Koho, Stack and Capital One: Which prepaid card is right for you?

Over the years, our payment options have been limited to debit, credit, cash, and mobile payments. There’s nothing wrong with these choices, but they can be limiting. Debit cards give you control since you’ll only spend what you have, but there are no rewards and your bank may charge you monthly fees to have an account. Credit cards offer fantastic rewards, but they often come with high annual fees and you could run into trouble if you don’t pay off your full balance each month.

More recently, a third option has emerged: prepaid cards. Prepaid cards are nothing new, but new players such as Stack and Koho haxve upped the game by providing a no-fee service that gives you rewards, helps you save, and gives you a cash referral bonus.

These new providers have many people excited, especially millennials who want more control over their money. We’re comparing the two along with Capital One’s Guaranteed Secured Mastercard to see which one is the right fit for you.

Stack

Fees: None

Foreign transaction fees: No (ATM provider may charge a fee)

Real-time notifications: Yes

Saving features: Round ups ($1, $2, $5 or $10), savings goals, spending insights

Perks: Discounts at a curated roster of merchants, access to exclusive experiences

Referral bonus: $5 for the first 5 referrals, $10 for the next 5, and $15 for every referral after that, uncapped. The referee gets $20 every time

Reports to credit bureaus: No

With 0% foreign transaction fees and no ATM fees, Stack has become the go-to card for many travellers.  You can basically withdraw money from foreign ATMs and just pay the Mastercard mid-market rate plus any fees the ATM provider charges. That’s significantly lower than the big banks who typically add on a 2.5%-3.5% fee.

Even if you don’t travel often, Stack will still appeal to you since there are no fees and you have complete control over your money on your phone. Instead of providing cash-back like rewards, Stack works directly with merchants to provide the best value for their rewards. For example, one current partner is Foodora, which is offering its users $15 off their first order. That could be a 20%, 30% or even 50% return depending on your order. Compare that to a cash back card which gives you 1% back, you’d only earn $1 for every $100 you spend.

Beyond rewards, Stack’s ultimate goal is to help their members build better financial reflexes. By offering saving round ups and savings goals, users will be saving every time they make a purchase. Instead of focusing on a monthly or annual budget, Stack’s in-app budgeting analysis tool, Financial IQ, starts with a weekly budget report. The idea is if you can conquer your week, you can own your month and manage your money in a sustainable way.

Koho

Fees: None

Foreign transaction fees: 1.5% (ATM provider may charge a fee)

Real-time notifications: Yes

Saving features: Round ups ($1, $2, $5 or $10), savings goals, spending insights

Perks: 0.5% cash-back, additional select offers from partners

Referral bonus: $20 to the referrer and $20 to the referee

Reports to credit bureaus: No

There’s a good chance you’ve already had a couple of friends invite you to join Koho, a prepaid. Both the referrer and the referee get $20 so that’s a pretty good incentive, but Koho offers more than a good sign up bonus. Koho’s mission is to improve people’s financial lives by making things transparent. There are no fees and the foreign transaction fee of 1.5% is much lower than the 2.5% – 3.5% that the big banks charge.

Users earn 0.5% cash-back, known on all purchases and up to 5% cash back at Koho partnered businesses. Unlike traditional cash-back credit cards which only pay out once a year, your power ups typically appear in your account within 1-2 business days. Beyond the cash back rewards, Koho also has ongoing offers with a variety of partners such as $55 off an Endy mattress.

Similar to Stack, Koho’s main goal is to help their users make smarter decisions with their money. You’ll get your instant spending notifications and a breakdown of your spending, but what some people will like is how Koho includes data-driven insights relative to other users. You could see how your monthly phone and internet bill compares to others or even what the average spend is at specific grocery store brands. These insights could help you put money back in your pocket if you adjust your shopping habits.

Capital One Guaranteed Secured Mastercard

Fees: $59 annually

Foreign transaction fees: 2.5%

Real-time notifications: Yes

Saving features: No

Perks: Zero liability

Referral bonus: None

Reports to credit bureaus: Yes – Transunion

Unlike Stack and Koho, the Capital One Guaranteed Secured Mastercard is not a prepaid card. It’s a secured credit card which means you need to deposit security funds to show that you’re committed to using the card responsibly. What makes this card different from the prepaid options is that your payment history gets reported to the credit reporting agencies so you can build or repair your credit score.

The security funds can’t be used to pay down your monthly balance, but the bigger the deposit you put down, the greater your credit limit will be. Your funds do get returned to you if you ever decide to close the account as long as you pay off the balance.

Beyond zero liability which protects you from unauthorized transactions, there are no additional perks or benefits. This shouldn’t be an issue because if you’re thinking about applying for this card, your goal is likely to improve your credit score, so you’ll qualify for a home or car loan in the future.

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