I am deeply passionate about finance. In fact, my final thesis in college highlighted the severe LACK of personal finance knowledge in young adults today. It angers me because it's affected me as well as just about anybody I know - credit debt, school debt, financing payments, etc.
That's not to say these things are unavoidable, however getting a leg up in whichever financial situation you might find yourself in is definitely better than having your head in the sand [metaphorically speaking of course]. Hence the need to recommend some SIMPLE and EASY methods to spending, saving and understanding your financial needs (and addressing them!!).
In this review, I cover what KOHO is, what it does, account benefits, drawbacks, and what my recommendation is in terms of getting a KOHO account of your own (HINT: you should!). Read below to see why!
Note: this post is NOT sponsored, this is my honest opinion and review following over a year of using the service.
What is a KOHO card?
KOHO is a pre-paid Visa card that you load and use for everyday expenses to earn cashback, save and keep tab of your expenses! It essentially combines your debit card (checking account) with the functionality of a Visa card that uses your preloaded funds for online purchases as well. You can access all of these features and control your funds within their simple, sleek and value-packed phone app.
You sign up through downloading their phone app (available for both Android and iOS users). Once your account is set up and you've selected one of the many fun card colors they offer, KOHO sends your card to you in the mail. Once you receive it, load it and activate it through making a purchase, you're good to go! (If you want to take advantage of a sign-up bonus, keep reading to find my code below!).
There are NO account minimums, NO activation fees and NO annual fees - BARELY ANY FEES AT ALL! You can use it everywhere that Visa is accepted (pretty much everywhere nowadays!) and can even access your card via Apple Pay (Android Pay coming soon).
The best use of this card in my opinion is for your discretionary purchases and monthly bills. This means your spare money that you use on your coffees, your online purchases, gas, groceries, nights out, etc., as well as any household bills you make on a monthly basis. Why? Because you earn cash back. Intrigued? Keep reading.
How does KOHO work?
You can deposit money to your KOHO account through one of three ways:
- Interac E-Transfer (quickest method)
- Auto-Deposit (from your weekly/bi-weekly paycheck)
- Link Accounts for Withdrawals (two to three business days)
Once you add funds, spending your money is as easy as tapping (or using your pin if you still don't trust the tap) AND you get 0.5% cash back on every purchase!
Then, use the app to load more money, transfer money out, and see all of your spending and transactions just like you would see in any other major Canadian banking app. Before going into the breakdown of the benefits and drawbacks of having a KOHO account I figured you'd want to know some more details about how trustworthy the company is.
How does KOHO make money without any fees?
I've often been asked how KOHO manages to make money if it doesn't charge any fees to its customers. If you're skeptical and need some convincing, I've done my research and here's what I found:
KOHO makes money through merchant transaction fees. Whenever you make a purchase using your KOHO Prepaid Visa, the transaction fees that the merchant pays to Visa (or Mastercard) for accepting your card are in part collected by KOHO. Some of this profit they keep and some is disbursed to KOHO card holders in the form of cash back. This way, KOHO makes money from the retailers that accept Visa and NOT from the customers (unless you choose to subscribe to the premium account - details below).
Is KOHO Safe to Use?
Furthermore, for anybody worried about security of their money being deposited to KOHO and what governs the money, here are some details:
KOHO's accounts are all held by People's Trust. People's Trust is a federally regulated trust company that's been around since 1985 and offers a wide variety of financial services to Canadians. The company's accounts are all insured under the Canadian Deposit Insurance Corporation (CDIC) so in the case that they close, CDIC will reimburse deposits made. Side note: this is how all financial services providers including banks work! For more information about CDIC coverage and how it works, click here for the link to their FAQ page. And by the way, anywhere you put your money, make sure it IS CDIC insured!
KOHO also uses regulations set out by Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) which is a federal government department that reports on and investigates crime, fraud, etc. The fact that KOHO does things by the book and is insured, shows me that they are responsible, accountable and trustworthy.
Benefits of KOHO
I tried to make this section as small as I could. I tried. But there's just so much that KOHO offers and I know you, Millenial, are a busy person. So here is the entire breakdown of all of the benefits you get with a KOHO account:
Activation Fees: None
Annual Fees: None
Account Minimum: None ($20,000 Maximum)
Transaction Limit: None
Withdrawal Limit: $600/day
Foreign Exchange Fee: 1.5% (most banks charge you 2.5%)
Transfer Fees: None + will reimburse your e-transfer fees for incoming money!
Cashback: Earn FREE automatic cashback on all purchases called PowerUps. It is automatic. You earn 0.5% back on all purchases which you see in-app in a day or two following any transaction.
Notifications: Every time your card is used, a notification pops up reminding you how much it was as well as how much you have left. It's mint for keeping tabs on your balance leftover which is better than dealing with overdraft fees, interest and the guilt over using it! THIS is the feature that gets you to think about your purchase and how much you have left which is crucial to being financially aware!!! As a safety feature you'll know right away if your card has been stolen and you can lock it right from your KOHO app.
