Why Get a Prepaid Card?

Prepaid visa card

Prepaid cards are used just the same as a debit or credit card, the only difference being that the holder cannot spend more cash than has been pre-loaded onto the card.

While prepaid credit and debit cards are an important financial tool for the unbanked looking to access digital marketplaces, there are a number of different uses for those with bank accounts as well.

Best Prepaid Cards in Canada

RankCardAnnual FeeRatingApply
1 Koho Prepaid Visa$0 Apply Now
2 CIBC Smart Prepaid Travel Visa Card$0 Apply Now
3 HomeTrust Secured Visa$0 Apply Now
4 Vanilla Prepaid Mastercard$4.95 Apply Now
5 Refresh Financial$48.95 Apply Now

Prepaid Mastercard & Visa Perks

Prepaid cards offer some great credit card-like perks for those without the best credit rating. Some prepaids offer cashback, others you can load with different currencies for travel, and some even offer purchase insurance.

Budget Conscious

Prepaid mastercard

For the budget conscious, prepaid cards serve a useful check against any spendthrift tendencies, as spending may not exceed the total amount deposited. And with generally free reloads, transfer cash conveniently to, for instance, students away from home without having to worry about overdraft fees.

Building Credit

Prepaid credit cards also offer an alternative method for building credit. For those Canadians who take a credit hit and have difficulty qualifying for a standard credit card, a prepaid card allows monthly credit payments secured by an initial deposit, and reports successful payments to credit bureaus. 

Privacy

And last, some simply want to shop with privacy online, or prefer not having credit card details floating around a porous internet. You can do this with KYC-free prepaid cards from Visa and Mastercard.

Best Prepaid Credit Card Canada by Category

The Best Prepaid Cashback Card 

Best Prepaid Travel Card

Best Prepaid Card to Build Credit

Best Prepaid Card for Privacy

Best Cashback Prepaid Visa Card

Overview

The Koho Prepaid Visa Card, the best prepaid debit card in Canada, especially for cashback. The standard card offers 0.5% back on every purchase, with up to 5% back when shopping with select partners. The Koho Premium card, available for $9 monthly/$80 annually, offers 2% cashback on three main categories, which is a great cashback rate for credit cards in general, and unrivalled in the prepaid space. 

Koho App

You can manage your Koho card from an excellent app, which offers interesting services like spend reporting and budget tracking, as well as saving features like “roundup” which essentially throws your spare change back into a savings account. According to Koho, this account will soon bear interest at 1.2% – watch this space.

No Hidden Fees

There are no hidden fees with Koho, though withdrawing money from an ATM, for instance, will incur an out of network fee.

Compare the best cashback card Canada has to offer.

Best Prepaid Card to use When Traveling

Overview

CIBC’s Smart Prepaid Travel Visa is best-in-show for no foreign exchange fee prepaid cards. You can load up US dollars, Euros, British Pounds, or Mexican Pesos at any time and lock in the prevailing rate. While this might be attractive for Forex whizzes, we much prefer simply taking advantage of a 0% foreign exchange rate when shopping in a different currency. In other words, simply load up your card with CAD and shop abroad without worrying about foreign exchange fees.

Added Perk

An added perk, card holders receive one free international ATM withdrawal a month, which can be enough for a short to medium length trip. Additional withdrawal’s are $1.99. 

Compare fx rates with the best exchange rate card Canada has to offer.

Best Prepaid Card to Build Credit

Overview

HomeTrust’s Secured Visa is available to any applicant without a credit check, with varying credit limits depending on the initial security deposit, from $500-$10,000. There are two different cards, a standard version which has no annual fee and a 19.99% APR, and a $59 annual fee card with a 14.99% APR. 

Card Comparison

If you haven’t got the $500 minimum deposit for the HomeTrust card, check out Refresh Financial’s secured card. Start with a $200 security deposit (max $10k). However, you are on the hook for a $48.95 annual fee – $12.95 annual PLUS a $3 monthly fee, or $48.95 annual. While the interest rate is 17.99%, lower than the HomeTrust’s standard 19.99%, the fee should be considered prohibitive at the lower credit limits / security deposit range.

CardAnnual FeeAPRMin. Deposit
HomeTrust - standard $0 19.99% $500
HomeTrust $59 14.99% $500
Refresh Financial $48.95 / $12.95 + $3 monthly 17.99% $200

Why These Cards Help Your Credit Score?

Both cards report activity to credit bureaus like transunion, which will build your credit score. Any unused portion of your security deposit is refunded when/if the account is closed. 

Best Prepaid Card For Privacy

Overview

The Vanilla Prepaid Visa is like Visa’s version of a burner phone – get it anonymously, load it up with $25-$250, use it, and then chuck it when you are done. The card does what it is meant to – allows for anonymous and safe purchases on and offline – but if this isn’t important for you, best to choose another prepaid card. Vanilla prepaid activation fee ($4-7 depending on the amount) is high, ATM withdrawals not allowed, and if you lose the card (and haven’t memorized the number) you are up the creek. 

For another attractive Mastercard with no foreign exchange fees, checkout the Stack Mastercard review.

Bottom Line

If you have difficulty to get approved for a credit card, prepaid cards are right for you.  Not only do they allow you to shop online, but used properly they can help you improve your credit.

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