An In-Depth Look at the Top Prepaid Cards in Canada
We Canadians love our credit cards, but they aren’t right for everyone. A prepaid card can be an excellent payment alternative if you’d like to limit your spending and minimize debt, or if you simply don’t have the credit score to qualify for a regular credit card. And a good prepaid card today can be more than just a means of making purchases; the cream of the crop might earn cash back or rewards, offer budgeting tips, and protect you from identity fraud.
Prepaid cards are often confused with secured credit cards, and though these two card types do have some overlap in functionality, they also differ in key ways. We’ve assessed Canada’s best options for both card types below. Which is the right fit for you?
In This Article:
Best Prepaid Cards and Secured Credit Cards in Canada
|Credit Card||Card Type||Card Features||Annual Fee|
|KOHO Prepaid Visa Card||Prepaid||0.5%–2% cash back on purchases and easy savings||$0 (Basic) or
$84 (or $9/month) (Premium) / year
|Mogo Visa* Platinum Prepaid Card||Prepaid||Plant a tree and earn bitcoin with every purchase||$0|
|CIBC Smart Prepaid Visa||Prepaid||No withdrawal fees at CIBC ATMs||$0|
|Home Trust Secured Visa||Secured Credit||19.99% APR|
|Refresh Financial Secured Card||Secured Credit||No credit check|
|$48.95 ($12.95/annual fee + $3/maintenance fee per month)|
KOHO Prepaid Visa Card
Prepaid Card for Cash Back Lovers
The KOHO prepaid Visa card is the best prepaid option if you’re looking to stay on budget while still earning rewards. KOHO works almost like a debit card—the card is actually linked to your KOHO spending account and the amount you can spend on the card is determined by your account balance. But it acts like a cash back card in that you earn 0.5% cash back on all purchases, or 2% cash back in three categories with KOHO Premium. You can even earn 1.2% interest on your account balance if you set up a direct deposit.
There are no account fees and no minimum balance required with a KOHO account. Also note that you can earn an additional cash back amount (up to 5%) when you use your KOHO card at participating retailers. For example, you’ll get 3% extra cash back when you use your KOHO card at Pizza Pizza.
- Perks: Earn 0.5% cash back (2% for three categories for Premium), earn even more cash back at select retailers, no fees for most transactions, Roundup feature to seamlessly save extra money
- Withdraw Fees: KOHO itself does not charge any fees, but you could be charged $2–$3 depending on the out-of-network fee charged by the ATM.
- Spending Limits: $3,000 daily limit
- Interest: Earn 1.2% on account balance if you set up direct deposit
- Annual Fee: No annual fee for a KOHO basic account; $84 (or $9/month) a year for KOHO Premium
Mogo Visa* Platinum Prepaid Card
Reloadable Card with a Green Twist
The Mogo Visa* Platinum Prepaid Card (also called MogoCard) is a free reloadable prepaid card full of unique perks. Each card purchase earns 50 satoshis (the smallest units of bitcoin), which can be quite a lucrative perk depending on how bitcoin’s value fluctuates. And every time you use your MogoCard you’ll plant a carbon-sucking tree—for free. Mogo claims that by using your card eight times per month over a year the resulting trees planted will absorb a combined total of approximately 48,000 lbs of CO2 over their lifetimes, enough to make the average Canadian climate positive for one year.
The card also provides access to a handy app where you can track your transactions, get insights into your spending habits, and benefit from free monthly credit score monitoring and identity fraud protection. You can also set spending goals, instantly freeze your card if it’s lost or stolen, and more.
