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Pre-Paid Credit Cards in Canada
February 17, 2023
7:08 am
countysaver
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Spurred by the introduction of the EQ Bank [where I have accounts already] pre-paid Mastercard, I've been looking into this class for "plastic" spending. No cardholder or foreign transaction fees are key features as I prepare for some international travel this spring. Other rewards are less significant though I tend to prefer cash-back to difficult to evaluate points. Forbes Advisor has a page on this class at https://www.forbes.com/advisor/ca/credit-cards/best/prepaid/

The CIBC AC Conversion card offering was new to me and I'm interested if anyone has experience with it.

Pre-paid cards usually emphasise that no credit bureau check is required so score will no be affected by applying. CIBC stated the same but during the on-line application process asked for permission for a soft-check [shouldn't affect score] and still wanted to know residence info for > 3years suggesting a bit deeper look. I stopped my application at that point as it seemed like more information than CIBC deserves for a pre-paid card. The website also indicated one could get the card instantly at an airport [CIBC has an exclusive on current exchange at Toronto Pearson and possible other CDN airports]; what checks are they conducting there? In any case it would be a bit too risky to rely on getting and loading the card an hour before leaving for Europe.

I like the connection with one of the well-known big-five banks and the card certainly operates in all the currencies I'm likely to need but the application process seemed intrusive. Maybe it's just that EQ Bank already has verified my identity or is CIBC digging deeper for cross-selling or something else? Call me skeptical - as well as old-enough to remember the necessity of buying travellers' cheques [which often could only be converted to cash [at banks, weekdays, in the few hours between late-opening, long-lunch and early closing] in multiple currencies before the € and fitting that in with trying to be a relaxed tourist! Praise be plastic spending.

February 17, 2023
8:07 am
savemoresaveoften
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Prepaid CC usually has an activation fee PLUS a non activity fee, a ripoff in my mind..

February 17, 2023
9:30 am
countysaver
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savemoresaveoften said
Prepaid CC usually has an activation fee PLUS a non activity fee, a ripoff in my mind..  

The cards I mentioned have none of these disadvantages. Some pay a "reward" per dollar spent; The EQ Bank card pays 2.5% interest on the balance on-deposit, no charge ATM withdrawals at any bank in Canada and a 0.5% cash rebate on spending; the CIBC version has a time-limited cash-back offer but still no fees.

This class of plastic differs from older pre-paid Visa and Mastercard "gift" cards some of which (did) carry fees and expiry dates and, from my experience, confused check-out cashiers who weren't trained on the differences to process debit, credit and gift cards.

February 17, 2023
11:34 am
Norman1
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I avoid giving pre-paid gift cards as well as gift certificates.

I prefer to contact the gift recipient and see if I can send the money as a cheque or an Interac e-transfer. That avoids losses from inactivity fees or merchant bankruptcies.

I got lucky years ago. I spent some Eaton's gift certificates I had forgotten about just months before Eaton's filed for bankruptcy.

One can have gift certificate issues even when the merchant didn't go bankrupt. One bakery refused to honour its gift certificates. The unfortunate gift recipient wrote a complaint to a local newspaper columnist and the columnist investigated.

It turned out the bakery changed hands a while ago. The previous owner did not mention to the new owner that there were gift certificates still outstanding. As far as the current owner was concerned, the gift certificates were bogus!

February 17, 2023
2:29 pm
Loonie
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I was actually afraid that EQ card would confuse people about other prepaid cards, and perhaps that is happening.

If you can get your credit needs covered by a credit card, there is no need for a prepaid card. Prepaid cards are basically for people who can't get credit. EQ is perhaps a bit different, but, if you have the money in your EQ account for their card, why would you want another one? If you don't have the money available, you won't get one anyway.
As for CIBC wanting to check your credit, they are just fishing. They want to see if you qualify for a card that would be more lucrative for them. If you do, they will then market that card to you.

By using a credit card, you can postpone payment for several weeks and also earn rewards.

February 17, 2023
4:33 pm
countysaver
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Loonie said
I was actually afraid that EQ card would confuse people about other prepaid cards, and perhaps that is happening.

If you can get your credit needs covered by a credit card, there is no need for a prepaid card. Prepaid cards are basically for people who can't get credit. EQ is perhaps a bit different, but, if you have the money in your EQ account for their card, why would you want another one? If you don't have the money available, you won't get one anyway.
As for CIBC wanting to check your credit, they are just fishing. They want to see if you qualify for a card that would be more lucrative for them. If you do, they will then market that card to you.

