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Email this8:28 am
November 5, 2022
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Saw this, and was wondering what is the catch? Anyone ever try it?
KOHO 5% HISA for $4 month https://www.koho.ca/essential/
Seems like the Dep/Wtd is highly restricted.
https://help.koho.ca/en/articles/3063291-all-koho-account-velocity-limits
9:24 am
April 14, 2021
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Doesn't look like there is any CDIC or CU insurance.
9:32 am
November 5, 2022
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It does have the standard 100K CDIC https://www.koho.ca/essential/
But the deposits/WTD are restricted. But in theory getting 5% could be worth paying a little, as $4 a month is the interest on $1000.
but there has to be a catch somewhere? As their target market seems to be "credit building".
They have a giant list of limits, so not a good sign there. But there might be something to this account?
9:39 am
April 14, 2021
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On the webpages for most FI, they have a separate link for CDIC coverage. None exists for KOHO. I went to CDIC and entered their name and nothing comes up.
https://www.cdic.ca/your-coverage/list-of-member-institutions/
Perhaps they use another name for CDIC coverage? Otherwise, I am not certain they have CDIC coverage.
9:47 am
November 5, 2022
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Looks like KOHO uses People's Trust like Wealthsimple
https://www.koho.ca/learn/safe/
9:57 am
November 5, 2022
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a few people are talking about it here
Thoughts on Koho's 5% interest on their $4 per month banking account?
byu/MainlyPixels inPersonalFinanceCanada
6:31 pm
December 12, 2009
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InterestThis said
a few people are talking about it hereThoughts on Koho's 5% interest on their $4 per month banking account?
byu/MainlyPixels inPersonalFinanceCanada
No thanks. Highly gimmicky. Very big bank likey. Only benefits them because think about it, interest rate is subject to change daily, but you don't get that monthly fee back each month if they drop the rate.
Let's say you put in $10,000, and assume you collect 5% for a full year, you earn $500 before taxes, but you pay $48 in service charges for the year, so effectively your pretax adjusted annual yield is 4.5%, but that's your pretax yield.
Cheers,
Doug
9:12 pm
April 6, 2013
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HermanH said
On the webpages for most FI, they have a separate link for CDIC coverage. None exists for KOHO. I went to CDIC and entered their name and nothing comes up.https://www.cdic.ca/your-coverage/list-of-member-institutions/
Perhaps they use another name for CDIC coverage? Otherwise, I am not certain they have CDIC coverage.
KOHO doesn't have CDIC coverage because KOHO Financial Inc. is not a CDIC member:
A common question we get is whether or not KOHO is CDIC insured. We completely understand that you want to make sure your funds are safe with us. KOHO itself is not CDIC insured. In the unlikely event that KOHO fails, your funds will be returned to you by our partners who hold your funds.
Are Accounts Earning Interest* CDIC Insured?
Yes! All cash balances from your account(s) earning interest* are held in trust at a Canada Deposit Insurance Corporation (CDIC) (https://www.cdic.ca/about-us/) member institution. Coverage is available for eligible deposits.
The detail about some balances being held in trust with a CDIC member doesn't mean much. CDIC is not going cover funds in trust going missing unless the funds are gone because the CDIC member fails.
One can see that nuance in operation when lawyers trust accounts come up short. Doesn't matter if the lawyers trust account is with a CDIC member when the account is short because of one of the partner lawyers takes off with the money.
7:51 am
April 6, 2013
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According to section 3(c) of the cardholder agreement, the funds are placed with investment dealer and CIPF member WealthSimple Investments Inc. when the KOHO Earn Interest option is chosen:
KOHO USER TERMS
…
- “Card” or “KOHO Card” means a plastic or virtual KOHO Prepaid Mastercard® or KOHO Premium Prepaid Mastercard.
…
- “KOHO”, “we”, “us” or “our” means KOHO Financial Inc.
…
I. KOHO CardHolder Agreement — Mastercard
…3. ADDITIONAL KOHO CARD FEATURES AND OPTIONS
…
(c) KOHO Earn Interest: This section only applies to users who have opted into KOHO Earn Interest. If you have opted into KOHO Earn Interest, your Card balance is held with our referral partner Wealthsimple Investments Inc. (“Wealthsimple”). Under the referral arrangement with Wealthsimple, KOHO receives an interest rate spread on amounts that KOHO users fund to their Save account. KOHO, in turn, may apply some of the interest rate spread we receive to users' Save accounts.
…
9:49 am
November 5, 2022
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Yes looks similar to the Wealthsimple structure, and if they use WS then that is with People's Trust.
But for a larger deposit, and if nothing else is available, it might be usable. But anything with such a long list of WTD restrictions is last on the list.
But looks like they are just essentially a Wealthsimple client, all they do is deposit more than 500K into Wealthsimple, and get the 5% rate, and have a referral deal where they take a cut of the interest rate spread.
And of course they take their fees, so it makes sense in that regard.
11:41 am
December 22, 2022
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Given the deposit/withdrawal restrictions, how would one go about depositing a large amount of say $100k? From what I can tell you would need to make 20 $5000 e-transfers with a monthly maximum limit of $20000. Meaning it would take you five months to load the $100k, unless there's another way. They mention direct deposit but that seems like something you would set up with your employer.
6:25 am
November 5, 2022
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All good points, I don't know if you can deposit an
EFT into KOHO but maybe they are calling that a Direct Deposit? That looks to be 20K max per transaction?
So KOHO looks like a "kids table account" but anyway just saw the 5% HISA.
KOHO are just using Wealthsimple, and their business model seems to be the monthly fees.
They do seem to have a free account called Easy at 3%.
So yes its dubious but its something.
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