Review: KOHO Prepaid Mastercard

At Frugal Flyer, we tend to focus on credit cards that are great for miles and points. However, even hardcore miles and points enthusiasts need to have a card or two they keep around for the long haul. 

Furthermore, everyone’s financial situation is different. For some, credit cards may not be an option. For others, it’s just a personal preference to avoid using credit and instead, they prefer to stick with debit or cash. 

However, the financial product landscape in Canada is ever-changing, and there is now a new category that sits between debit cards and credit cards: reloadable prepaid credit cards. KOHO is a financial institution that offers such a product: a prepaid Mastercard that comes with various credit and savings-related features.

What is the KOHO Mastercard?

Similar to other prepaid credit cards, like Mogo Prepaid Visa card and Vanilla Prepaid Mastercard, the KOHO card acts as a prepaid credit card in which you must load funds from your bank account to your KOHO account before you can make any purchases.

You can load your KOHO card online through Interac e-transfer, through using an existing Visa Debit card, or by having your payroll deposited directly into your account. They also offer an “early payroll” feature, which gives you access to $100 of your next paycheck three days before the deposit hits your account.

This means that all funds that are spent while using the card are your own money that you loaded from your regular bank account; you are never drawing from a credit limit like you would with a credit card.

A big selling point of the KOHO prepaid Mastercard is that there are no hidden fees. That means that there is no monthly fee, no non-sufficient funds (NSF) fees, no e-Transfer fees, no interest charges, and no fee on atm withdrawals (unless one is charged by the third-party ATM provider).

If you want to join the 375,000 Canadians currently holding the KOHO card, you can sign up for the KOHO reloadable prepaid card here. Once approved, you will receive your physical card in the mail and $20 will be deposited in your KOHO account once you make your first purchase.

KOHO Prepaid Mastercard Rewards

The KOHO card offers 0.5% cashback on all your purchases. This means that for every $100 spent on the card you will earn $0.50 in cash back. 

This is a fair rate of return for a prepaid Mastercard, however, if you were open to holding a credit card instead, many options would allow you to earn a minimum of 1% cashback with no fees, such as the PC Optimum Financial Mastercard.

KOHO has partnered with various retailers to provide cardholders with increased cashback on their purchases. At the time of writing, 30 retailers are partnered with KOHO to provide an increased cashback percentage rate of 2-10%, depending on the retailer. Some of the retailers include Altitude Sports, Indigo, and Mary Brown’s.

This is a similar model to other prepaid card providers, such as Neo Financial.

For the most current list of partners available, check the “Cashback Partners” page in the KOHO app.

KOHO Premium

While the base-level KOHO Mastercard is offered with no monthly or annual fees, KOHO does also offer a premium account with additional rewards and benefits. The premium card comes in a vertical design to differentiate it from the normal KOHO card, which is horizontally oriented.

The KOHO premium card does come with a fee of $9 monthly or $84 annually.

The main feature of the KOHO premium account is that it gives cardholders the opportunity to earn cash back at a greater rate. The premium version of KOHO gives 2% back on purchases made within specific categories, including groceries, eating and drinking, and transportation. Any purchases made in these categories would earn 0.5% cashback on the normal KOHO card.

On the travel side of things, KOHO Premium offers no foreign transaction fees, whereas the base-level KOHO card charges 1.5% on all transactions outside of Canada. This means any purchases made outside of Canada may result in savings of 2-3%, whereas with many other prepaid cards and credit cards you would often be charged an additional fx fee.

KOHO premium also offers one free international ATM withdrawal per month which can save upwards of $2-3.

One of the more interesting features of the premium card is the KOHO price match program. This is a feature that allows you to submit your receipts of recent purchases made on your premium KOHO prepaid Mastercard, and if KOHO can identify a cheaper price elsewhere, you will be credited the difference to your KOHO account.

The KOHO premium credit card offers a 30-day trial period if you are interested in trying it out before committing to the monthly or annual fees.

Credit Building with KOHO Card

If you have a thin credit file or need to improve your credit score and history, KOHO offers a credit-building service. 

By holding the KOHO prepaid Mastercard, you can subscribe to their credit building service for $7 per month. By signing up, KOHO will report your account to the major credit bureaus every month which will have a positive impact on your credit history. All that is required is that you have $7 available in your spendable account each month to cover the fee for this service.

It is important to remember that there can be no guarantee as to what to expect in regards to your credit score as a result of using this service, as many factors play into the determination of your credit rating, such as the age of your accounts, total credit utilization, and payment history. However, what is guaranteed is that the KOHO credit-building service will report a tradeline that reflects positively upon your credit file.

This service is only recommended for those who are unable to currently get a credit card due to credit history or score; in most cases, holding a credit card would be far superior for the benefits and credit reporting, if you are able to get approved for one. It would also be worth considering a secured credit card as another option.

For those who need a bit of help in the credit history department, this is a great solution that requires minimal effort. We have seen similar options in the United States, such as the Extra debit card, so it is nice to see a Canadian financial institution supporting this initiative as well.

Conclusion

If the rewards and no fees make the KOHO card a good fit for your wallet, you can sign up for your free Koho account here to earn $20 upon making your first purchase.

KOHO is one of many options out there in the Canadian prepaid card landscape. It is always worth reviewing all of the prepaid card options that are available to you to find the best one for your needs.

Frequently Asked Questions