Best prepaid cards and secured credit cards in Canada
| Credit Card | Card Type | Card Features | Annual Fee |
|---|---|---|---|
| Koho | Prepaid | 0.25%–2% cash back on purchases and easy savings | $0 (Easy) or $84 (or $9/month) (Extra) / year |
| Neo MoneyTM card | Functions as a Prepaid | Earn an average of 5% instant, unlimited cashback and 2.25% interest on every dollar in your account | $0 |
| Mogo Visa Platinum Prepaid Card | Prepaid | Plant a tree with every purchase | $0 |
| Home Trust Secured Visa | Secured Credit | 19.99% APR Limit: $500–$10,000 | $0 |
KOHO
Prepaid card for cash back lovers
The KOHO Prepaid Mastercard® 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 cash back (1% on Groceries + Transportation) on your purchases, or more cash back (2% Groceries, Transportation, Eating & Drinking 0.5% all other categories) with KOHO Extra. You can even earn up to 2.00% interest on your whole balance with no minimum deposit requirement.
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% with Easy; up to 6% with Extra) when you use your KOHO card at participating partnered merchants.
Sign up and get a $20 instant cash bonus (once you load your account and make your no minimum first purchase within 30 days) right to your KOHO account with referral code.
Key features:
- Perks: Cashback, earn even more cash back at select partnered merchants, 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 depending on the out-of-network fee charged by the ATM
- Spending limits: $3,000 daily limit
- Interest: Earn up to 2.00% on account balance if you set up direct deposit
- Annual fee: No annual fee for a KOHO Easy account; $84 (or $9/month) a year for KOHO Extra
Click here to apply or learn more by reading our complete KOHO review.
Neo MoneyTM card
Direct access to your money, plus high interest and instant cashback
The Neo MoneyTM card is similar to prepaid cards, but without the hassle of reloading funds to spend online or in-store. Instead, this card allows you full access to the balance you already hold in your Neo MoneyTM account, one of the best high-interest savings accounts in Canada (earning a high 2.25%, interest earned daily).
With the Neo Money card, there’s no limit to the instant cashback you can earn and it’s yours to spend however you like. First-time purchases at Neo partners get up to 15% cashback and following that you’ll earn an advertised 5% cashback on average (varies depending on partner and current offers) at 10,000+ partners.
It’s the best of both worlds here: you’re earning high interest when you don’t spend (on your balance with your Neo Money account) and high cashback when you do spend (with your Neo Money card), allowing you to double your earning potential.
Sign up for Neo Money today using our link and get a $5 bonus!
Key features:
- Perks: Grow your savings with high interest earned daily on every dollar and earn instant unlimited cashback at 10,000+ partners
- Withdraw fees: Withdraw from any ATM worldwide with no fees from Neo’s side
- Loading & spending limits: The Neo Money card uses your existing Neo Money balance so there’s no manual reload to worry about when spending online or in-store
- Fees: Free everyday transactions and no monthly fees
Click here to apply for the Neo Money card.
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. Every time you use your MogoCard you’ll plant a carbon-sucking tree—for free. Mogo claims that every purchase you make with the MogoCard plants a tree to remove carbon emissions equivalent to 500lbs CO2.
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.
Key Features:
- Perks: Plant trees 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
Click here to apply for the Mogo Visa* Platinum Prepaid Card.
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.
Key Features:
- 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
Click here to apply or learn more by reading our complete Home Trust Secured Visa review.
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:
- They’re not debit cards. Prepaid cards are sometimes mistakenly referred to as ‘prepaid debit cards.’ A prepaid card is not interchangeable with a debit card, however, as unlike a debit card a prepaid card is not connected to a checking account.
- They’re not credit cards. The term ‘prepaid credit card‘ is also thrown around quite a bit, but prepaid cards do not work like credit cards, as their purchases are not subject to interest charges and their use is not reported to credit 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.
Related: Tips on building credit history for new immigrants
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.