The confusion arises from whether it is a credit or debit card. With funds on deposit and earning interest, it seems like a debit card but if it's processed as a credit card then the merchant/service provider is penalized which is what I would like to avoid. An interest-paying chequing/transaction account offering Interac debit is, I suspect, non-existent. Two days and EQ hasn’t answered the question directed to the bank.

A reasonable conclusion that CIBC is on the lookout for people with excellent credit scores to market other products.

February 18, 2023
11:42 am
Doug
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savemoresaveoften said
Prepaid CC usually has an activation fee PLUS a non activity fee, a ripoff in my mind..  

That is not necessarily the case any longer. Those flavour of prepaid credit cards, usually for sale in a non-reloadable, non-personalized format but sometimes still in a personalized, KYC-validated format, are definitely in the minority. CIBC has largely exited that market, retaining only its decent, no fee Air Canada prepaid credit card. Vancity Community Investment Bank and Vancity, together the long dominant sleazy issuer in the space, have completely exited the market. PayPower still exists, yes, and DCBank still issues its fee-laden cards through Money Mart, Vanilla from Peoples Trust Company may still exists but its market share has dropped considerably, and Equitable Bank has tried to fill the void left by Vanilla and Vancity/VCIB with its fee-laden Joker MasterCard; however, the norm now is for prepaid cards to have actually less or no fees as compared to banks' chequing accounts. 🙂

Simplii Financial even has a virtual Visa gift card that has no activation or monthly maintenance fees and no fees for sales, but you have to be a Simplii Financial client to purchase them; you don't have to be a Simplii Financial client to spend them. So that's a great example of the non-reloadable kind.

Cheers,
Doug

February 18, 2023
11:49 am
Doug
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Loonie said
I was actually afraid that EQ card would confuse people about other prepaid cards, and perhaps that is happening.

If you can get your credit needs covered by a credit card, there is no need for a prepaid card. Prepaid cards are basically for people who can't get credit. EQ is perhaps a bit different, but, if you have the money in your EQ account for their card, why would you want another one? If you don't have the money available, you won't get one anyway.
As for CIBC wanting to check your credit, they are just fishing. They want to see if you qualify for a card that would be more lucrative for them. If you do, they will then market that card to you.

By using a credit card, you can postpone payment for several weeks and also earn rewards.  

I would disagree on the second point. Historically, that was quite possibly true, but nowadays, the no fee variety are alternatives to debit cards and more of competitors for debit cards than credit cards. I would, for example, feel more comfortable using a prepaid card with the Visa or MasterCard zero liability policies and purchase protection policies, in some cases, than the Voluntary Code of Conduct for Consumer Debit Card Services, for example. The EQ Bank Card is game-changing in that regard, and the fact it's linked to the EQ Bank Savings Plus Account, so you can easily transfer money to/from the card in real time. So I think there's room in one's wallet for both a prepaid card and a postpaid credit card. In fact, I would say my usage of my debit card is likely to decline significantly, as I look to primarily use my EQ Bank Card for small purchases and ATM withdrawals, and my American Express SimplyCash and Scene+ credit cards for most of my monthly expenses. 🙂

Many people do not know that while merchants may be able to surcharge for Visa and MasterCard credit cards now, they're prohibited from doing so on Visa and MasterCard prepaid credit cards. The settlement also does not apply to American Express credit cards, so if they want to accept American Express, they cannot surcharge.

In my view, EQ Bank Card is Equitable Bank's way of busting up the Interac Corp. 100% monopoly on physical debit card transactions, and that's a good thing.

Cheers,
Doug

February 18, 2023
4:06 pm
Loonie
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I'm OK if it works for you, Doug.

I almost never use debit, so would not find much use for yet another card, from EQ. (Also, I really dislike dealing with EQ anyway.) I would consider that having to stop and log in to EQ and transfer money to make a purchase would be very annoying.
I haven't noticed any surcharges yet for using CC but it's a good reminder to keep an eye out.
In my experience, the usefulness of CCs is related to volume.

In my view, EQ is trying to hoodwink customers into keeping their money ther at 2.5%. Such changes are never fundamentally about improving service, always about improving profits. But I'm sure Interac could use the competition!sf-smile

February 18, 2023
10:36 pm
RetirEd
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CBC Marketplace ran a program on annoying fees a week ago (still available on their website) that said a legal change ENABLED more prepay fees, which had been banned. Check carefully.

