Credit cards. You bring them into your life thinking they are going to be your fun-loving pal, always ready for a good time and to help you out at a moment’s notice. Then, one day you wake up and realize your new best friend has been leeching off you for years.
In many instances, the same can be said of traditional banks that overcharge, penalizing you for your purchases instead of rewarding you. The good news is, it doesn’t have to be that way.
Digital banks, like Toronto-based KOHO Financial, are breaking the traditional mould and offering Canadians full-service options — like prepaid credit cards and high interest savings accounts — that allow people to put more money in their pockets without stifling their spending power.
Deep down, we all know credit card debt is bad, and yet, it has a sneaky way of slowly rising in the background of our lives. For an alternative that actually works, look towards the world of prepaid credit cards. We’re not talking about the prepaid cards you see next to gift cards at the supermarket. No, we’re talking about the new breed of reloadable prepaid cards, connected to your phone and loaded via e-transfer or direct deposit.
The cream of the crop of this new breed of card comes from Vancouver-founded and Toronto-based KOHO Financial. Like all the best no-fee prepaid cards, KOHO lets you load your card on the fly with an amount of your choice so that you don’t inadvertently overspend, but what really sets it apart is what happens next.
Despite the best intentions of debt counsellors everywhere, Canadians have come to enjoy collecting cash back and travel points, despite the obvious flaws (complexity, high interest, increased spending, etc.). So, moving to a prepaid card can admittedly feel like you’re leaving an opportunity behind.
Thankfully, KOHO has found two ways to reward their cardholders: By letting them earn cash back every time they spend and letting them earn 1.2% interest when they save. That might sound like one of those Buddhist poems that’s meant to nullify your mind, but it’s true.
Like other credit card reward programs, KOHO offers a minimum of 0.5% cash back on every purchase you make. This can range between .5% to 4% depending on your account type and who you’re buying from (it could actually go as high as 12% if you start referring friends).
But you don’t have to spend to earn. If your money is just chilling out in your account, it will still be putting in work for you every day. With KOHO’s free high interest savings feature, KOHO Save, every penny in your account will be earning 1.2%.
So, let’s say you break up with your traditional credit card in favour of stowing that cash away in a KOHO Savings Account. That means that while your money waits for your next bubble tea purchase, it’ll grow day after day.
Plus, since KOHO doesn’t run a hard credit check, there’s no risk involved with signing up (your credit score won’t be affected). It’s completely free to open an account, and you can cancel for free at any time.
You could even use KOHO as an added financial tool on top of your regular banking account, assess the benefits, and enjoy the platform before deciding whether you want to make it your primary banking account.
For those of us more interested in brunch than banking, 1.2% might not seem like a lot, but do a quick survey of the rates offered by Canada’s big banks, and you’ll realize the opportunity here.
If you’re curious, KOHO recently released a savings calculator on their website that will let you figure out how much you could expect to earn by switching to their card.
The numbers are impressive, and when combined with the ability to prevent overspending, KOHO might be that fun-loving sidekick you always wanted.
To learn more about how you can earn with KOHO or to dive in and sign up, visit koho.ca.