What is a Prepaid Credit Card?

A prepaid credit card is a card that looks and pays like a credit card (usually Visa or Mastercard), but you’re spending your own money, not borrowing from a credit limit.

You load funds onto the card first, then use it online or in-store like a regular card. When the balance runs out, you reload it. There’s usually no purchase interest, because there’s no revolving debt.

Despite the name, it’s technically not a real “credit” card unless it comes with an actual credit limit.

KOHO Essential Plan

With KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can add Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

How a Prepaid Credit Card Works

• Load money: Add funds to the card from your bank, paycheque, or e-transfer

• Tap, chip, or pay online: Use it like you would a regular credit card

• Spend down the balance: Each purchase comes out of what you’ve loaded

• Reload when needed: Top it back up when the balance gets low

There’s no monthly “statement balance” to carry—once your loaded funds are gone, the card just stops approving purchases until you reload.

Prepaid vs Credit vs Debit

• Credit card: You borrow from a limit and pay it back later; you can be charged interest if you don’t pay in full.

• Debit card: You spend directly from your chequing account at your bank.

• Prepaid card: You load money first, then spend from that balance, often with extras like cash back, interest, and budgeting tools.

Prepaid is ideal if you want card acceptance and online access without the risk of running up a traditional credit card balance.