FCAC Publishes Pre-Paid Payment Card Guide

"Pre-paid cards look like credit cards and can be used in similar ways, but they aren't credit cards. The money you're spending is your money, which you 'load' onto the card before using it," Commissioner Knight said. "The fee structure of a pre-paid card is also quite different from a credit card. In many cases you will pay a variety of fees in order to take advantage of the benefits these cards offer. That's why pre-paid cards can be an expensive way to spend your own money."

FCAC's pre-paid card booklet contains a detailed table that enables consumers to compare the features and fees of 16 pre-paid cards now available in Canada. For many of these cards, fees are charged for various types of transactions - such as for making purchases, re-loading money onto the card and making inquiries about card balances. Some cards also have monthly maintenance fees, and several have time limits on how long they can be used before the remaining balance becomes subject to a fee or, in some cases, is forfeited outright.

"To determine the benefits of any financial product, consumers also need to be aware of the costs," said Commissioner Knight. "FCAC's new Pre-paid Cards booklet, as well as our other consumer tools can help consumers shop around and find the best financial products for their needs and budget. While some consumers may decide that a pre-paid card is right for them, others might find that another product, or combination of products, suits them better. For some, a low-rate credit card, or a low-cost bank account with a debit card, may be a more attractive option."