Prepaid cards have become popular as an alternative way to pay for purchases, or to give as gifts. While prepaid cards offer several benefits, they have costs and conditions that you should be aware of.
What types of prepaid cards are there?
There are two main types of prepaid cards. Both require you to pay up front to “load” money on to a card for later use. Both are sometimes referred to as “gift cards”.
- Prepaid cards from retailers can only be used at a single store or group of stores, such as a chain or a shopping mall.
- Other prepaid cards, usually branded with a payment card network operator’s logo, such as American Express, MasterCard or Visa, can be used at most merchants that display the specific network’s logo.
Things to consider before buying a prepaid card
- Is there an activation fee or purchase fee?
- Does the card have an expiry date?
- Are the terms and conditions made available to you before you purchase the card?
- What other fees apply to the card?
- What happens if the card is lost or stolen? Are you protected against unauthorized purchases?
- How do you check the card balance? Is there a fee to check the balance?
For more details, read the FCAC’s tip sheet “Prepaid Cards : 10 Things to Consider Before Buying“.