High credit card fees, fraud, lousy credit; whatever you might be trying to avoid with your traditional credit card, you may not have to anymore.
Instead, there are options out there that can help you reap the benefits of a credit card, such as cashback, easy online shopping, and increased spending power, without ever worrying about things such as your credit score, fees, or high-interest rates.
Koho is an alternative, more effective, and cheaper way of managing your spending and saving habits in Canada.
With an easy-to-use prepaid and reloadable Mastercard, interest-bearing spending and savings accounts, and a user-friendly mobile app to help you track your spending and saving.
Koho’s financial technology can help you stop worrying about overspending and manage your finances more effectively. The company also offers cashback on all of your purchases and other useful features to get your financial house in order.
Personally speaking, I like Koho. In fact, both of their Prepaid Mastercard and Premium Prepaid Mastercard made it onto my best virtual credit cards in Canada list, where I talked about digital credit card options to help protect your identity, shield you against fraud, and save on fees.
In today’s post, we’ll go into the details of what Koho is. Hopefully, the information will help you understand the company’s offerings as a fintech enterprise and decide whether their products are the right choice for you in your financial journey.
Let’s get started!
Launched in 2017, Koho is a financial app developed by Daniel Eberhard. During its design, Eberhard’s goal was to simplify credit cards and personal finance for average consumers through a straightforward and high-quality mobile app.
Contrary to what many people believe, Koho is actually not a registered bank. However, on its user-friendly app, Koho offers similar features to a free checking account, pays interest on its balances, and allows you to reap the benefits of a credit card without its disadvantages.
To keep your money safe, Koho is partnered with Peoples Trust (a federally regulated financial company based in Vancouver, BC) and Mastercard to hold and safely keep the funds users load onto their cards.
Koho’s main feature is their reloadable prepaid Mastercard.
Attached to your Koho spending account, the card is kind of like a hybrid between a debit and credit card; a debit card in the sense that you cannot spend more than you have in your account and a credit card in the sense that it functions as a Mastercard at all point of sales and offers cashback on your purchases.
With Koho, you can have a variety of digital accounts such as “spending” and “saving.” You can put funds into your Koho accounts either by Interac e-transfer from your existing bank or by linking your payroll to it by direct deposit.
Once the funds are in your account, you are free to use your prepaid Mastercard by making whatever purchases you like, whether they’re in-person, online, or for recurrent subscriptions (such as gym memberships or streaming services).
Koho helps track and manage your finances by offering an app that is truly outstanding. I find its user experience to be seamless. On it, you can see your spending habits broken down, put money aside into your savings, and watch your cashback funds accumulate.
In addition, you cannot spend more than you have with the Koho prepaid Mastercard, which is one way that many people get into credit card debt. By avoiding unnecessary spending, Koho helps you manage and save your money better.
Do note that Koho is a solely digital financial institution. Therefore, they do not have any in-person branches. However, they also do not charge any additional fees for using ATMs.
In addition to simplifying your finance game through their mobile app and reloadable prepaid Mastercard, Koho has some great features that we’ll go through now. As I mentioned earlier, they offer 0.5% cashback on every single purchase that you can instantly cash out within the app to put towards purchases or savings.
In addition, because their Mastercard is prepaid and functions similarly to a debit card, you never have to worry about spending more than you can pay back or the high-interest rates that are associated with most credit cards (as you may know, interest rates that are somewhere between 19 to 24% are completely normal in Canada!).
Something that I also find quite interesting is this: Koho states that their users actually end up reducing their overall spending by putting aside 7% of their funds into their savings with the help of their features. Furthermore, they say that this is 5% more than users save on other banking platforms!
Furthermore, Koho has the following features associated with their accounts:
Early payroll: at absolutely no charge, Koho users can have access to $100 of their upcoming payroll up to 3 days before their paycheque hits their account. Need funds even sooner? For $5, you can have access to the $100 any time before your payday with the “Early Payroll Instant” feature.
Interest earned: set up direct deposit onto your account (whether it’s a one-off government payment or your recurrent payroll, it doesn’t matter!), and you will qualify for 1.2% interest on your entire KOHO balance regardless of which account it’s in.
Credit building: the good thing about the Koho Mastercard is that, because it’s prepaid, having a good credit rating is not really necessary. But how will you build up your credit with a prepaid card? Enter the Koho credit building feature.
For $7 per month, Koho will take it upon themselves to report your financial progress to a major credit bureau, such as Equifax or Transunion, and help you grow your credit score in just six months.
Referrals: by referring a friend who signs up using your referral code and makes a purchase within 30 days of opening the account, you both will receive a $20 credit! You can refer up to 50 friends and make $1000 from their referral program.
Although Koho can replace your day-to-day banking needs, such as payments and transfers, I would still recommend having an account at a “regular” bank. There are certain things such as sending wire transfers, getting draft cheques, or simply having your own cheque book that Koho cannot offer.
In addition, do consider having an ongoing relationship with a more traditional bank or credit union for other financial vehicles such as investments, loans, mortgages, or general financial planning.
What banks see as your “loyalty” to them can sometimes unlock good offers and services that you may not be able to obtain through a digital-only and low-fee service like Koho.
Yes, Koho is safe and is used by nearly 400,000 Canadians. The funds you upload onto your Koho card are protected by a federally regulated bank, Peoples Trust, who would ensure that you have access to your money if Koho were to go under for whatever reason (although this is quite unlikely).
In addition, although Koho itself is not a bank and therefore not insured by the Canada Deposit Insurance Corporation (CDIC), any funds that you place into their interest-bearing accounts are indeed protected by the CDIC for up to $100k.
This is to say that Koho has several different safety nets within their products and your money and accounts are safe with them.
Without additional features, Koho does not help in building your credit. This is because you are technically not borrowing any money from them when you use your Mastercard as you do with other “traditional” credit cards. The Koho card is prepaid and reloadable, meaning you can only spend what you deposit on it.
Despite this, Koho thought of a way to help you build your credit with their products. For a monthly $7 fee, you can get their “credit building” feature which gets Koho to help you build up your score in a short six months.
Koho does this by reporting your financial progress to a major credit bureau in Canada, which can then reflect this progress within your credit rating.
In my opinion, this is a great feature, and it’s quite cost-effective if you think about it holistically. You can avoid all of the fees and high-interest rates of traditional credit cards while reaping the benefits of using a Mastercard and building up your credit rating. A win-win? I think so.
As you can see, Koho is a prominent fintech company offering consumers the chance to simplify their finances, track their spending and reap the benefits of a credit card without the hassle.
Their features truly make it clear that their users’ financial health is essential to them, and this isn’t always the case with bigger banks, who are sometimes more concerned about their bottom line than they are about their customers.
If this post piqued your interest and you would like to know more about the nitty-gritty on Koho’s prepaid Mastercard, I have a whole post on it on my website. You can find that here.