In today’s digital age, online shopping offers convenience and a vast array of products. However, security concerns can sometimes deter people from making purchases online. Virtual credit cards provide an excellent solution, offering an extra layer of protection for your financial information.
This article explores the five best virtual credit cards in Canada for 2024, delving into their features, fees, and benefits to help you choose the card that best suits your needs.
What are Virtual Credit Cards and How Do They Work?
Virtual credit cards function similarly to regular credit cards, but with a crucial difference: they offer a unique, temporary credit card number for online transactions. This temporary number shields your actual credit card details, minimizing the risk of fraud if a data breach occurs.
Virtual credit cards come in two primary forms:
- Single-use virtual credit cards: These cards generate a unique number for each online purchase, offering maximum security but requiring renewal for recurring payments.
- Reloadable virtual credit cards: These cards function more like traditional credit cards, allowing you to reload funds and pay for multiple online purchases with the same virtual number.
Here’s a breakdown of how virtual credit cards work:
- Apply for a virtual credit card: You can obtain a virtual credit card through various channels, including credit card issuers, prepaid card providers, or your bank (if they offer virtual debit cards).
- Access your virtual card details: Once approved, you can log in to your online account and access your virtual card details, including the unique credit card number, expiry date, and security code (CVV).
- Make secure online purchases: During checkout, enter the virtual card details instead of your physical credit card information. The transaction will be processed as usual, with the payment deducted from your linked account.
Benefits of Using Virtual Credit Cards
Virtual credit cards offer several advantages for online shoppers:
- Enhanced Security: By using a unique number for each transaction, virtual credit cards minimize the risk of your actual credit card details being compromised in a data breach.
- Convenience: Virtual credit cards are readily accessible through your online account, eliminating the need to search for your physical card each time you shop online.
- Budgeting: Some virtual credit cards allow you to set spending limits, helping you control your online purchases and avoid overspending.
- Cost-Effectiveness: Many virtual credit cards are free of charge, particularly those offered by prepaid card providers.
- Faster Access to Credit: If you’ve recently applied for a physical credit card, you can often use a virtual credit card immediately for online purchases while waiting for the physical card to arrive.
- Regular Credit Card Benefits: You can often continue to earn rewards points or cash back when using a virtual credit card linked to a rewards program. Additionally, the zero-liability protection offered by major credit card companies like Visa and Mastercard typically applies to virtual credit card transactions.
- Improved Credit Score: Responsible use of virtual credit cards can positively impact your credit score, as transactions are reported to credit bureaus.
Downsides of Virtual Credit Cards
While virtual credit cards offer significant benefits, there are a few limitations to consider:
- Limited In-Store Use: Virtual credit cards are primarily intended for online transactions. If a store doesn’t accept digital wallet payments (like Apple Pay or Google Pay), you’ll need your physical card to make a purchase.
- Return Challenges: Returning online purchases made with a virtual credit card to a physical store can be tricky. The retailer may request the exact credit card number used for the purchase, which might no longer be available with single-use virtual cards.
- Subscription Renewal: Subscriptions linked to single-use virtual cards require manual renewal upon number expiration.
- Potential for Fraud: Although virtual credit cards offer increased security, they aren’t entirely immune to fraud if hackers gain access to the temporary number while it’s active.
The Top 4 Virtual Credit Cards in Canada for 2024
Here’s a comprehensive analysis of the top 4 virtual credit cards in Canada for 2024:
1. KOHO Prepaid Mastercard:
- KOHO Premium: This premium option comes with a monthly fee ($9) but offers enhanced benefits:
- 1.5% cash back on groceries, transportation, and restaurant orders (up to 5% cash back at partners)
- No foreign currency transaction fees
- 5% interest on your balance
- Price matching feature
- Free financial coaching
- Access to the credit building service for a lower fee
- One free international ATM withdrawal each month
- A premium physical Mastercard prepaid card
- Real-time Interac e-transfers
- Transaction limits:
- $4,000 maximum amount per transaction
- $600 daily ATM limit (Essential) / $800 daily ATM limit (Premium)
- $20,000 maximum monthly load amount (Essential) / $60,000 maximum monthly load amount (Premium)
- $5,000 per Interac e-Transfer (Premium only)
- Promotion: Get a $20 welcome bonus when you use the CASHBACK referral code during signup and complete your first purchase with the card.
2. Neo Money Prepaid Mastercard:
The Neo Money card is a popular prepaid option offering both a virtual and physical card. It rewards users with an average of 5% cash back at thousands of Neo partner stores across Canada. Key features include:
- Average of 5% unlimited cash back at participating stores
- Up to 15% cash back on your first purchases
- 1% cash back on groceries and gas
- Unlimited transactions and bill payments
- No monthly fee for a regular card
- 2.25% interest on your account balance
- Access to a spending account with unlimited Interac e-Transfers
- Access to a high-interest savings account with competitive rates
- Fees: No monthly or annual fees (upgrade to a Premium account for $4.99 monthly for features like credit score monitoring, group life insurance, purchase protection, extended warranty, and priority support).
- Transaction limits:
- $200,000 maximum balance
- $25,000 max bill pay (per payment)
- $10,000 daily maximum Interac e-Transfer ($3,000 per transaction)
- Promotion: Get a $20 welcome bonus via a referral link when you open an account, fund it, and complete your first purchase.
3. Wealthsimple Cash Card:
The Wealthsimple Cash Card is a free prepaid Visa card offering 1% cash back on all purchases. It integrates seamlessly with the Wealthsimple Cash App, allowing for free instant money transfers within Canada.
- Benefits:
- 1% cash back on all purchases
- Integrates with the Wealthsimple Cash App for easy money transfers
- Cashback can be added to your balance or invested in stocks or cryptocurrencies through Wealthsimple Trade/Crypto
- Add the virtual card to your Apple Wallet or freeze it using the Cash App
- Fees: There is no monthly or annual fee.
- Transaction limit:
- $10,000 maximum daily spending limit
- Maximum of $500 per ATM withdrawal and $1,000 per day
4. Wise Virtual Card:
Wise is a renowned global money transfer service. When you apply for the Wise debit card, you also receive a virtual card for online and in-store payments. Here’s what sets Wise apart:
- Multi-currency account: Manage over 50 currencies, allowing direct payments in the local currency and avoiding foreign exchange conversions.
- Up to 3 virtual cards at once
- Easy integration with Apple Pay and Google Pay
- Instant generation of new cards and payment details
- One-click card freezing for security
- Fees: No monthly or annual account fee (if you already have a personal or business Wise account).
- Transaction limits:
- $2,650 daily ATM withdrawal limit ($7,000 monthly)
- $17,500 daily limit for online payments ($55,000 monthly). Your limit may vary, so check your online account to confirm.
- While linked to your Wise debit card and account, the Wise virtual card offers standard credit card protections and is licensed by Visa.