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An In-Depth Look at Prepaid Cards in Canada

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Last updated on July 31, 2019 Views: 547 Comments: 25

Like traditional debit and credit cards, prepaid cards can be used to order products from the internet, book airfare and hotel accommodations, and withdraw cash from an ATM. They offer a similar level of flexibility as traditional cards, but without the strings attached: unlike their plastic counterparts, many prepaid cards are not connected to financial institutions. Neither a bank account nor a credit score is required to get a prepaid card, making it one of the most accessible payment methods around.

Prepaid cardholders can only spend as much money as they’ve already deposited. 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. All of these factors make prepaid cards ideal for those who can’t get approved for traditional credit or debit cards, or for those who simply want to use them as a budgeting tool.

Best Prepaid Credit Cards Canada

Credit CardCard FeaturesAnnual FeeCard ReviewApply for Card
Scotiabank Prepaid Reloadable Visa$10 annual fee
Free reloads
$0Read MoreApply Now
Home Trust Secured Visa No Annual FeeNo credit check
19.99% APR
Limit: $500-$10,000
$0Read MoreApply Now
Refresh Financial Secured VisaNo credit check
17.99% APR
Limit: $200-$10,000
$48.95Read MoreApply Now
CIBC Air Canada® AC Conversion™ Visa* Prepaid CardUp to 10 different currencies (simultaneously)
Draw from same currency as pre-loaded on card
$0Read MoreApply Now
CIBC Smart Prepaid Visa24/7 online access
$0Read MoreApply Now
Canada Post Prepaid Reloadable Visae-wallet app
No bank account, no credit check needed
$0Read MoreApply Now

The Benefits of Prepaid Cards

Studies indicate that 37% of Canadians surveyed expressed interest in prepaid credit cards, while another recent study indicated a 17% spike in acquired prepaid cards from 2016 to 2017. What makes these prepaid credit cards such a handy financial asset? Here are just a few examples:

  • Purchasing power for Canadians with credit concerns or ambition to build credit
  • Lowered or eliminated overdraft fees and interest
  • Secure & cost-effective online and in-store purchases
  • Automated bill payments

From families, to individuals, to business owners and travellers, there are perks to enjoy with prepaid credit cards in Canada, but also fees and factors to consider.

Prepaid Cards Limitations

While accepted by millions of vendors, prepaid cards may also have strict credit limits, high transaction fees and other drawbacks. Bank-issued prepaid cards. vs non-financial institution prepaid credit cards can differ, along with funded prepaid debit cards vs. prepaid secured credit cards. How? The primary difference is that the use of a prepaid debit credit card does not affect your credit rating (for better or worse), while the use of a prepaid secured credit card does and offers an opportunity to build or rebuild credit.

Which is best for you? Discover the options.

Types of Prepaid Cards – Prepaid Debit vs. Prepaid Credit Cards

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Prepaid debit cards and secured credit cards differ substantially. A prepaid debit card is loaded with funds and can then be used by the cardholder to make purchases. The card may be intended for one-time use, might be anonymous for security reasons, and can’t always be used for online purchases.

Prepaid secured credit cards also require a security deposit. But unlike a debit card, if cardholders responsibly pay their credit card bill each month, or at least make the minimum payment required, their credit score gradually increases. If they don’t make their required payments, their credit score decreases and the credit card issuer can tap into the security deposit in order to cover the charges.

Prepaid Debit Cards

Some noteworthy perks of prepaid debit cards include:

  • Useable for cashless shopping
  • Low annual fees
  • Great for gifts
  • Bypass banks or financial institutions
  • Money management tool for individuals and businesses
  • Accessible to all

CIBC Conversion Card

Prepaid Debit Cards for International Travel and Online Shopping

CIBC Air Canada AC conversion Visa Prepaid CardPrepaid cards are very convenient for their low barriers to entry and simple functionality, but they’re typically not recommended for use while travelling abroad. The CIBC Conversion card changes this notion, however, with its travel-friendly ability to hold multiple international currencies simultaneously. Up to 10 different currencies can be loaded to the card at locked-in exchange rates, and then spent while abroad.

This card feature extends into the online shopping realm as well. If you frequently purchase from US-based eCommerce companies, for example, then you might opt to load the card with USD whenever you see the most favorable exchange rate and then save those greenbacks for your next online shopping spree. Your currencies are manageable via an online platform provided by CIBC, and cardholders can load the equivalent of up to $20,000 to the card (spread across the different currencies).

