only spend the money you already have.

You might hear them referred to as “reloadable credit cards”, “pay-as-you-go credit cards” or “prepaid cards”, but they generally all work the same way.

How do prepaid cards work?

Instead of borrowing money, you load funds onto a prepaid card and then use it to make purchases. How much money you load onto the card determines the total amount you can spend.

There are two varieties of prepaid cards:

• Closed-loop cards, which have a set amount of money already loaded, much like a store gift card.
• Open-loop cards, which can be used anywhere, and are typically reloadable..

Once you’ve received a prepaid card and added funds to it, you can use it to make online and in-person purchases wherever the card’s payment merchant (Visa, Mastercard or American Express, for example) is accepted.

Types of prepaid cards

There are several different types of prepaid cards available, so it’s a good idea to know what they are and how they work.

• Prepaid Mastercards can be used everywhere Mastercard is accepted, including Costco, which does not accept Visa and American Express for in-store purchases.
• Prepaid Visa Cards can be used anywhere Visa is accepted. Visa also makes gift cards, which are sold (and accepted) at many retailers.
• Prepaid Amex Cards come in set amounts and are not typically reloadable. You can only use them at merchants that accept American Express.
• Prepaid travel cards are generally reloadable cards that may hold multiple foreign currencies or offer travel perks. A card loaded with multiple currencies allows you to know the exchange rate upfront, and you won’t need to carry different physical currencies. Some also allow you to withdraw funds at foreign ATMs and limit foreign transaction fees.
• Prepaid gift cards may be available for a specific merchant or network of retailers, or as a general Visa, Mastercard or Amex card that can be used anywhere. These cards are usually not reloadable.

Prepaid card maintenance

Using a prepaid credit card requires a little work on your end. You’ll have to:

• Activate your card. Most are activated as soon as you load funds, but others may require you to register your card before activation.
• Check your card’s balance. Some prepaid cards have a website where you can check your balance. Others have an app.
• Reload your card. You can typically add more funds to your reloadable prepaid card via an app, your online account or e-Transfer. A few cards let you reload your balance at select locations like the post office. You may be able to transfer the balance of one gift card to another if they’re from the same merchant.

Where to buy prepaid cards

Prepaid cards that have set limits can be purchased at some grocery stores, drug stores and gas stations. A few banks and credit unions offer reloadable cards online and in person.

The most common way to obtain a prepaid card is by securing one through an online-only bank. These cards tend to carry more features, like rewards and spending insights. You can generally apply for these cards online in a few minutes, and they get shipped right to your address, so there’s little effort on your end.

How much does a prepaid card cost?

Closed-loop cards, such as gift cards, generally have no fees: you just need to pay for the amount you load onto the card.

Open-loop cards, however, typically charge some sort of fee. Some may come with an activation fee, charge an annual or monthly fee regardless if you’ve used your card or not, or require you to pay a fee whenever you reload funds to the card.

Choosing the best prepaid card for you

The essential features to consider when choosing a prepaid credit card include:

• Network. Some merchants do not accept cards from every network (Visa, Amex or Mastercard, for example), so choose a network that works at most of the places you shop.
• Fees. Some prepaid cards may have monthly fees and costs associated with activation and reloading funds, as well as foreign exchange and foreign ATM fees.
• Limits. Many prepaid cards have daily load, spending, cash withdrawal and transaction limits.
• Rewards. A few prepaid cards earn rewards, such as cash back.
• Loading options. Every prepaid credit card has different loading options, such as in-person, online or via an app. Make sure the one you opt for makes loading your card convenient and quick.

Other considerations might include:

• ATM access. If you need access to cash, you can use some prepaid cards to withdraw funds from ATMs. Fees likely apply.
• Security features. Some prepaid cards have enhanced security features like chip and PIN and the ability to freeze your card. Gift cards typically do not have any security features.
• Spending insights. Prepaid credit cards offered by online-only banks and fintech companies may give you spending insights to help you understand where your money is going, or tools to boost your money management skills.
• Referral bonuses. Some prepaid cards have a cash referral bonus when you sign up and load funds. In most cases, both the referrer and the referee get a reward.
• Direct deposit. A few prepaid cards allow you to set up direct deposits to have payments, like your paycheque, sent right to your prepaid card.
• Payment options. Some also let you pay bills, use foreign currencies, send Interac e-Transfers or send money directly to other users as you would with a mobile payment app.
• Virtual use. Fintech prepaid cards typically have a virtual card (usually available in the app), so you don’t need to carry your physical card. Some are compatible with digital wallets, like Google Pay.

Getting the most out of your prepaid card

A prepaid card can come in very handy for both online and in-person shopping. And since using one doesn’t typically affect your credit score, it can be a relatively low-risk way to make purchases.

Who can benefit from using a prepaid card?

• Someone unable to obtain a traditional credit card due to their credit history, and want to take advantage of credit building services offered by some prepaid card providers.
• Newcomers to Canada who are ineligible for a traditional credit card and haven’t yet set up a bank account.
• Unbanked or underbanked consumers struggling to qualify for a traditional credit card or bank account.
• Kids or teens who aren’t old enough for a credit card or bank account and want to practice budgeting their money.

Pros of prepaid cards

• No overspending. Because you have to load a prepaid credit card before using it, you can’t spend money you don’t have. Just make room in your budget for the cash you plan to spend.
• Safer than cash. If you lose the money in your wallet, it’s usually gone forever. Some reloadable prepaid cards may allow you to recover your funds even if your card is lost.
• Easy to reload. Reloads on prepaid cards can often be done in-person, online or via a mobile app.

Cons of prepaid cards

• No credit building. Since prepaid cards aren’t credit cards, your credit score won’t improve while using them unless the provider offers a credit-building program.
• Limited rewards. While some prepaid cards give you cash back, you won’t get the attractive additional benefits that come with traditional credit cards, such as airport lounge access, travel insurance and mobile device insurance.
• Potential fees. Some prepaid cards have activation and monthly fees that can eat into your balance.

Alternatives to prepaid cards

• Use debit. Physical and virtual debit cards, which are tied to a bank account, give you direct access to your chequing account. Just be wary of how much you’re spending — you might run through your entire cash supply quicker than you think.
• Go secured. Secured credit cards act like traditional credit cards but require a security deposit to apply. The card’s credit limit is typically equal to the security deposit.. The advantage over prepaid cards is that secured cards can help you build your credit score. See our picks for the best secured cards in Canada.

» MORE: The best credit cards for bad credit