Deciding between a prepaid Visa and prepaid Mastercard all comes down to your needs. Though the best prepaid credit card right now is the Wealthsimple Prepaid Mastercard (a Mastercard), there are other Visa options that work well, too.
Here's a comparison of prepaid Visas and Mastercards so that you can find the one that suits you best.
Key Takeaways
- Most prepaid credit cards fall under Visa or Mastercard.
- The best prepaid credit card is the KOHO Extra Mastercard.
- The best prepaid Visa card is the CIBC AC Conversion Card.
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The best prepaid credit cards
| Prepaid card | Earn rates | Annual fee | Apply now |
|---|---|---|---|
| Wealthsimple Prepaid Mastercard | * None |
$0 | Apply now |
| KOHO Extra Mastercard | * 1.5% cash back on groceries, restaurants, and transportation * 0.25% cash back on all other purchases |
$144, or $9 per month | Apply now |
| EQ Bank Card | * 0.5% cash back on all purchases |
$0 | Apply now |
| Neo Everyday Account | * Average of 5% cash back at partner retailers * 1% cash back on gas, up to $500 spent monthly * 1% cash back on groceries, up to $500 spent monthly |
$0 | Apply now |
What is a prepaid credit card?
A prepaid credit card acts as a credit card as it can be used to make purchases either online or in person, but it’s pre-loaded with money as opposed to being paid off at a later date.
In many ways, prepaid credit cards are a lot like debit cards, only they're not attached directly to your bank account.
How do prepaid credit cards work?
To use a prepaid credit card, you'll need to load money into it before making a purchase. You can do this by sending an Interac e-Transfer or direct deposit, for example. This way, you won't be able to overspend and find yourself with a looming balance.
You can use a prepaid card like any other credit card or debit card – simply tap or insert it into the payment terminal or enter the card details online.
Different types of prepaid credit cards
Prepaid credit cards come in 2 main types:
- Store-bought prepaid credit cards: These are the cards you see at the grocery store checkout line, gas stations, and convenience stores. They ideal for specific purchases and offer the convenience of a credit card without adding to the balance of your actual credit card. They also make great stand-ins for gift cards and don’t tie the receiver to a specific retailer.
- Bank-issued prepaid credit cards: To get a bank-issued prepaid card, you must "apply” through the bank’s website or at the branch. The balance is easily reloadable so you can apply for the card once and then reload with as much or as little money as you want.
Prepaid Visa cards
There aren't too many prepaid Visa cards on the market:
| Prepaid card | Card type | Maximum balance | Fees | Apply now |
|---|---|---|---|---|
| OneVanilla Prepaid Visa | Store-bought, non-reloadable card | $500 | $0 (not including activation fees) |
OneVanilla Prepaid Visa
OneVanilla Prepaid Visas are the same as the OneVanilla Prepaid Mastercard.
They can be purchased in preset amounts at select retail locations, or you can load them with variable amounts of your choice from between $20 to $500.
They can be used online like any other prepaid credit card, but there are some downsides:
- They cannot be used for recurring bills
- They cannot be used at ATMs or refunded for cash back
- If your card is lost or stolen, the only way you can get a replacement is if you have your card number written down or memorized
- With low maximum balances, you'll need to purchase more than one if you're making a big purchase, which also means paying more than one activation fee
Prepaid Mastercards
If you're looking for a prepaid Mastercard, there are quite a few options on the market, and a lot more than prepaid Visa cards.
Here's a quick glance at some of the options out there for you:
| Prepaid card | Card type | Maximum balance | Fees | Apply now |
|---|---|---|---|---|
| Wealthsimple Prepaid Mastercard | Bank-issued, reloadable card | None | $0 | Apply now |
| KOHO Extra Mastercard | Bank-issued, reloadable card | $40,000 | $144 annually, or $9 per month | Apply now |
| EQ Bank Card | Bank-issued, reloadable card | None | $0 | Apply now |
| MyVanilla Prepaid Mastercard | Store-bought, non-reloadable card | $200 | $0 (not including activation fees) | Apply now |
| BMO Prepaid Travel Mastercard | Bank-issued, reloadable card | $10,000 | $6.95 annual fee |
Earn rewards on all your purchases
×1 Award winner 
The Wealthsimple Prepaid Mastercard has no annual fee and charges no foreign exchange fees. You’ll earn 1% cash back on all purchases plus enjoy up to 2.5% interest on your account balance.