CIBC’s AC Conversion card is aptly named, because whenever the cardholder makes a purchase in a foreign currency, the card automatically draws from that same currency—as long as it’s preloaded to the card. With one free international ATM transaction per month, no annual fees, and 24/7 support, it’s a great companion for travellers who might not have the credit required for ‘no foreign transaction fee’ credit cards.

Scotiabank Prepaid Reloadable Visa

Prepaid Debit Cards for Cashless Shopping & Low Fees

Scotiabank Scene Visa

Prepaid cards allow in-store or online cashless purchases and payment processing, and typically come with very low annual fees. For example, with a minor $10 annual fee, and free reloads online or via mobile, the Scotiabank Prepaid Reloadable Visa is fit for a smart shopper. Get up to $2400 loaded on your card, and enjoy low purchase fees deducted on your first value load for only $10. Also, leverage your payment security with zero liability guaranteed, and secure reloads that appear on your card within 48 hours to 4 business days max.

CIBC Smart™ Prepaid Visa* Card

A Rechargeable Present

cibc smart prepaid visaWe’ve all heaved sighs of disappointment after receiving gift cards to stores we never shop in. So when special occasions come around, there’s no better or more flexibile gift to give than pure cash – on a prepaid debit Visa card. The CIBC Smart™ Prepaid Visa* Card, offers cardholders 24/7 online access to account details and easy online reloads (if you want to make it a gift that keeps on giving).

Canada Post Prepaid Reloadable Visa® card

Forget Credit Checks or Bank Accounts

Not all Canadians have bank accounts, or a high enough credit score to be approved for a credit card. But most of us have a mobile phone now, and cards like the Canada Post Prepaid Reloadable Visa® card allow us to seamlessly manage our money in an e-wallet app. Canada Post and other non-financial institutions offer these prepaid debit cards (both prepaid Visa & Mastercard are available) without a bank account or credit check. Just bring your valid government-issued photo ID to a Canada Post branch and buy the card for $15. Reloads are only $3.

Budget Properly and Manage Your Expenses  

A prepaid card can be a very effective budgeting tool for both individuals and businesses, as it allows them to set monthly budgets/spending limits and ensure they’re not exceeded. You or your employees can easily overspend with a credit card, but a prepaid card keeps a ceiling on spending and you/your business in the black.

Prepaid Credit Cards

Secured credit cards can be an ideal solution for individuals looking to improve their credit score. Qualification requirements are usually minimal, and the card issuer regularly reports a cardholder’s responsibility to credit bureaus. Additional secured card benefits might include:

  • Low annual fees
  • Free financial education resources
  • More security perks and protections than prepaid debit cards
  • Some cards offer eligibility for age 16+
  • Discounts on vehicle and travel insurance

Home Trust Secured Visa No Annual Fee

Low Barriers for Approval

Home Trust Secured Visa Low-Rate credit cardUnlike unsecured credit cards, secured credit cards usually have very low credit score requirements for applicants, and sometimes won’t run a credit check at all. The Home Trust Secured Visa No Annual Fee requires no credit rating minimum (most applicants are accepted), gives two different options for annual fees pending interest rates ($59 annual fee and 14.90% interest or no annual fee and 19.99% interest), international cash withdrawals at over 1 million ATMS worldwide, and a very wide security deposit from $500-$10,000.

Refresh Financial Secured Visa

Financial Know-How Alongside Credit Building

refresh financial visaCredit building is the common selling point in many secured credit cards, but some card issuers pair their clients’ financial growth with financial education resources. The Refresh Financial Secured Visa offers this opportunity via online money management courses called Refresh f.i.t.

Which Type of Prepaid Card Is Right for You?

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There are a range of benefits and drawbacks of using prepaid cards in Canada, be they debit or secured credit cards. With prepaid debit cards you can make cashless payments with ease, simplify the management of your personal or business expenses, bypass credit checks, and keep your credit score unaffected. With secured credit cards, you can receive a range of benefits that many standard credit cards offer, and with responsible use your card is a tool for improving your credit score.

So which card’s for you?

Article comments

25 comments
Felix says:

Just found out the hard way: the Canada Post Pre-Paid Visa card CANNOT be reloaded through Paypal, which is a pain.