- Perks: Plant trees and earn bitcoin with every purchase, free credit score monitoring, free identity fraud protection
- Withdraw Fees: $1.50 domestic ATM withdrawal, $3.00 international ATM withdrawal; max $500 daily withdrawal
- Spending Limits: Can spend up to $3,000 per transaction, up to $5,000 a day
- Loading Limits: Max card balance of $10,000
- Other Fees: No annual fee but there is a 2.5% foreign exchange fee and a monthly inactivity fee of $1.99 if you haven’t used your card in 365 days
CIBC Smart™ Prepaid Visa* Card
A Rechargeable Present
The CIBC Smart™ Prepaid Visa* Card is very easy to use: You just buy a CIBC Smart™ Prepaid Visa* Card through online or mobile banking, or at any CIBC Bank branch. Then you load it with at least $20 from your CIBC chequing, savings, or personal line of credit account. You must have a CIBC account to load the card and you can reload it online or at any CIBC branch. Cardholders enjoy online access to account details and pay no fees for CIBC ATM withdrawals in Canada. There is, however, a 2.5% fee for any non-Canadian dollar transactions.
- Perks: Easy to buy and reload as long as you have a CIBC bank account, no credit check
- Withdraw Fees: No fees to use card or make withdrawals at a CIBC ATM. Non-CIBC ATMs in Canada may charge an additional ATM withdrawal fee. There is a fee of $3.50 for withdrawals made at ATMs outside of Canada
- Spending Limits: $3,000 daily spending limit
- Loading Limits: You are allowed to put as much as $10,000 onto the card, with a max daily load of $3,000.
- Annual Fee: $0
Best Prepaid Card Alternatives: Secured Credit Cards
Home Trust Secured Visa
Secured Credit at No Additional Cost
The Home Trust Secured Visa requires no minimum credit score (most applicants are accepted) and you can choose from a wide range of security deposit amounts, ranging from $500 to $10,000. The card even features two different options for annual fees depending on what interest rate you want (pay a $59 (or $5/month) annual fee to get an APR of 14.90%, or no annual fee for 19.99% APR). Home Trust reports your account activity to Canada’s two credit bureaus so you can use the card to boost your credit score.
- Perks: Easy approval, and payments are reported to credit bureau so could improve your credit score
- Withdraw Fees: $2.50–$10.00 for Cash Advances from an ATM displaying the Visa or Plus logo located in Canada or $4.50–$15.00 for Cash Advances if the ATM is located outside Canada and the United States, depending on the amount of Cash Advance.
- Spending Limits: None as long as you don’t exceed your credit limit
- Deposit: Up to $10,000
- Annual Fee and Interest: $59 (or $5/month) and 14.90% interest on purchases; or no annual fee and 19.99% interest on purchases
Refresh Financial Secured Card
Low-Barrier Credit Access
The Refresh Financial Secured Card offers guaranteed approval to anyone who can meet its basic eligibility requirements (being age of majority and making at least a $200. The card comes with a $48.95 ($12.95/annual fee + $3/maintenance fee per month) annual fee, and has a purchase interest rate of 17.99%. The card also features free online financial management courses. Watch out for some unexpected fees like a $0.50 bill payment fee, $5 ATM withdrawal fee, a $2 monthly fee for inactivity, and a 3.5% foreign transaction fee.
- Perks: Helps build credit score, provides educational resources for personal finance, lower than average purchase interest rate of 17.99%
- Withdraw Fees: $5 fee for ATM withdrawals
- Spending Limits: None, but can’t exceed credit limit (the security deposit you made). If you do exceed it, you will be charged $5 for the first time and then your card will be cancelled.
- Deposit: Up to $10,000
- Annual Fee and Interest: $48.95 ($12.95/annual fee + $3/maintenance fee per month) annual fee; 17.99% purchase interest rate
*This card is owned and issued by DirectCash Bank pursuant to license by Visa International. The Visa Brand is a registered trademark of Visa International.
How Do Prepaid Cards Work?
Like traditional debit and credit cards, prepaid cards can be used to make online and in-person purchases, or to withdraw cash from an ATM. They’re a great asset for budgeting, because you load a prepaid card with whatever amount of money you wish and can’t spend beyond that amount until you load the card again. For example, if a cardholder adds $500 to a prepaid card and spends $200 on a hotel reservation or night out, then they can spend a maximum of $300 more before the card becomes unusable and must be reloaded.
Some other key things to remember about prepaid cards include:
- cards are sometimes mistakenly referred to as ‘ .’ A is not interchangeable with a , however, as unlike a a is not connected to a checking account.
