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Prepaid Mastercard: Myths vs Reality

5 min read

Prepaid Mastercard

Written By

Gaby Pilson
Gaby Pilson

Rounding it up

  • There are many misconceptions about prepaid credit cards, like the idea that they’re the same thing as debit. This is untrue; prepaid cards come with extra perks (cash back, anyone?) that debit cards can’t offer.

  • Contrary to some beliefs, prepaid cards are widely accepted! You can even link them with your smartphone for Apple, Google, and Samsung Pay.

  • We can’t speak for other prepaid credit cards, but the KOHO prepaid Mastercard takes it up a notch with zero fees and robust protection against theft.

  • Plus, the KOHO card won’t let you overdraft on your account and won’t charge non-sufficient funds fees, making it a great money management tool.

Let’s be real for a minute here: No one likes being in debt.

But rent, utilities, cell phone bills, food, and all those little daily expenses can add up super quickly, leaving you with a hefty sum to pay when your credit card statement hits your inbox each month.

Unfortunately, if you accidentally spent a bit more than you should’ve on a new smartphone or on a well deserved vacation, then your bank account will soon shed a silent tear in anticipation of the interest you’ll need to pay in the coming months.

Worry not - KOHO’s got your back.

With our prepaid Mastercard, you don’t have to fret about spending more than you have or worry that you’re driving yourself into debt with your purchases. Instead, you can focus on saving money and making the most of your income so you can live your best life, debt-free.

There are a whole lot of misconceptions out there about prepaid cards. So, it’s understandable if you’re a bit apprehensive about ditching your fee-filled credit card for a shiny new KOHO prepaid Mastercard and account.

Up next, we’ll tackle all your burning questions about KOHO’s prepaid Mastercard and dispel any myths about this awesome money management and savings tool.

KOHO Signup Link

Myth 1: Prepaid credit cards are the exact same thing as a debit card

Isn’t that just a debit card?

Nope, we’re not talking about debit cards. A prepaid Mastercard, or a pre-loaded payment card, is one of the best ways to manage your spending without driving yourself into massive credit card debt with your daily spending.

All of KOHO’s accounts come with a reloadable prepaid Mastercard that helps you spend only within your means. You can also use your KOHO card to withdraw money at an ATM. So, yes, in that sense, prepaid cards are similar to debit cards, but, they’re not the same thing.

Our prepaid Mastercard isn’t a debit card, and that means it comes with some special perks. For example, you earn cash back on the must-have. It’s also synced with your KOHO app so you can get real time stats and updates on your spending trends to help you reach your savings goals.

Have you ever seen a regular ol’ debit card do all of that? We didn’t think so.

"A prepaid Mastercard, or a pre-loaded payment card, is one of the best ways to manage your spending without driving yourself into massive credit card debt with your daily spending."

Myth 2: Prepaid cards aren’t widely accepted

False! In fact, thanks to the KOHO card’s Mastercard co-branding, your prepaid card is accepted anywhere that takes Mastercard, which is pretty much anywhere in the world that takes plastic as a form of payment in lieu of cash.

You can even link your KOHO prepaid Mastercard to your smartphone for use as a virtual card with Apple, Google or Samsung pay. This means you can shop until you drop (within your spending budget, of course!) without ever getting up off the couch, or pulling out your card when tap pay is accepted.

Go ahead and use your KOHO card online, in-store, and wherever you like to shop, worry-free.

Myth 3: Prepaid cards have lots of hidden fees

Not with KOHO, they don’t. With your KOHO account and prepaid Mastercard, there are no hidden fees. That’s right - zero, zilch.

Unlike other financial institutions and credit card issuers, we don’t get excited about charging hard working Canadians like yourself any unnecessary fees.

The only additional fees you’ll ever be charged when you use your KOHO prepaid Mastercard are foreign transactions and international ATM fees (which KOHO doesn’t profit from, we might add). But we’re totally upfront about this and we’ll never hide behind technical jargon and small-print loopholes to get money from you.

In fact, with KOHO Extra, which has no foreign transaction fee and one international ATM withdrawal included per month, you can almost completely avoid these extra charges altogether. That means more money in your pocket for saving and guilt-free spending.

KOHO Signup Link

Myth 4: You can overdraft your bank account with a prepaid card

Many people think that you can inadvertently overdraft your bank account and spend more than you have when using a prepaid Mastercard. But since your KOHO card is not a credit card and we don’t want you to end up in debt, we don’t let you overdraft on your account.

Plus, you have to manually load your KOHO card (or set up direct deposit of your paycheque or e-Transfer funds) using the app, so you can easily manage how much you have available to spend. This means that unlike a credit card, you can’t overspend and drive yourself into loads of consumer debt with a nice dash of interest on top.

Additionally, you can’t accidentally overdraft your account and wipe out all of your savings with your prepaid Mastercard. Since you can control precisely how much you make available on your KOHO card for spending at any given time, you’re always one step ahead of any impulse purchases.

We’re also not a fan of hidden charges, so we don’t charge you NSF (non-sufficient fund) fees if you accidentally try to spend beyond your means. Instead, we’ll just send you a nice, friendly reminder straight to your phone to let you know that you didn’t have enough money on your card to make that payment. It’s as simple as that.

"Since you can control precisely how much you make available on your KOHO card for spending at any given time, you’re always one step ahead of any impulse purchases."

Myth 5: Prepaid cards are easy targets for thieves

We get it: The idea that you can load up some of your hard-earned cash onto your KOHO card only to have it stolen by someone that can then go on a nice spending spree with your money sounds scary, indeed.

Your KOHO prepaid Mastercard is completely secure and is protected under Mastercard's zero liability policy if someone makes unauthorized purchases on your dime. With your KOHO prepaid Mastercard, you’re protected from fraudulent charges and you can always chat with us in-app for technical support.

We even take your security a step further and make it super easy to protect your money if someone steals your card. If you think that someone stole your card or that your account has been compromised, you can quickly and easily lock your prepaid Mastercard on the KOHO app.

Unlike other banks and credit card companies, we don’t make you waste hours on the phone trying to get past those pesky automated answering machines just to freeze your card when a thief is out there spending your money. All you have to do is log into the app, toggle the lock feature on your card, and your money is instantly safe and secure.

The ultimate payment option for spending on a budget

Your KOHO prepaid Mastercard is so much more than a debit or credit card. It allows you to easily manage your spending and get free cash back on the must-haves without pesky hidden charges.

When combined with the KOHO app, your prepaid Mastercard offers unparalleled protection from fraudulent charges and identity theft so you can shop confidently and securely. Plus, with a KOHO Extra account, your prepaid Mastercard can save you even more with extra cash back, free financial coaching, and zero foreign transaction fees.

What more could you want?

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!

Gaby Pilson

Gaby Pilson is a writer, educator, travel guide, and lover of all things personal finance. She’s passionate about helping people feel empowered to take control of their financial lives by making investing, budgeting, and money-saving resources accessible to everyone.



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The KOHO Mastercard® Prepaid card is issued by KOHO Financial Inc. pursuant to license by Mastercard International Incorporated. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

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