You can add it to your Paypal account, and the option to reload it shows up, but it won’t finalize and says “denied” when you try to reload it. I just called and they confirmed on the phone that the only way to reload it is at the post office or through a bank. Would have considered something else if I’d known.

Also sites like this don’t specify which cards can and can’t be reloaded through Paypal, which would be nice to know.

The GreedyRates Team says:

Hey Felix,

Thanks for the comment, and we’re really sorry to hear you encountered these issues with the Canada Post Prepaid Visa! It’s annoying that PayPal could be connected to the card yet prevented from working—seems counterproductive to us. Regardless, if you’re so unhappy that you need to reload it at the post office or at a bank, then you can explore any of the other prepaid cards in Canada and make sure they’re compatible with PayPal before applying. This can be accomplished with a quick phone call to the bank.

In our experience, you’ll have better luck with cards issued by Canada’s bigger banks, or a similarly well-connected financial institution. Banks are better able to provide a network of complementary services for their products (things like PayPal), so we’d recommend looking at a card like the Scotiabank Prepaid Reloadable Visa. If they don’t allow direct transfers, then you can at least link your PayPal account to a bank account and then transfer from PayPal to the bank, and then reload your card using your bank balance. Call Scotia and let us know how the process goes. Good luck!

GreedyRates

Stefanie says:

Scotiabank has cancelled their program, please update the article to reflect this
Dear customer,

This is to notify you that the bill payment relationship between SCOTIA PREPAID and Scotiabank has been terminated. Consequently, you can no longer make payments to SCOTIA PREPAID through Scotiabank. SCOTIA PREPAID has been removed from your payee list and any future-dated or recurring payments to this payee will be rejected.

Please go to pending transactions to delete any payments you may have scheduled. If you have any questions please contact SCOTIA PREPAID directly.

The GreedyRates Team says:

Hi Stefanie,

Thanks for the heads up! Your last date to use the balance on your card is September 30th, 2019 so you’ll still have a few more months with your Scotiabank Prepaid Visa. Two weeks ago was the last day (June 10th) that you could’ve reloaded your card, so whatever is on it currently is all you’ll get. This means that you’ll need to do a thorough checkup of your finances to determine which bills are attached to your Prepaid card and switch them over to a new one.

We’re suggesting that cardholders who come to us with this news check out the similar, yet slightly different Canada Post Prepaid Reloadable Visa. Unfortunately, you won’t get to enjoy the free reloads (they’re $3 each), but we’re currently preparing a list of alternatives for when the Scotia card is actually discontinued later this year. Thanks again and good luck!

GreedyRates

M says:

The Scotia prepaid visa if it has a balance at the end of Sept and it has not been used Scotia will be sending out a cheque to the card holder I just talked with them Yesterday

The GreedyRates Team says:

Hi M,

Thanks for the update. That’s good to hear and more logical than the sparse information we’ve been able to get ahold of so far, which indicated that customers would be risking their cash by not emptying their cards before September 30. In fact, not reimbursing customers by cheque would likely be illegal in Canada, so glad you came to comment and provide further guidance. With our earlier comment, we didn’t mean to insinuate that Scotia would be keeping the money depositing into their customers’ prepaid cards, but it is important to take care of the transfer before you lose access (you can never tell how easy the claim process will be).

With a recent press release published by Scotiabank we can see that it now says, “We will be
communicating with you about how you can claim any funds that remain on your card after deactivation.” That’s somewhat of a relief, so now the only thing you need to worry about is what prepaid card you’ll replace it with! Might we recommend the Canada Post Reloadable Visa? Check it out and let us know what you think.

GreedyRates

Nazir Yar says:

Hi! I want to rebuild my credit via a secured credit card and would like a few different options so I could study the good and the bad of each card. Could you please help me. At the moment I use my debit MasterCard for online purchases and have also used vancity’s prepaid credit card which costs only two dollars and could be filled with up to four hundred bucks.

The GreedyRates Team says:

Hi Nazir,

Great questions, we’ll certainly try to help. First, if you’re trying to rebuild your credit then you need to be using credit—not debit! While banks do pay attention to debit transactions, it doesn’t involve risk or borrowing, so the effect on your credit will be exponentially better even with a secured credit card. The Vancity card isn’t cutting it, unfortunately, because if it has a maximum credit limit of just $400, then you’re restricting yourself needlessly. What if you need to pay an online bill or make a purchase that’s more than $400? The card is out of the question.