Peoples Trust is one financial institution that relies heavily on prepaid cards. That seems like one reason their interest rates are sometimes way out of synch with other FIs.
RetirEd

RetirEd

February 19, 2023
7:33 am
COIN
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I don't see the difference between a prepaid credit card and a gift card except a prepaid credit card is likely to be accepted at more establishments.

February 25, 2023
1:06 pm
moveyourmoney
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Does anyone have experience with the Wise prepaid debit card? I applied for the card and opened an account because traveller reviews spoke highly of the product and low fees. However, when I want to add funds, it appears they charge fees to transfer in from a FI linked account. Charging to add funds (deposit) doesn’t make sense- is that correct? This would mean they charge at both ends- deposits and use of the card through fees where currency exchanges are involved. Nobody had mentioned the front end fee as far as I picked up- am I missing something or is this just another cash grab that might be lower but occurs in more ways than I’m used to. No deposit fees for Wealthsimple and it appears to have competitive foreign exchange advantages. I wanted both in case one had issues, I would have a backup.

February 25, 2023
1:28 pm
Norman1
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According to Fees for receiving and adding money, it looks like Wise, for Canadians, charges to load Canadian dollars, with Canadian dollars, using certain methods:

Debit card: 2.16%
Direct debit (?): 0.24%
Interac e-Transfer: $1.24 + 0.02%
Bill payment: $2.30
Domestic wire transfer: $2.30

Didn't see a charge for direct deposit. Maybe no charge to push money in through a direct deposit as described in How do I use my CAD account details?

February 25, 2023
5:03 pm
moveyourmoney
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Norman1 said
According to Fees for receiving and adding money, it looks like Wise, for Canadians, charges to load Canadian dollars, with Canadian dollars, using certain methods:

Debit card: 2.16%
Direct debit (?): 0.24%
Interac e-Transfer: $1.24 + 0.02%
Bill payment: $2.30
Domestic wire transfer: $2.30

Didn't see a charge for direct deposit. Maybe no charge to push money in through a direct deposit as described in How do I use my CAD account details?  

Thanks Norman- good info. I tried to add $3k to my cdn account balance. Wise must view that as the equivalent to a domestic wire transfer or bill payment. I thought they tried to charge about $7 to do so. However, when I checked back, it was $2.30 as you stated for a couple of the fees you spotted. Not the biggest deal but I find any deposit fee hard to swallow. Wise makes their money on foreign money transfers, exchange rate fees, etc. They do not pay interest on the account funds. The other win for them is that when people travel or work in many countries, you can have 50 different currency accounts plus your home country balance just sitting there. Use the funds and pay fees, leave idle funds in many accounts and they use your money for free. Every time you transfer back and forth between currencies, pay the fees. And apparently, pay the fees to add (deposit) to your home country balance too! Just something to be aware of- the Wealthsimple prepaid card may prove to be superior for travel- the small interest they pay can cover some of the misc exchange, Visa, or foreign atm fees. We’ll see.

February 26, 2023
12:18 pm
JohnnyCash
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moveyourmoney said
Does anyone have experience with the Wise prepaid debit card? I applied for the card and opened an account because traveller reviews spoke highly of the product and low fees. However, when I want to add funds, it appears they charge fees to transfer in from a FI linked account. Charging to add funds (deposit) doesn’t make sense- is that correct? This would mean they charge at both ends- deposits and use of the card through fees where currency exchanges are involved. Nobody had mentioned the front end fee as far as I picked up- am I missing something or is this just another cash grab that might be lower but occurs in more ways than I’m used to. No deposit fees for Wealthsimple and it appears to have competitive foreign exchange advantages. I wanted both in case one had issues, I would have a backup.  

Pushing and pulling funds to and from a linked account is free, ie, Tangerine, EQ, etc. I find it most useful for converting to USD and pulling them into a USA based bank account, again no fees when initiated from the bank end.
If you have a EQ USD account, you can send funds directly into Wise USD account using Send Money Internationally. The minimum amount is $5.00 without any fees.

