These days, people are getting afraid of credit cards and their high-interest rates. They want a way to make purchases without accumulating debt and significant fees. That’s where KOHO comes in.
As a prepaid card, you can control your spending and stay within budget. It sounds like a great idea, but what is the catch with KOHO?
The thing is, there really isn’t one. KOHO is exactly what it says it is. There aren’t hidden fees, and the amount you save and spend is within your control.
If you’ve struggled in the past with poor credit and need a way to keep track of your finances, the KOHO card is a solid choice.
Want to learn more about KOHO? Read on as I explain the benefits of this prepaid card.
How Does KOHO Work?
Once you set up an account online, all you need to do is fund your card. You can do that by either Interac e-Transfer from an existing bank account or set up a payroll direct deposit with your employer.
After that, use your card whenever you want. You can make purchases online or in person.
KOHO is accepted anywhere Mastercard is. You can set savings goals and accumulate cashback on all your purchases.
KOHO lets customers budget, spend, and save – all in one app. Credit cards can get their users into trouble. With high credit limits, it’s easy to spend more than you can afford.
Those unnecessary purchases come with high-interest rates and outlandish fees, digging customers into an even deeper financial hole.
Instead of falling for that trap, KOHO users can sign up for a free reloadable prepaid card that helps give them control. The best part is that there aren’t any fees.
The basic KOHO card offers cashback rewards on all purchases, as well as a savings account where you can set specific goals.
You can go a step further and enroll in KOHO’s RoundUP program and roundup your purchases to the next $1, $2, $5, or $10 and sock it away into your savings.
Another impressive feature is that your account can earn interest if you set up payroll direct deposit.
The interest rate is higher than most big banks, making it an easy way to grow your money.
Because KOHO isn’t a credit card, it won’t help improve your credit score.
However, they do offer a separate Credit Building feature for $7/month. If you subscribe, keep making purchases, and KOHO will report your activity to the major credit bureaus, helping you increase your credit score in just a few months.
KOHO can link up with Apple Pay, so you don’t need to have your card handy if you want to make a purchase.
One big advantage to KOHO is its financial coaching. You can create a budget and track your spending in real-time. You can get tips and tricks on debt repayments and savings.
While KOHO’s no-fee account offers you all kinds of perks, the KOHO Premium account takes it a step further.
The account charges an $84 annual fee or $9 per month. The paid subscription increases your cashback rewards on transportation, grocery, and restaurant purchases.
In addition, KOHO Premium users can take advantage of price match guarantees and financial coaching. One of the biggest benefits to the paid account is that you won’t get charged foreign transaction fees.
These fees can range anywhere from 1% to 2.5% and can really make a dent in your pocket if you frequently use foreign currency.
The KOHO app is user-friendly and makes it easy to keep track of your finances. You can set up payroll deposits, bank transfers, and bill payments.
In addition, you can check on your balance, set up your savings goals, and even create your budget.
If you need to reach customer service, just use the in-app live chat, making it easy to get answers to questions right away.
KOHO partnered with the Peoples Trust Company to hold all funds. The Peoples Trust is a federally regulated institution. As a member of the Canada Deposit Insurance Corporation (CDIC), deposits are generally insured for up to $100,000.
In addition, KOHO is backed by some of the largest financial institutions, including Greyhound Capital and the National Bank of Canada.
Is KOHO a Good Idea?
KOHO’s unique reloadable prepaid card gives its customers the ability to purchase items while saving money.
As a hybrid debit/credit card, KOHO is the best of both worlds. There are no added fees and interest charges, and the best part is you can only spend what you load onto the card.
That helps control overspending and keeps your finances on track.
Understanding the Advantages and Disadvantages
One of the main advantages of KOHO is that it offers a no-fee spending and savings account. There are no added fees or interest charges, which makes it a cost-effective alternative to traditional banking options.
Additionally, KOHO offers a hybrid debit/credit card allowing you to enjoy the perks of a credit card without risking overspending, as you can only spend what you load onto the card.
KOHO also provides cashback rewards. With their PowerUps feature, you can earn 0.5% cash back on all of your purchases, or even up to 2% cash back on purchases made at select merchants. These rewards can add up to significant savings for you over time, especially if you use the card for everyday expenses like groceries.
Another benefit is that KOHO is digital-first, focusing on an easy-to-use app that helps you manage your money more effectively. With built-in budgeting tools, you can set spending goals and receive real-time updates on your expenses.
However, there are some disadvantages to consider before deciding to use KOHO. One of the main drawbacks is the lack of CDIC insurance. Since KOHO is not a bank and operates as a financial technology company, your funds are not protected by the Canada Deposit Insurance Corporation. This means if KOHO were to go insolvent, your funds wouldn’t be insured.
Additionally, while KOHO is primarily a no-fee platform, there’s an optional credit building service that costs between $7 to $10 per month. If you’re interested in using KOHO to improve your credit score, keep in mind that this service isn’t free.
Lastly, KOHO may not be an ideal option if you prefer to have a physical branch for your banking needs. Since KOHO is a digital-first platform, customer support is primarily provided through the app or email. This could be an inconvenience for users who prefer face-to-face interactions or require an immediate resolution for financial issues.
Frequently Asked Questions
How does KOHO make money?
KOHO makes money primarily through interchange fees. When you use your KOHO card for transactions, merchants pay a fee to KOHO’s payment processor. A portion of this fee is then shared with KOHO.
They also offer a Premium account with additional benefits for a monthly fee. It’s important to note that KOHO does not rely on high interest rates or excessive fees like many traditional banks or credit cards.
What is the point of KOHO?
The main purpose of KOHO is to provide Canadians with a more consumer-friendly alternative to traditional banks. With their prepaid Visa card and app, KOHO users can control their spending, avoid accumulating debt, and stay within budget.
The platform also includes features to help users save money, build credit history, and earn interest. The overall goal of KOHO is to promote financial wellness and make personal finance management more accessible.
Final Thoughts – What is the catch with KOHO?
The KOHO reloadable card is exactly as advertised. With no fees, cashback rewards, and ways to budget and track your money, this card is an excellent option for those looking to stay on top of their finances.
If you’re looking for more options, check out these top virtual credit cards in Canada.