- They’re not credit cards. The term ‘ ‘ is also thrown around quite a bit, but cards do not work like cards, as their purchases are not subject to interest charges and their use is not reported to bureaus. Spending with a prepaid card therefore has no influence on your credit score, positive or negative.
- There’s no free lunch. While a prepaid card might not charge an annual fee, it’s still intended to make a profit for its issuer and may charge fees to load money onto the card, make ATM withdrawals, etc. Be sure to read the fine print.
Related: How to Create the Perfect Budget
Where to Buy Prepaid Cards
A wide variety of Canadian financial institutions offer prepaid cards today, including some of the Big 5 banks, as well as a number of newer competitors. The easiest way to get a prepaid card is to apply for it online (check out our links above) and receive it by mail—this will likely be the only way to receive prepaid cards issued by smaller institutions. Bigger banks may issue their prepaid cards in person at a branch, and they may require you to have a bank account with them as a prerequisite to get their prepaid card.
Most (but not all) prepaid card issuers require cardholders to be at least the age of majority in their province. Requirements other than that are scant, which make prepaid cards a viable payment solution for those with a shaky credit history, or those with no credit history at all.
Prepaid Card Pros
- Facilitates easy cashless payments
- No credit check for approval
- No interest charged on purchases
- Helps with sticking to a budget, because you can never spend more than what you’ve loaded onto the card
Prepaid Card Cons
- Will not improve your credit score
- Some charge fees for loading funds, ATM withdrawals, etc.
- Typically earn less rewards/cash back and have fewer value-added features than top unsecured credit cards.
How Do Secured Credit Cards Work?
Secured credit cards require you to make a deposit up front, and the deposit amount usually matches the spending limit you’re given by the card issuer. Note that the card’s security deposit isn’t used to pay off the card’s balance each month. Rather, the deposit acts as collateral to ensure you pay off your debts. You’ll get the deposit back when you close the account, provided your balance is paid off and the account is in good standing.
Secured credit card balances are subject to interest, but consistently paying off your card balance by its due date will allow you to evade interest charges, as well as improve your credit score over time.
With a secured credit card, it’s important to note:
- A credit check may be required to get a secured credit card, but the eligibility barriers are very low, and the vast majority of applicants are accepted.
- Unlike a prepaid card, with a secured credit card your purchases will be subject to interest, so you need to stay on top of paying off your balance each month.
- As cardholders pay their secured credit card bill each month, or at least make the minimum payment, their credit score will gradually increase.
Secured Credit Card Pros
- Can build up your credit score
- Greater flexibility than a reloadable prepaid card because you don’t need to instantly spend your own money
- You can set your own credit/spending limit via the security deposit you decide to make.
Secured Credit Card Cons
- Charges will be subject to interest if you don’t pay off in full each month.
- Could damage your credit score if used irresponsibly.
- May charge annual fees
Here’s a table to help summarize the differences between prepaid cards and secured credit cards:
|Item||Prepaid Card||Secured Credit Card|
|Fees||Likely no annual fee, but fees may be charged to reload the card or make ATM withdrawals||May or may not have an annual fee + fees for cash advances, foreign transactions, etc.|
|Credit Limits||You can only spend whatever amount you add to the card||Your security deposit becomes the card’s credit limit|
|Credit Score||Will not affect your credit score||Will affect your credit score|
|Interest Rates||Purchases are deducted immediately; you can’t carry a balance||You can carry a balance and thus can be subject to interest rates|
Should You Get a Prepaid Card?
Even if you count yourself among those who prefer to be unbanked, these days it’s virtually impossible to make all your transactions in cash. Prepaid cards can be a fitting middle ground if you’ve sworn off credit and debit cards, but still want the convenience of cashless payments. A prepaid card can also be a useful tool for those who’ve had chronic problems repaying their credit card balances and are planning to set stricter limits on their spending.
That said, if you’re looking to set spending limitations and simultaneously improve your credit score, you might elect to go with a secured credit card.