As a longtime consumer and personal finance blogger with thousands of dedicated readers, I‘ve reviewed my fair share of banking products over the years. KOHO caught my attention recently as an intriguing prepaid card and financial management app designed specifically for Canadians. With over 800,000 users and glowing reviews across the internet, KOHO seemed too good to be true at first glance.
Always approaching hot new fintech with a healthy dose of skepticism, I decided to thoroughly investigate KOHO myself to find out if this product really lives up to the considerable hype. After poring over customer reviews, studying the pricing and policies with a fine-toothed comb, grilling their chatbot customer service, and ultimately trying the card myself for a full month – I‘m ready to give my fully transparent assessment.
While KOHO does have some genuinely helpful features, especially for those rebuilding credit or living paycheck to paycheck, it is definitely not the perfect banking solution that some make it out to be. Read on for my brutally honest take.
What Exactly is KOHO and How Does it Work?
For those not yet familiar, KOHO functions as an online-only account paired with a prepaid Mastercard debit card. You load funds into your account via direct deposit, bank transfer or by sending funds to your card number. KOHO is not a credit card so you can only spend the money you‘ve loaded.
As you spend, the KOHO app tracks your purchases, allows you to set budgets for goals and sends notifications when you overspend. You earn small cashback rewards on every transaction which can be instantly redeemed for cash. Balances also earn interest paid out monthly.
On the surface, it offers users transparency around spending, some forced savings, and cashback perks for a slick, user-friendly experience right from your smartphone. But there are definitely some catches I uncovered during my testing…
The Good: Valuable Tools for Rebuilding Credit and Sticking to Budgets
One of KOHO’s biggest value propositions, beyond the cash back rewards, is helping users build or rebuild their credit. For an extra $10 per month, you can sign up for KOHO Credit Building which is essentially a self-funded installment loan managed within your KOHO account. This loan allows you to demonstrate responsible payment history each month and thereby raise your credit score over time.
As someone who has struggled with credit card debt in the past, I found the app‘s real-time spending notifications and automatic round up savings features hugely beneficial for sticking to a budget. After linking my monthly bills I could set hard spending limits that temporarily locked my card when I hit my allotted restaurant or shopping budget for example. The card lock feature alone probably saved me a few hundred in overspending my first month!
Another major perk for lower income Canadians living paycheck to paycheck is KOHO‘s early payroll deposits. Many users report getting paid up to 2 days early, which can mean the difference between paying a bill on time or not. The cash back rewards are also more meaningful when every dollar counts.
The Bad: Hidden Fees, Spotty Acceptance, Clunky Service
Now for the unfortunate downsides I uncovered during a month of hands-on testing…
While KOHO markets itself as “no fee banking”, read the fine print and you actually can incur some hefty fees if you aren‘t careful. Convenient features like Instant Top Up when you overspend come with a 1.5% surcharge. Even seemingly basic transactions like Interac e-transfers will cost you $1 each. While these fees are comparable to traditional banks, the “no fee” marketing sets inaccurate expectations.
When it comes to actual spending, one of KOHO users‘ biggest complaints is that card acceptance is still quite limited compared to Visa or Mastercard credit cards, especially at smaller vendors. My local greasy spoon diner and wine shop for example do not accept KOHO. This spotty acceptance makes it tough for KOHO to serve as your sole payment card.
Lastly, while KOHO advertises “fast, caring support whenever you need it” my experience with their chatbot left much to be desired. With no phone line available, the chatbot failed to understand my inquiry and getting to an actual human took almost half an hour – longer than the banks KOHO aims to disrupt. A convenient chat is fine for quick questions but poor substitute for real, responsive customer service.
The Bottom Line: OK for Some, Not Fully Baked Yet
To sum up this brutally transparent KOHO review – the product shows promise helping Canadians take control of their finances, but still has some kinks to iron out compared to traditional banking options. The cash back rewards and unique credit building installment loan make it shine the most for lower income Canadians needing to stretch every dollar. KOHO falls short though when it comes to fee transparency, merchant acceptance, and delivering banking-grade service.
I expect KOHO will continue improving their product over time, hopefully addressing pain points like clunky customer service. But for now, it earns a respectable 3 out 5 stars from this picky reviewer. Unless you are really struggling financially, traditional no fee accounts like Simplii or Tangerine still provide better overall value. Here‘s hoping innovative fintechs like KOHO keep challenging stale old banks – but the incumbents still retain an edge in key areas for now.
I’m happy to answer any other questions about my experience with KOHO in the comments! Please subscribe if you found this brutally honest review helpful.