March 3, 2023
6:02 am
countysaver
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Doug said

I would disagree on the second point. Historically, that was quite possibly true, but nowadays, the no fee variety are alternatives to debit cards and more of competitors for debit cards than credit cards. I would, for example, feel more comfortable using a prepaid card with the Visa or MasterCard zero liability policies and purchase protection policies, in some cases, than the Voluntary Code of Conduct for Consumer Debit Card Services, for example. The EQ Bank Card is game-changing in that regard, and the fact it's linked to the EQ Bank Savings Plus Account, so you can easily transfer money to/from the card in real time. So I think there's room in one's wallet for both a prepaid card and a postpaid credit card. In fact, I would say my usage of my debit card is likely to decline significantly, as I look to primarily use my EQ Bank Card for small purchases and ATM withdrawals, and my American Express SimplyCash and Scene+ credit cards for most of my monthly expenses. 🙂

Many people do not know that while merchants may be able to surcharge for Visa and MasterCard credit cards now, they're prohibited from doing so on Visa and MasterCard prepaid credit cards. The settlement also does not apply to American Express credit cards, so if they want to accept American Express, they cannot surcharge.

In my view, EQ Bank Card is Equitable Bank's way of busting up the Interac Corp. 100% monopoly on physical debit card transactions, and that's a good thing.

Cheers,
Doug  

A few weeks in and I've been happy with my EQ Bank card. One advantage I've not seen mentioned is the reduced risk from fraud or hacking or skimming or whatever. No one can steal more from the card than what's on deposit. Shopping on-line where there is no guarantee against card data being stolen, this could matter. EQ Bank's instant transfer/loading option makes it possible to keep only a small amount on deposit.

I wasn't aware that merchants are not charged an interchange fee for prepaid Visa and Mastercard transactions. EQ's answer to questions about fees have been uninformative beyond telling me I should say "credit" when asked debit or credit. A source for this information would be appreciated.

On the subject of merchants surcharging for credit card use, I recently encountered what I took to be a 'work around'; the payment terminal at a Toronto fast-food stall wouldn't allow me to proceed to pay until I indicated how much of a tip I wanted to pay ["no tip" was greyed-out, not an option] with the amount starting at [a suspicious] 5%. I had zero confidence the 13¢ I paid would go to the counter attendant. It would be a nice premium, however, to the business operator more than offsetting the interchange. Totally coincidental I was using my EQ Mastercard, I expect. I was not about to make a scene and hold-up the line questioning the apparent hidden surcharge but will be more alert in the future.

March 3, 2023
9:36 am
HermanH
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countysaver said
On the subject of merchants surcharging for credit card use, I recently encountered what I took to be a 'work around'; the payment terminal at a Toronto fast-food stall wouldn't allow me to proceed to pay until I indicated how much of a tip I wanted to pay ["no tip" was greyed-out, not an option] with the amount starting at [a suspicious] 5%. I had zero confidence the 13¢ I paid would go to the counter attendant. It would be a nice premium, however, to the business operator more than offsetting the interchange. Totally coincidental I was using my EQ Mastercard, I expect. I was not about to make a scene and hold-up the line questioning the apparent hidden surcharge but will be more alert in the future.  

Make a stink. Otherwise, nothing will change.

March 3, 2023
11:13 am
savemoresaveoften
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count
On the subject of merchants surcharging for credit card use, I recently encountered what I took to be a 'work around'; the payment terminal at a Toronto fast-food stall wouldn't allow me to proceed to pay until I indicated how much of a tip I wanted to pay ["no tip" was greyed-out, not an option] with the amount starting at [a suspicious] 5%. I had zero confidence the 13¢ I paid would go to the counter attendant. It would be a nice premium, however, to the business operator more than offsetting the interchange. Totally coincidental I was using my EQ Mastercard, I expect. I was not about to make a scene and hold-up the line questioning the apparent hidden surcharge but will be more alert in the future.  

If I encounter a place where I can not choose 0% / no tips, I will choose the $amount option and give them $0.01 (or $0.05 if this is the min. due to round down).
Will never let a place dictate me how much I tip, unless I was told beforehand.

March 3, 2023
11:14 am
savemoresaveoften
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Will never let a place dictate me how much I tip, unless I was told beforehand.  
If the store insist a set min % cuz thats how they setup their machine, I will just walk away and NOT complete my purchase, whatever it is that I am buying.

March 3, 2023
1:36 pm
Loonie
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Speak to your MPP about this practice. At the very least, mandatory tipping should be published on same font as menu pricing and highly visible.
Otherwise, pay cash, and always
make sure you have small bills and change in your pocket.

In some countries, tipping is illegal.

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