A premium prepaid card
$100 GeniusCash + Up to 1.5% cash back on purchases + Lower annual fee.*
The KOHO Extra Mastercard is a rare premium prepaid card
For $9 per month (or pay $144 per year), you'll get more rewards and pay fewer fees.
With this premium prepaid Mastercard, you'll earn:
- 1.5% cash back on groceries, restaurants, and transportation
- 0.25% cash back on all other purchases
To top it off, it also comes with no foreign exchange fees to help you save money while travelling outside of Canada.
A no annual fee, no foreign exchange fee prepaid card
The EQ Bank Card is a unique hybrid spend/save account. It's primarily a high interest savings account, where you earn 2.75% interest on your balance.
But this account also comes with a prepaid Mastercard. This card offers:
- 0.5% cash back on all purchases
- No annual fee
- No foreign exchange fees
A perfect addition to your spend-and-save portfolio.
OneVanilla prepaid Mastercard
One of the most common types of prepaid credit cards out there is the line of OneVanilla Mastercard Gift Cards.
The MyVanilla Prepaid Mastercard can be purchased pretty much anywhere but comes with activation fees of up to $5.95.
Although these cards come with expiry dates, the funds on the card will not expire. Simply contact customer service and they'll put your remaining balance on a new card and mail it out to you.
If you make purchases in foreign currencies, you'll be charged a 2.5% fee on those purchases.
BMO Prepaid Travel Mastercard
If you're looking for a bank-issued prepaid credit card and you like shopping at Costco, the BMO Prepaid Travel Mastercard could be a good option.
Although it comes with an annual fee of $6.95, it can have a balance between $100–$10,000 depending on how much money you want to put on it.
The BMO Prepaid Travel Mastercard is the only prepaid Mastercard offered by one of the Big 5 banks, which is nice if you're looking for the security of a well-established bank behind you and your prepaid Mastercard.
Like the MyVanilla Prepaid Mastercard above, you'll be charged an additional 2.5% on foreign currency purchases.
You can apply online, which is nice, and BMO says you'll get your response in under 60 seconds.
Choosing the best prepaid card for you
Here are some things you should consider when applying for a prepaid credit card.
- Fees: This makes a big difference if you have to pay an annual fee or not. If you do, make sure you take advantage of any rewards and perks to make it worth it. Also, fees on things like cash advances may swing you to another card.
- Network: Some vendors only accept Mastercard (like Costco) or Visa. Ensuring you have a card that's compatible with your spending habits is paramount.
- Ease of loading: Some cards need to be topped up in person while others can be loaded quickly online or through an app. In this case, go with what's most convenient for you.
- Limits: Keep an eye on daily limits in terms of loading money, spending money, and ATM withdrawals.
Pros and cons of getting a prepaid Visa card or Mastercard
Prepaid credit cards can be useful in some situations, but having a prepaid Visa card or Mastercard may not match up to getting an actual credit card from one of those issuers. Here's a quick rundown of the pros and cons associated with getting one of these cards.
4 reasons to get a prepaid Visa or Mastercard
First, let's start off with the potential benefits.
1. They can be used in the same manner as credit cards
Prepaid credit cards will give you the ability to shop online, rent cars, and book hotels (although not all hotels will accept prepaid cards, so be sure to check ahead of time).
Some of the above cards will even allow you to earn rewards, save money faster, and control your finances better.
2. You don't need to have good credit
Possibly the best thing about getting a prepaid Visa card or prepaid Mastercard is that they're not reliant on credit scores and almost anyone can get approved.
You don't need to worry about a hard credit inquiry or your credit utilization or missed payments ruining your credit history.
3. You don't need to worry about interest charges or annual fees
Traditional credit cards come with fees and charges that you always need to be aware of – in fact, that's one of the main ways credit card companies make money.
But with prepaid credit cards, you'll never have to pay interest, and although some do come with annual fees, they are often significantly less than some "normal" credit cards' fees.
4. Prepaid cards are a set amount and don't encourage overspending
With prepaid credit cards, you don't need to worry about spending money you don't have. So, if you've gotten into trouble in the past or don't trust yourself with a traditional credit card, you'll avoid falling into the trap.
5 reasons not to get a prepaid Visa or Mastercard
There are also a few reasons you might want to consider another alternative.
