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10 Reasons why you should get a prepaid Mastercard (with KOHO)

5 min read

10 Reasons for a Prepaid Mastercard

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Rounding it up

  • Choosing a banking service is a big decision — it can be a powerful tool to building financial independence, or a one way ticket to degraded credit.

  • Prepaid credit cards are a great option, especially because it helps you budget without spending more than you have.

  • With KOHO’s prepaid credit card, you can also avoid extra fees, get direct deposits, and earn cash back.

  • KOHO’s prepaid credit card also offers robust consumer protection and is accepted wherever Mastercard is (which is a lot of places!).

You’ve got more freedom than ever when it comes to what you’re spending money on — and how you spend it! But with choice comes decisions: What’s the right vehicle for that purchasing power?

Every bank has multiple account types, and every credit card company has countless varieties of cards. (Well, maybe not countless, but close enough.)

And while it might not seem like a big deal, the account you pick now can stick for years. If you find an account you love, it’s a powerful tool to build toward financial independence. But choosing a credit card without the right foresight can mean months or years of degraded credit. That can impact everything from getting loans for home ownership to getting stuck with higher interest rates on credit cards.

That’s a lot to think about, but we think we’ve got a great solution. Prepaid Mastercards can offer a minimal-risk way to enter the world of digital banking. With KOHO, prepaid cards are backed by Mastercard®, the most ubiquitous credit card network in the world, with more than 300 million cards in circulation. Let’s take a look at all the ways a prepaid Mastercard with KOHO can be a great choice for your financial present and future.

"Prepaid Mastercards can offer a minimal-risk way to enter the world of digital banking."

1. Budgeting with Prepaid Cards

First and foremost, a KOHO prepaid Mastercard is a way to put your money to work without racking up debt. The average Canadian currently holds nearly $73,000 of debt (really!). A prepaid card doesn’t accrue debt, but instead uses the money you already have.

And, with a service like KOHO, you’re able to use our app to automatically pay bills, set aside savings and track your spending on specific categories. This control sets you up to make smart budgeting decisions for the future without damaging your long-term credit.

Prepaid cards, like the KOHO prepaid Mastercard, can genuinely revolutionize the way you handle your personal finances. It's often said that budgeting is key to financial freedom and success, and a prepaid card can be your most effective tool in managing your spending habits.

  • Secure Spending:
    A prepaid card ensures that you will never be spending money you don't have. Since you only use funds which you've loaded onto the card, there's no risk of falling into a spending spiral that could get you into unwanted debt.

  • Expense Tracking:
    Targeting certain financial habits can be daunting. The KOHO app synchronizes with your prepaid Mastercard so you can now categorize and visualize your spending in real-time. This pinpoints exactly where your money is going, helping you make informed budgeting decisions.

  • Setting Financial Goals:
    From saving for a down payment to affording that longed for vacation, setting savings goals is much easier with a prepaid card like KOHO. By setting aside a portion of your preload balance for your specific target, you’re able to see your goal progress and meet your financial targets faster.

  • Control Impulse Spending:
    As the saying goes, 'out of sight, out of mind.’ By allocating a specific amount on your prepaid card for discretionary spending, you keep extra funds out of reach, thereby curtailing impulse purchases.

  • Protection Against Overspending:
    Unlike credit cards where exceeding your limit could mean hefty charges and soaring interest rates, prepaid cards, like the KOHO, don’t permit overspending. This feature provides an extra layer of self-protection against risky financial decisions.

2. Mastercard is accepted in thousands of locations

If you’re going to get a prepaid card, there’s no better option than Mastercard. Accepted by more than 24 million locations around the world and most online retailers, Mastercard is one the most expansive credit and debit card networks in the world. By partnering with Mastercard, KOHO puts customer convenience above all; meaning that a KOHO prepaid Mastercard gives you the maximum number of opportunities to spend at the restaurants, bars, and stores you love the most, across the globe.

3. Avoid NSF fees with a KOHO prepaid Mastercard

KOHO’s prepaid Mastercards don’t have non-sufficient fund (NSF) fees at all, which saves you from being charged penalties if your account is too low to make a purchase. With the average NSF fee at $45, that money can add up!

Instead, KOHO simply offers you a friendly notification if your account doesn’t have enough to cover a transaction and the transaction isn’t completed. No harm, no foul, no fee.

"If you’re going to get a prepaid card, there’s no better option than Mastercard."

4. Get your funds deposited directly

One of the most frustrating parts about working, especially if you’re a young person working a job for the first time, is not getting your paycheque when you need it. A majority of employers offer direct deposit of your paycheques.

A prepaid Mastercard through KOHO can act as the recipient of those direct deposits, which puts the money in your pocket quicker.

5. Cleaner contactless payments

This seems sort of strange to consider, but the reality is that in these times, there is a real concern about the transmission of surface-borne pathogens. I know, this feels like a far-fetched consideration to make, but studies have shown that paper money can be hotbeds for bacteria, and many health guidelines are pivoting towards recommending contactless payments whenever possible.

KOHO Signup Link

6. Earn money on the money you spend

A prepaid Mastercard with KOHO is a unique financial tool, because it offers many of the benefits of a credit card with the low-risk nature of a debit card. With KOHO, you earn cash back on groceries and transportation. And we partner with eligible retailers for additional cash back as an incentive to shop there, which gives you even more money back. KOHO’s cash back is a special distinguishing factor from using a standard debit card that simply draws from the money in your chequing account without offering added incentives on purchases.

7. Consumer protections

A big reason why Mastercard is such a powerful player in the debit and credit card market is the consumer protections they offer to their customers.

Banks are built around a system of trust that your money is protected at all times. What’s great about KOHO is that we aren’t a traditional bank, but still offer the same levels of security to keep your finances and information safe.

"A prepaid Mastercard with KOHO is a unique financial tool, because it encapsulates many of the benefits of a credit card with the low-risk nature of a debit card."

8. No long-term risk to credit

Credit cards are a big responsibility. In fact, the average Canadian owes around $8,600 in credit card bills at any given time. Failure to pay off credit cards on time can impact your credit score, which can make future loans a huge hurdle to clear.

A prepaid Mastercard with KOHO doesn’t accrue any debt, so it eliminates any risk of long-term effect on your credit. By opting for a prepaid Mastercard over a credit card, you live within your budget while building positive habits that will help your financial literacy in the long run.

9. Easy bill pay

Managing paying bills isn’t life’s most joyful task, but we can help streamline things a bit. A prepaid Mastercard with KOHO affords you the opportunity to automate your bill payments, which takes a huge step out of the payment process.

In the past, you’d receive a bill in the mail and send a cheque back for the amount in question. These days, most major institutions will accept automatic bill pay linked to a bank account or a card number.

KOHO Signup Link

10. Doesn’t rely on a bank account

Most debit cards are tied to some bank-backed chequing account. Generally speaking, this fact isn’t a big deal; but dealing with bank customer service can be. Because banks are such large institutions, they offer countless services, and everyday customers can be left scratching their head when they need assistance.

A prepaid Mastercard from KOHO offers many of the same services as a bank, but it’s streamlined to put the customer first. Instead of having countless departments dedicated to different products, KOHO makes managing your money easier than ever.

Why a prepaid Mastercard is right for you

The 10 benefits outlined above might not apply to everyone equally . But even small pros can compound over time, and that’s especially true for your finances. Prepaid Mastercards — especially with KOHO, though we’re a teensy bit biased — offer unparalleled freedom and flexibility without luring you into overspending.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!