The Best Prepaid Credit Cards in Canada for 2022
While there's a lot to say about traditional credit cards' convenience, they are not without pitfalls. If you are looking for a more predictable way to manage money while still having the ability to make credit card purchases, then a prepaid credit card might be right for you. They can also be a great tool for those of us with lower-than-average credit scores who may find regular credit cards to be out of reach.
So, who offers the best-prepaid credit card in Canada? The good news for Canadian consumers is that you have a variety of options.
In this article, we will go over an offering of the best prepaid credit cards in Canada, as well as considerations you should have when toying with the idea of a prepaid credit card.
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The Best Prepaid Credit Cards in Canada
KOHO’s millennial-friendly social media advertising makes it likely that you’ve seen its name before. But, if you have been unsure of what exactly this company does, here is some demystification.
KOHO is a fintech company (not a bank) that has been around since 2014. The company offers mobile app banking services as well as a prepaid VISA credit card. The latter is what we’ll focus
KOHO’s prepaid Visa Card allows users to load a Visa card with a set amount of money that they would like to spend. Think of it as a credit card that has been pre-loaded with funds. Not only does this make it easy to stay under budget, but users also have the option of using RoundUps, which will round up money spent to the next dollar amount and deposit the spare change in a chequing account.
The best part of this card is that it allows spenders to earn cashback on their spending.
Account-holders have the option of upgrading to KOHO Premium, which gives the option of earning up to 2% cashback on certain purchase categories such as groceries or transportation.
Otherwise, users with a regular account can earn 0.5% cashback.
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While a relatively new player on the scene, the Stack Mastercard stands out among prepaid credit cards for its lack of foreign transaction fees. It also comes without an annual fee and allows spenders to earn rewards with certain retail partners. Users also have access to purchase round-ups for quicker savings.
The Stack card is a bit of a hybrid between a debit card and a traditional credit card. Cardholders have the option to load money onto their Stack Mastercard through methods such as Interac e-transfer or even through scheduled direct deposit.
Where the card shines, though, is its absence of foreign exchange fees. This makes it an ideal choice for travelers who would otherwise be subject to a fee of up to 2.5% with their regular bank account for spending in foreign currencies
Also, since this card is a Mastercard, you can use it at Costco, which prepaid VISA cards can't offer!
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MOGO is a Canadian fintech company that has been around in some capacity since 2003.
The MOGO Prepaid VISA allows spenders a deep analytical dive into their spending habits. Thanks to its insightful app allowing users to see a representation of how they spend their money, with suggestions for ways that they can cut back.
Unlike some of the other cards on this list, MOGO does not offer its customers an opportunity to earn rewards or cashback on their purchases.
However, it does come with unconventional benefits that some may find enticing, such as free access to a regular Equifax credit check as well as Identity Fraud Protection. MOGO also pays a carbon tax offset for every purchase that its customers make.
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4. PC Money
PC Financial is a popular option among Canadians looking to take a frugal and functional approach to money, so it’s no surprise that they offer an attractive prepaid credit card.
PC Money functions as a standard prepaid credit card and comes complete with a basic but functional bank account.
Like other PC Financial products, the PC Money card comes with the opportunity to earn PC Optimum points and even offers a sign-up offer of 50,000 bonus PC Optimum points. Also, true to its nature, this card comes without a monthly fee.
Because the PC Money card can also work like a bank account, you can set up a bill payment schedule with PC Money. It’s not the only card that functions like a bank account, but it is easily the best no-frills option.
5. Wealthsimple Cash Card
If you’re new to Wealthsimple, you’re late to the party — but we are happy to welcome you anyways! Wealthsimple is a Canadian online investment management service that has blossomed in popularity in recent years.
While the app focuses on registered savings accounts and its staple robo-advisor product, it also offers a prepaid VISA card in the Wealthsimple Cash Card. There’s one catch, though — it’s not available. At least, not yet.
While a Wealthsimple Cash account can allow you to make free transfers between your bank accounts and your Wealthsimple cash account, it also allows you to benefit from a zero-fee account with a good interest rate. The physical card element would allow users to use this account as a prepaid VISA is not yet available.
However, there are plans to make the Wealthsimple Cash Card a reality, both physical and electronic. Once it’s available, Wealthsimple Cash will distribute a functional advantage to anyone with a Wealthsimple account.
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What is a Prepaid Credit Card?
Not quite a debit card, not quite a regular credit card, a prepaid credit card has the same functionality as a regular credit card. The exception is that it draws from a bank of existing funds instead of relying on credit. Think of it like a gift card accepted anywhere that major credit cards are.
A prepaid credit card works by drawing from a card balance that has to be pre-loaded by the account holder. It is similar to a secured credit card, which instead functions like a regular credit card without a predetermined balance.
With a secured credit card, credit bureaus monitor the user's balance. Like a traditional credit card, the credit card limit is a deposit that the user makes
Our Final Thoughts
Whether you are trying to limit your reliance on traditional credit cards or try to be more mindful of your spending limits, a prepaid credit card is certainly worth considering. The use of a prepaid card does not cancel out the usefulness of a regular credit card, and vice versa.
Making educated use of both is a wonderful way to build a comprehensive budget-friendly financial strategy for yourself that makes the most of the money-saving methods that are on the market.
Frequently Asked Questions
No credit bureau receives your prepaid card activity. While it has its advantages — you don’t need to worry about late payments affecting your credit score — it also means that a prepaid card will not help you build up a credit score.
If building or improving your credit is one of your goals, you may want to look into another option, such as an unsecured credit card with a low limit, or a secured credit card, both of which report to the credit bureaus.
A prepaid credit card is an excellent choice for students or anyone else who has a limited income.
They are also a wonderful choice for anyone who is new to money managing and feels intimidated by using a credit card with a high balance.
However, prepaid credit cards can be advantageous to anyone — using one does not mean that you are struggling with money management in any way. On the contrary, it means that you are financially savvy!
One of the biggest advantages of using a prepaid card is that it gives you the ability to make purchases wherever credit cards are accepted without dealing with a credit card’s hassles.
You can generally use a prepaid credit card anywhere you would use a regular credit card, such as making online purchases and renting cars or hotel rooms. However, there may be some cases where a prepaid card is not accepted. It’s always a good idea to check in advance. .