1. They don't help build your credit
For some people, the fact that prepaid credit cards aren't attached to credit scores is a great thing. For others, however, it's a downside.
If you're trying to get your credit score back on track, you might want to consider something that will help you build your credit, like a secured credit card. A prepaid Visa card or Mastercard won't help you in this case.
2. You could be losing out on interest
Although having a prepaid credit card with a $10,000 balance might come in handy in times of emergency, any money that you put on a prepaid credit card won't earn any interest.
You'd be much better off investing that money or even putting it into a TFSA, only putting money on your prepaid credit card as you need it.
3. Most won't give you rewards on all your purchases
There might be a few prepaid credit cards that give you rewards, but these rewards pale in comparison to some of the best credit card rewards programs out there.
So, if you're able to get a legit credit card and use it responsibly, then you'll likely be much better off.
4. Store-bought cards can't be used for recurring bills
Finally, if you're looking for a credit card that you can put your Netflix subscription on, a store-bought card isn't the way to go.
Although store-bought cards can be used in many of the same ways as traditional credit cards, this is one purchase you won't be able to make with them.
5. You'll miss out on insurance coverage
Although some of the above prepaid cards come with basic insurance, even some no fee credit cards come with a better insurance package that you could be missing out on.
The
MBNA Rewards Platinum Plus® Mastercard® Please review your insurance certificate for details, exclusions and limitations of your coverage.Extended Warranty 1 year Purchase Protection 90 days Mobile Device $1,000
If having peace of mind while you travel and shop is a priority for you, you might want to consider going with a real credit card.
Prepaid credit card alternatives
Still unsure if a prepaid credit card in Canada is the best way to go for you? Thankfully there are a few other options.
Secured credit cards
One way to improve your credit score without any risk of racking up an unpayable balance is by getting a secured credit card.
Getting a prepaid Visa card or Mastercard won't help your credit score because you are putting in your own money and refilling it when it runs out. You're not actually taking out any credit.
But a secure credit card works by requiring a security deposit. This deposit becomes your credit limit, so you will never spend more than what you have. But your bank will still allow you to borrow up to that amount in credit, which you will pay back later.
These types of credit cards have high approval rates, and if you use them responsibly, your credit score will improve enough to potentially get a higher end card.
Rebuild your credit with a secured Visa credit card
The
Almost everyone is approved, and your balance is based on what you provide as your security deposit – which can be an amount from $500 to $10,000.
This secured credit card also has no annual fee.
A no fee credit card alternative
Want an option for a standard no fee credit card? You can try the Home Trust Preferred Visa.
In terms of benefits, you'll see:
- no annual fee,
- no foreign transaction fees, and
- 1% cash back on all purchases – with no limits except for purchases made in foreign currencies.
Most secured credit cards don't earn rewards, so if you want a small chunk back on your purchases and can use this responsibly, it's definitely a good place to start when moving up the credit card ladder.
We'd love to hear from you
Do you have a favourite prepaid credit card in Canada?
There are a lot of options out there for prepaid Visa cards and Mastercards.
With different apps, rewards, and features available, it pays to do your homework.
FAQ
Which prepaid credit card is best in Canada?
The best prepaid credit card in Canada is the KOHO Extra Mastercard. Not only will you earn rewards on all your spending, if you sign up for KOHO Earn Interest, you'll also earn interest on your account balance.
Do prepaid credit cards work like regular credit cards?
On the surface, a prepaid credit card works the same as a regular credit card. The big difference is with a prepaid credit card, you have to load it first with your own money. With a credit card, the issuer basically lends you the money you need, and you have to pay them back later.
What types of prepaid credit cards are there?
There are 2 types of prepaid credit cards. First are store-bought cards, which are purchased in stores and have a set amount you can spend with. The other are bank-issued cards, where you apply for a card, and then transfer money from a bank account to the card.
Who issues Prepaid Visa cards?
Prepaid Visa cards are issued by OneVanilla.
Who issues Prepaid Mastercards?
Prepaid Mastercards are issued by BMO, KOHO, and OneVanilla.
Which prepaid credit card allows me the greatest maximum balance?
The KOHO Extra Mastercard allows the greatest maximum balance by far. It has a limit of $40,000.
Do prepaid cards work like debit cards?
For the most part, yes. However, a debit card is linked to your bank account, while a prepaid card needs to be loaded and reloaded with a finite amount of money from a source of funds, like a bank account.
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