It’s official! The only thing we love more than poutine is plastic. Canada ranks #1 in the world for credit card holders. What we don’t love are insanely high-interest rates and debt. Prepaid cards are a great choice if you want the convenience of a credit card without the risk and responsibility that comes with it. Prepaid cards are growing in popularity, and for good reason, but they’re not a perfect solution. Here’s what you can and can’t buy with prepaid cards in Canada.
- What is a prepaid card?
- Are prepaid cards accepted everywhere?
- Types of prepaid cards
- What you can buy with prepaid cards
- What you cannot buy with prepaid cards in Canada
- Why was my prepaid card declined?
- Always have a backup plan
- Prepaid Card FAQs
What is a prepaid card?
Think of a prepaid card like a digital piggy bank. You load up the card with the amount of money you want to spend, and then you can use it just like a regular credit or debit card. Unlike a credit card, you won’t go into debt or pay a dime of interest. It’s like having your cake and eating it too!
Prepaid cards are available from financial institutions, retailers, and other organizations in Canada. You can use them to make purchases wherever the card network is accepted, like Visa or Mastercard for example. In most cases, you can also withdraw cash from your prepaid card through ATMs. Some prepaid cards even come with extra features, like cash back or other rewards.
And the best part? You don’t need to have a bank account or jump through hoops to get one. Prepaid cards are accessible to anyone and no credit check is required. So whether you’re saving up for a big purchase or just looking for a better way to manage your money, prepaid cards give you a lot of flexibility.
Are prepaid cards accepted everywhere?
Generally, you should be able to use your prepaid card without issue wherever its payment network is accepted. The network is always indicated on the card itself so you know where to use it. For example, prepaid Visa cards will have the Visa logo and should be accepted wherever Visa is accepted, same with prepaid Mastercard, Amex, Interac, etc.
If you have a debit-credit card from your bank, like a Tangerine Visa-Debit for example, you’re supposed to be able to use it anywhere that accepts Interac or Visa, and both logos will be on your card.
Prepaid cards are often pitched as a seamless substitution, but that’s just not the case. I love my Visa-Debit, but it doesn’t work at some merchants – like the gas station down the street.
A friend of mine has had terrible luck trying to book hotels in Ontario, using several different prepaid cards trying to find one that works. While these payment woes are not super common, nobody likes to be caught off guard. Not to mention, a declined transaction can be hella embarrassing.
Types of prepaid cards
Not all prepaid cards function the same. Depending on where you buy it and the type of card it is, there will be different restrictions on how it can be used and what you can actually buy with it.
From a financial institution
Prepaid cards issued by a financial institution like a bank, credit union, or a neobank, and connected to a deposit account in your name will give you a lot more shopping freedom. These types of prepaid cards will allow you to pay for most things in-store, online, and abroad.
Having said that, each issuer will have different restrictions on the types of things you can and cannot buy with its prepaid card. It’s important to read the card agreement to make sure the types of transactions you intend to make are supported.
Examples of prepaid cards issued by a financial institution:
- KOHO Prepaid Mastercard
- EQ Bank Prepaid Mastercard
- Wealthsimple Prepaid Mastercard
- CIBC AC Conversion Visa Prepaid Card
From a retailer
Prepaid cards that you purchase from retailers like convenience stores, grocery stores, etc., are much more limited in terms of where they’re accepted and what you can and can’t buy. Some are sold in specific denominations while others let you choose an amount to put on the card.
They may also be reloadable, meaning you can put more money on the card to keep using it, or non-reloadable which means once you’ve spent the balance you can no longer use the card. Examples of prepaid cards purchased from a retailer include:
- Vanilla Prepaid Visa and Mastercard
- Joker Prepaid Visa and Mastercard
- American Express Prepaid Cards
Virtual prepaid card
Unlike a physical prepaid card, a virtual prepaid card is issued electronically and can be used to make online purchases. Because they’re not physically tangible, you don’t have to worry about losing or misplacing them. Plus, they’re preloaded with a specific amount of money, so you can only spend what you have, no more, no less.
What you can buy with prepaid cards
Prepaid cards can be used to purchase a wide range of goods and services in Canada. Here’s a breakdown of what you can buy:
Prepaid cards can be used to buy groceries, pay bills, and make other day-to-day purchases. They can also be used at gas stations, restaurants, and retail stores.