In these cases, and also as general advice for those who want to raise their credit score, a secured credit card like the Home Trust Secured Visa is recommended. It comes from a reputable and well-known bank and offers a credit limit between $500 and $10,000 contingent on a security deposit. Grab one of these secured cards via an online application and then use it responsibly—don’t max the credit limit out immediately and take months to repay your deposit.

Let the bill for 30% of the limit come due and pay it off each month, as well as your other balances. Keep your other credit cards open to avoid getting hit with temporary credit score reductions and to keep your utilization ratio up as well. If you need any other assistance, our vlog on credit scores could be helpful, or otherwise email us at info@greedyrates.ca and we’ll respond ASAP.

GreedyRates Staff

cuddywifter says:

Hi there, thanks for the info. The Scotiabank Prepaid Reloadable Visa is being discontinued in September 2019, so you may want to update this article. I have one, and am currently looking for a replacement, which is what brought me here.

The GreedyRates Team says:

Hey Cuddywifter,

Appreciate the heads up for our other reader about the soon-to-be discontinued Scotiabank Prepaid Reloadable Visa. Scotia sent out a warning to cardholders that if their account wasn’t closed by September 30, 2019 that it would automatically close them without any remuneration for the funds you lost. This is super important for this reason, but notable that the September date is the last of four crucial dates regarding this card and also the Scotia SCENE Prepaid Reloadable Visa.

On June 10, 2019 this is the last day you can reload your card, and also the last day that bill payments from third-party financial institutions will be accepted. On July 1, 2019 Scotia will stop issuing replacement cards, and then finally on September 30, 2019 you’ll lose access to the card completely (and the funds along with it). Be sure to spend them before this date!

If you’re looking for an alternative card, then check out Canada Post’s Prepaid Reloadable Visa. It’s almost identical to the Scotia one, but instead of free reloads you’ll be charged $3 each time. You can control the relative cost of this fee by depositing more, less often, of course. Otherwise, it can also be used to transfer money to other people’s accounts for free, by using the handy online portal.

GreedyRates

Catalina P. says:

As owner of a small trucking company, I like to give my drivers a prepaid credit card to pay for hotels, meals and small repairs (like flat tires) and parts purchasing on the road. The idea is to have a track record of expenses for each unit ( receipts do get lost) and to save my drivers to call me every time for a small purchase since I’m also out working and not in cell range all the time. The thing I don’t understand is why it take so long to reload funds to the cards, when in this day and age, everything is instant. The other thing I learned, Scotia Bank will not issue cards to card holders with a PO Box address. Well, I live in rural BC, Canada, like thousands other Canadians. There is no door to door mail service out here. Any suggestions?

The GreedyRates Team says:

Hey Catalina!

Great question, and thanks for providing context as well. If your drivers are on the road and you want a way to easily reload their prepaid cards, then you should check out the CIBC Smart Prepaid Visa. There’s no prepaid card as flexible as this one, which offers acceptance virtually everywhere and simple, free online reloads from one admin account. You’ll be able to easily get a visual on your employee expenses and then reload their cards individually from a remote location (like the trucking HQ or even your home).

Unfortunately, we’re unsure if CIBC has the same rule about P.O. boxes that Scotia does. This is probably something you should check with them over the phone before getting several copies for your employees, but it’ll take no time at all. Let us know how it goes and how your employees like the cards. We’re sure they will!

GreedyRates

Richard S. says:

You might be able to setup a remote “mailbox” at a business that provides “street addresses”. I have done that for my business for 10 years. Should cost between $100-$250 per year.

Joe Doe says:

I’ve been doing this for years, it’s great especially in the day and age of no privacy you can set up a google account, lets say under the name Joe Doe use a prepaid card to make purchases on google play (like a VPN) make eBay purchases under the same name (for things like prepaid sim cards) set it up cell plan etc. Online bus and train tickets etc you can then move around and communicate freely.

The GreedyRates Team says:

Hey Joe,

Interesting comment! Your perspective on prepaid cards is much appreciated, and yes, if you value anonymity yet still want the same financial flexibility afforded via regular credit cards, your strategy is sound. You can absolutely go into a store, pay for a prepaid card with cash, and then use it to purchase connected services like a cell phone and phone plan. Paying for goods is another matter entirely, because to have something shipped to you, you’ll still need to provide an address and other personal details. However, for buying a VPN service, things on eBay, or “goods” that exist only online like in-world videogame items, it’s a winning tactic.