Insights: You can track EXACTLY where your money went. In your transaction history, you not only see a store's name but also their logo for quick reference where available. KOHO also sorts and categorizes your purchases so you can further analyze your spending in the "Insights" tab of the app. Once the app starts to recognize your spending patterns, you'll start getting some helpful tips about where you should spend less or alternative places you can buy things. (Example: "McDonald's average purchase is smaller than Starbucks' have you tried switching?").
Saving: KOHO's RoundUp feature helps you save your money by stashing little pieces in a savings account of out sight! RoundUps can be enabled on the account in-app which then rounds up every purchase to the selected whole dollar amount (either $1, $2, $5 or $10). Every round up is tucked away in the savings tab and is transferred out of your "spendable" amount. You don't get a notification for any RoundUps made for you UNTIL you've completed a goal (which you can set up in the savings tab). You can always top up your savings goals by contributing more than your RoundUps. Once you've completed a goal, you can transfer this amount back to your spendable amount to use for whatever you were saving for (new shoes? new coat? date night?). It's definitely a great savings tool because it automates the process of saving and makes it painless!
Investing: KOHO has also partnered with fintech giant WealthSimple to create an easy and seamless way to invest automatically - you can indicate a portion of funds you want invested, connect to your WealthSimple account and the amount is transferred for you to fund your investing activities without you having to do anything! WealthSimple in-depth review coming soon!
Joint Accounts: For those of us living with partners or roommates where bills are split and tracked separately and need to be isolated from the rest of your paycheck - this is the perfect solution for you!
Referral Program: Lastly, you can earn even more in cashback through their referral program which gives you (at the time of me writing this article) an additional 1% additional cashback on all purchases for 90 days for each referral!
Premium Account Features (Paid and Optional):
Here is a quick summary of all of the paid features that come in the premium version of the KOHO account:
Cost: 30 Day Free Trial followed by $9 a month OR $84 a year
Cashback: 2% cashback on grocery, eating out and transportation purchases. 0.5% cashback on all other purchases still applies!
Foreign Exchange: Free from 1.5%
Withdraw: $800 increased from $600 a day
Limit: $40,000 increased from $20,000 (don't ever keep this much, invest it!)
Other perks:
- Free access to financial coach for one-on-one advice
- Price Matches determined by KOHO on eligible transactions are credited to your account
- You can withdraw 800 dollars a day vs. 600 and have 40K in your account vs. 20K
- Premium Card design which ships out to you after the free trial ends
If you're unsure about whether premium is worth it for you, after several months of using the card check that you are actually spending over $450 CAD in the food/grocery/eating/transport categories a month (check the insights in app for this). If that's the case, the cashback for this amount ($450 x 2% = $9) will pay back the monthly fee for the premium version. You'll also save an additional $24 a year if you pay for the year upfront. But if you're finding you're not spending this amount of money in a month in those categories, then you might have to pay for the premium subscription out of pocket.
Drawbacks of KOHO
I tried to be as objective as possible about KOHO and the only downsides I could see to having them in your financial arsenal are:
1. You do NOT earn interest on any money sitting in your account (spendable or savings). Their savings account is great for smaller term savings such as a monthly phone bill or a new pair of shoes or a vacation. For larger purchases that you want to save for exceeding one year, I would recommend taking advantage of a High Interest Savings Account (HISA) such as the ones offered at WealthSimple or EQBank (reviews coming soon!). This is because KOHO accounts do not earn interest meanwhile a lot of other financial institutions provide you with some interest earnings for choosing them to keep your money in their pockets for safekeeping.
2. KOHO does not affect your credit at all. Why is this a bad thing? Regular day-to-day spending on a credit card keeps your credit active and tends to build your credit IF you can use a credit card wisely and stay on top of it. So for those looking to build your credit score up this way, KOHO transactions will not be registered since it's a prepaid Visa and you aren't borrowing any money on credit. On the other hand, for those that tend to go a little overboard on credit, KOHO will mitigate your habits from tanking your credit score by giving you a budgeted amount (the amount you deposit) to spend with and your credit won't be affected at all!
The Final Verdict on KOHO
In the theme of keeping things easy, simple and automatic, I give KOHO a huge thumbs up. With one KOHO card, you can make some money, keep your daily expenses in order, your savings satisfied and your investments growing.
This card has allowed me to not only keep track of my expenses, where they go, but also earn cash back on them. I can also effortlessly save and invest by rounding up my purchases and using them on my short-term goals. This automates the way I save for the little things and ensures the process is hassle free!!
Their simple to use app interface and ability to analyze your purchases are huge factors in streamlining and becoming aware of your day-to-day spending. It helps you make better informed decisions with your money, helps you budget, stash some cash and meet your goals (even with someone!).
If you'd like to sign up, use my referral code K2J8OZEW and you’ll earn an extra 1% in cash back for a total of 1.5% on all purchases in the first 90 days (3% if you subscribe to premium!). If you don't use my referral code, you can always sign up yourself through their app, I don't mind really - but you'd also lose out on the extra 1% cashback!
Let me know in the comments below what your thoughts are about KOHO or if you have any questions for me in regards to other Fintech you'd like me to review. I'm always looking for ways to automate my finances and keep everything super simple. Please subscribe for upcoming post notifications and more reviews like this one.
Happy Spending and Happy Saving!
Linda Kamaev