Prepaid cards can be used for online transactions, including shopping on eCommerce websites and purchasing digital products like music, games, apps, subscriptions, and more.
Prepaid cards can be used to pay for travel expenses such as plane tickets, hotels, and rental cars. Most will let you make purchases in other currencies, like when travelling abroad or shopping online with a foreign retailer.
Most prepaid cards let you make cash withdrawals from supported ATMs. For Visa prepaid cards, look for ATMs with the VISA logo. The same goes for Mastercard, Interac, Amex, etc.
What you cannot buy with prepaid cards in Canada
While you can buy almost all the same stuff that you can with traditional debit and credit cards, there are some exceptions, especially if it’s a prepaid card from a retailer rather than a financial institution. Here’s what you generally cannot buy with prepaid cards:
Pay at the pump
Many prepaid cards from retailers cannot be used to pre-pay for gas at the pump. For example, this is true for Vanilla Prepaid Visa and Mastercards, and Joker Prepaid Visa and Mastercards. The Wealthsimple Prepaid Mastercard states that transactions at unattended terminals like parking ticket machines and pay-at-the pump terminals may not be supported.
If gas is a regular purchase you plan to make with your prepaid card and you prefer to pay at the pump, make sure you read the card agreement to confirm if this type of transaction is supported.
Gambling & Adult Entertainment
Most prepaid cards, regardless of who issues them, do not support transactions on gambling and adult entertainment sites. For example, KOHO Prepaid Mastercard will not work for both online gambling and adult entertainment, while the EQ Bank Card restricts online gambling, and American Express Prepaid Cards restrict both online and physical casinos.
Pre-Authorized Debits (PADs)
If you were planning to use a prepaid card for recurring bill payments and subscriptions, you’ll have much better luck with a prepaid card issued by a financial institution. Many prepaid cards from retailers like grocery and convenience stores have a lot more restrictions.
For example, Vanilla Prepaid Cards, Joker Prepaid Cards, and American Express Prepaid Cards (to name a few) cannot be used for recurring pre-authorized transactions. That means you cannot use them to pay for things like Netflix, Spotify, Hello Fresh, car insurance, etc.
Prepaid cards cannot be used to purchase investment products such as stocks, bonds, or mutual funds. This may seem obvious, but some brokerages, like Wealthsimple, let you instantly fund your investment account with a Visa-Debit or Mastercard-Debit. If you try to do this with a prepaid card, it will not work.
Big ticket items
Prepaid cards have restrictions on the maximum amount that can be spent in a single transaction as well as a daily maximum value of transactions. This means that they can’t be used to buy really big-ticket items like cars, expensive high-end artwork, or real estate.
Transaction limits vary by issuer, so make sure you read the card agreement carefully if you plan to make a big purchase. For example:
- EQ Bank Card has a single and daily transaction limit of $5,000, as well as a single and daily ATM withdrawal limit of $500.
- KOHO Prepaid Mastercard has a daily transaction limit of $9,000, an ATM per-withdrawal limit of $305 and a daily ATM withdrawal limit of $610.
- Vanilla Prepaid Visa cards can only be purchased in denominations ranging from $25 to $250, while Vanilla Prepaid Mastercards can only be purchased in denominations ranging from $20 to $500. That means you cannot purchase something that costs more than the available balance on the card.
- Joker Prepaid Visa and Mastercards only let you load a maximum of $500 on the card, which means it cannot be used for a purchase that is more than $500.
Cash Back Transactions
Some retailers, like Walmart for example, allow you to withdraw cash at the point of sale (POS). They do this by charging you more than the value of your purchase and giving you the difference in cash. Some prepaid cards allow this type of transaction while others do not.
For example, the KOHO Prepaid Mastercard does not support this kind of transaction. The Vanilla Prepaid Cards do not support cash-like transactions, which means they likely do not allow you to make POS cash-back transactions either.
Virtual prepaid card limitations
A virtual prepaid card is not typically accepted for in-store transactions unless it can be added to a digital wallet like Apple Pay, Google Pay, Samsung Pay, etc. Then, the merchant also has to accept digital wallet payments, so it’s best to double-check before you try to make a purchase. Plus, they’re not the best option for things like recurring subscriptions or pre-authorization transactions.