You’ll also want to get non-reloadable cards only, as you likely know. For other readers worrying about the safety of their online communications and identity, it’s important to know that reloadable prepaid cards usually require more personal data to purchase. Non-reloadable cards usually only require a name and address, and as long as that’s the same info you give to the merchant when paying, it’s all above board. While we can’t expressly condone some of the other tricks to using prepaid cards, you can read more into it online from other sources. Good luck “Joe” – and stay safe!

GreedyRates

OttawAl says:

I have an Amex card upon which I will get a boatload of bonus points if I hit a spending threshold within 3 months. I don’t think I will make the threshold because Amex is not accepted in many places I shop. Is there any way to buy a prepaid Visa or MC using my Amex card, without incurring high fees?

The GreedyRates Team says:

Hi OttowAI,

Interesting comment! Unfortunately, most credit cards with bonuses that require you to meet spending milestones will only apply eligible spending to your total. We’re not sure which Amex card you hold, but regardless, we are sure that there’s a section in the fine print dedicated to what constitutes ‘eligible spending’. For all issuers, the “loophole” of buying prepaid cards or gift cards is closed in an airtight manner. It might feel clever to buy something with one card’s credit limit that essentially represents the same flexible purchasing power, but it won’t when you receive your statement and figure out that your plan was for naught. Good try though—and sorry to be the bearer of bad news. Just do you best to meet the spending requirements, and don’t force it if you can’t, because then you’ll burn up any benefits you would have gained from the bonus. Good luck!

GreedyRates

iago says:

Looks like this can only be used where VISA is accepted.

The GreedyRates Team says:

Hi Iago,

The prepaid cards listed in this article are all Visa cards, which means that they’re issued by Visa and therefore won’t work in a place that doesn’t accept Visa as a payment method. In this regard it works the same as any credit card, so if you have a prepaid Visa, be sure to double check that the merchant you want to redeem it at will accept! Thanks.

GreedyRates

CVandergrift says:

This is aggravating………
I have a friend in Canada I send money gifts to sometimes and he has problems getting cash from the MoneyGram stores up there, plus he doesn’t have a car.

I thought would have him get a prepaid debit card in his name, and I would just reload it instead of using MoneyGram, since they don’t have their own cards.

You’d think these companies would be smart enough to have special cards for this kind of thing.

The GreedyRates Team says:

Hey CVandergrift,

What an interesting comment—thanks for sharing. If you’re trying to send money to a friend in Canada, then it’s impossible to avoid some type of exchange or a payment method outside our structured financial system. If you’re sending him dollars, it requires some exchange into CAD for it to be useful to your friend, and this requires a bank. If you could buy a card for someone unrelated to you and simply put money on it that they could use, then this would circumvent the global payments system that’s required for a society with financial accountability and transparency. We recommend going with Western Union or using a service like PayPal to send money gifts to friends in other countries.

GreedyRates

Phil says:

CIBC Smart Visa Prepaid card cannot be used as a gift card. This is stipulated on the CIBC page for the card…so you can’t give it to somebody else for their use.

The GreedyRates Team says:

Hey Phil,

That’s correct. Merchants consider the card a prepaid card, which is more like debit than a gift card. This means that if you apply for it, it will require some personal information from you so that others can’t use it—just you. This is a good thing; usually if you misplace a gift card, anyone can pick it up and use it. If you lose your prepaid Visa card, you wouldn’t want someone to go to the store and buy clothes with it, would you? They can’t because like a credit card, the merchant will check your ID to ensure they match. Stay safe!

GreedyRates

Joe says:

Merchants never check your idea when using a credit card.

Never.

The GreedyRates Team says:

Hi Joe,

When you go into a store to buy something with your credit card, the person behind the counter is sometimes required by their employer to ask for an accompanying ID with your credit card. They want to make sure you’re not committing fraud, and this system works on your behalf as well. If your card is somehow stolen, you’ll want the same merchant to ask the thief for your ID as well. In fact, this standard is usually enough to prevent fraudsters from doing much more than buying small-ticket items. Does this make sense? If we misunderstood your statement, let us know. Thanks.

GreedyRates Staff