Prepaid cards and other prepaid products have become popular as an alternative way to pay for purchases, to give as gifts or to use when travelling. Whether physical or electronic, these products are—or can be—loaded with funds that can be used by the cardholder to make withdrawals or purchase goods or services. While prepaid products offer several benefits, they have costs and conditions that you should be aware of.
What types of prepaid products are there?
Prepaid cards and products require you to pay up front to “load” money on to a card for later use. They are sometimes referred to as “gift cards.” Some are single use, while others are reloadable.
- Prepaid cards for specific retailers can only be used at a single store or group of stores, such as a chain or a shopping mall.
- Prepaid cards, branded with a payment card network operator’s logo, such as American Express, MasterCard or Visa, can be used at most merchants that display that network’s logo.
- Promotional products are prepaid payment products that are purchased by an organization and distributed as part of a promotional, loyalty or award program. The funds on them are often available for a limited time and may be subject to maintenance fees.
Things to consider
For more details, read FCAC’s tip sheet Prepaid cards: 10 things to consider.
Learn more about your rights and responsibilities regarding prepaid cards.