Why was my prepaid card declined?
Have you ever tried to make a purchase with your prepaid card only to be rejected? Ouch, so embarrassing. Don’t worry, you’re not alone. There are a few common reasons why this can happen:
Running low on funds
This is the most common reason your card gets declined. It’s like trying to buy a round of drinks at the bar when your account is drier than the Sahara desert. To avoid this, make sure to keep an eye on your balance and reload your card before making any purchases.
If you’ve entered the wrong card information, your card might get declined. Think of it as giving the wrong password to your phone. Double-check your card info before hitting the checkout button to avoid this issue.
If your card has hit its expiration date, it’s time to get a new one. It’s like driving around with an expired driver’s license. Replace your card to keep calm and carry on.
If your card issuer thinks your card has been lost or stolen, they might block it. Unusual activity can trigger this, even when it’s YOU using the card. Contact your card issuer to get this sorted out.
Some merchants have restrictions on the type of cards they accept or the amount you can spend. If you are trying to make a purchase that exceeds these restrictions, your card might be declined. Check with the merchant before making a purchase, especially if you’re travelling.
Sometimes, your card might get declined due to technical issues. It’s like your favourite website going down during a big sale. Try again later or at a different location.
Always have a backup plan
Having a backup method of payment is pretty essential. Without it, I would have been in hot water if I couldn’t pay for the gas I just pumped. My friend was left stranded in the middle of the night with nowhere to stay after the hotel he booked refused his prepaid card. Backup payment is your safety net!
Whether you prefer debit cards, cash or even just the trusty ol’ credit card, having access to an alternative form of payment can prevent a sticky situation if you don’t have enough money or are unable to pay for the stuff you need. If don’t qualify for a traditional credit card, consider a secured credit card that can help rebuild your credit and double as backup payment.
Plus, having multiple options can give you more flexibility with budgeting and managing your finances. It’s always good to be prepared! If your prepaid card is declined, which does happen, you’ll still have other options ready – and that’s what I call peace of mind!
Prepaid Card FAQs
Can I buy gas with a prepaid Visa card?
It depends on the gas station and their accepted payment methods. Some gas stations may accept prepaid Visa cards as a form of payment, while others may not. To be sure, check with the specific gas station beforehand to confirm.
Does Amazon accept prepaid cards?
Yes, Amazon accepts prepaid cards, with some restrictions. The specific prepaid card you have must be Visa, Mastercard, or American Express, and it must have a balance sufficient to cover your entire purchase.
Does Air Canada accept prepaid credit cards?
Yes, Air Canada accepts prepaid credit cards as a form of payment. The specific prepaid card must be a Visa or Mastercard, and it must have a balance sufficient to cover the entire cost of the flight or other travel expenses.
Does OnlyFans accept prepaid cards?
OnlyFans accepts some prepaid Visa cards and only if it has 3D Secure Authentication.
Does DoorDash accept prepaid cards?
Yes, DoorDash accepts prepaid cards as a form of payment. The specific prepaid card must be a Visa or Mastercard, and it must have a balance sufficient to cover the cost of your food order.
What car rental companies accept prepaid credit cards?
This varies from one rental company to the next. Some car rental companies in Canada may accept prepaid credit cards, while others may not. It is best to check with the specific car rental company before making a reservation to confirm their accepted payment methods.
Does Klarna accept prepaid cards?
Klarna, a Swedish BNPL and shopping service, does not currently accept prepaid cards or American Express credit cards. They accept payments from most major credit and debit cards.
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About The Author: Heidi Unrau
Heidi Unrau is the senior Finance Journalist at Hardbacon. She studied Economics at the University of Winnipeg, where she fell in love with all-things-finance. At 25, she got her first bank job as an entry-level teller. She moved up the ranks to Credit Analyst, Loans Officer, and now a Personal Finance Writer. In her spare time, you'll find her hiding in the car listening to Freakonomics podcasts, or binge-watching financial crime documentaries with a pint of Häagen-Dazs. When she's not chasing after her two little boys, she's in the hot tub or arguing with her husband over which cash back card to use for date night. She’s addicted to coffee, crypto, and obsessively checking her credit score on Borrowell.
Fun Fact: Heidi has lived in five different provinces across Canada, loves her free Tangerine bank account, and will never cut back on Starbucks. Like ever.
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