Using credit/prepaid cards

Credit cards and prepaid cards offer the convenience of making payments without carrying cash. Cards can also be safer than cash, because if your wallet is lost or stolen, it’s harder for thieves to access the funds on a credit or prepaid card.

This information will help you understand the benefits and drawbacks for each type of card, so you can choose the options that are right for you.

Credit cards

Credit cards allow you to borrow money from the credit card company to pay for your purchases. At the end of the month, you can choose to repay the borrowed funds in full and avoid paying interest, or make the minimum payment and start paying interest on the funds you didn’t repay. However, if you miss a payment, it will negatively impact your credit rating.

Benefits

  • Safer than carrying cash
  • Convenient — widely accepted
  • Buy now and pay later
  • Protection against fraud
  • Get a record of all your purchases
  • Build your credit history*
  • Shop and pay for items online
  • Protect yourself from theft**
  • Earn rewards through loyalty points programs or earn a percentage of cash back on your purchases
  • Get travel insurance and other types of purchase protection
  • 21-day grace period before interest is charged on purchases (doesn’t apply to cash advances)

Drawbacks

  • It’s easy to lose track of purchases and overspend
  • If you miss a payment, it negatively affects your credit rating
  • You may end up paying higher interest rates and other fees

Before you apply

A credit card contract is a legally binding agreement. Before you apply, make sure you understand:

  • your credit limit
  • the interest rate
  • annual fees and admin fees
  • minimum monthly payment
*Find out why building a credit history is important.
**Many cards come with a Zero Liability Policy, which means that if your credit card or card number is stolen and used to make purchases you didn’t authorize, you’ll be reimbursed for the charges.

Prepaid cards

Using a prepaid card allows you to pay for purchases without having to carry cash or find an ATM nearby. Some prepaid cards are “reloadable,” which means you can top up the card whenever the funds run low, while others are “single load” or “gift” cards that are thrown away when the funds are used up.

Reloadable cards come with security features like PIN numbers for ATM access. Fraudsters could copy card numbers off cards sold in easily accessible retail locations, which they use when the card is activated by the real purchaser. When purchasing a card, ensure the package has not been tampered and check your transactions on the customer service website URL on the back of the card.

Benefits

  • Safer than carrying cash
  • Convenient—no ATM visit needed
  • No bank account or banking relationship needed
  • No credit check needed
  • Access to funds never expires*
  • Can be used for online purchases
  • Some can be used anywhere Visa is accepted electronically
  • Reloadable cards can be used to withdraw cash at an ATM

Drawbacks

  • Doesn’t help you build your credit history
  • May incur activation fees and other fees
  • May incur maintenance fees for each month the card is not used
  • May not be accepted online or across the border due to various security requirements
*While the plastic card will expire in time, you can request a replacement card to continue using any remaining funds.

Before you buy

Different prepaid cards come with different features and benefits, so read information on usage, fees, terms and conditions carefully before buying a prepaid card.

Additional information