One thing that came as a surprise when we moved to Canada was how high the banking fees are. Luckily, soon enough we discovered other zero-fee online banking alternatives in Canada, such as KOHO and TANGERINE, but which one is better?
In this article, we’ll compare KOHO vs Tangerine so you can choose which works best for you.
Koho provides an online, zero-fee banking account that comes with a prepaid card. KOHO card is something like a hybrid between a credit and debit card.
The main difference is that unlike a credit card, you can’t borrow money. You can only use your own money and therefore there is no interest to pay.
The best part, you get 1% cashback on all your purchases without the risk of accumulating debt. If you use the code KNOL0VLR at signup, you can earn an extra CA$20 bonus.
With KOHO Extra (premium account), you’ll get an extra 2% on 3 categories of your choice. KOHO extra also means zero foreign transaction fees and one free international ATM withdrawal per month. However, for foreign transactions, we prefer using WISE.
KOHO App Features
Koho app is user-friendly and comes with some attractive features such as automating your financial saving goals.
You can use their Roundup plan, where your purchases will be rounded to the nearest 1$, 2$, 5$ or 10$ (you can choose) and KOHO will keep that extra cash for you in order to reach your savings goals.
With the mobile app, you can create custom spending categories so you know exactly how you’ve spent your money. Overall, a KOHO account makes it easier to track your expenses and manage your finances.
KOHO Credit Building
Because KOHO doesn’t work as a traditional credit card, you can’t build your credit score by borrowing money. However, you can opt in for an alternative credit-building tool. This feature is optional.
If you subscribe for $10 a month for a period of 6 months, KOHO will report these payments to a major credit bureau on your behalf. You can pay upfront for a full 6-month subscription which rounds up to 60$ or have $10 deducted each month for 6 months. If you make payments on a monthly basis, just make sure that you have enough balance on your account.
The beauty of paying the full sum upfront is that you don’t have to worry about any late payments. I love the ‘set it and forget it’ approach.
Another advantage of this setup is that anybody can sign up for it even without any prior credit history.
I’ve tested it for myself and my credit score has moved up by 110 points within a period of 6 months. This tool might not be for everyone but it’s nice to have other options of building your credit score for a reasonable fee.
KOHO Earn Interest
With KOHO you can currently earn 1.2% interest rate on your entire KOHO balance — your Spendables, RoundUps, Savings Goals, all of it. (The rate can be a subject to change).
You don’t need any minimum balance. This makes it a combination between a high saving interest account and a checking account.
- No annual fee
- No minimum balance
- 0.5% cash-back on all purchases
- 20$ bonus to sign up with KNOL0VLR referral code
- Automated savings goals with Roundups
- Real-time spending insights
- ApplePay compatible
- Joint account option
- Free financial coaching
- High saving interest rate
- Virtual Card available
- no online cheque deposits
- you need to pay if you want to build a credit score
- no RRSP, TFSA account options
- daily transaction limit $9000 and $610 ATM withdrawal limit
- can’t use it as an authentication method for government services, such as CRA
- KOHO doesn’t have any ATMs for free withdrawals (ATM fees are about $2-3 at other banks)
Tangerine is a subsidiary online bank of Scotiabank. Unlike its parent bank, Tangerine offers zero-fee chequing and savings accounts with attractive interest rates.
Zero fees mean no monthly account fees, free and unlimited debit transactions, free pre-authorized payments and free Interac e-transfers.
As a new user, you can often earn up to 2,25% for the first 5 months (check the latest rates*) upon the opening of your savings account. To receive 50$ cash bonus when you sign up for Tangerine, use this code 59975031S1.
Tangerine customers can access any Scotiabank ATMs free of charge. There are few fees for certain transactions such as non-Scotiabank ATM withdrawals or overdraft fees, however, they are much lower compared to other banks.
Tangerine Credit Card
Another attractive perk of Tangerine is its Money-back credit card. You can choose up to 3 categories on which you can earn 2% cashback. All other purchases earn 0.50 % cashback.
There are no annual credit card fees. In order to qualify for this credit card, you need 12 000$ annual income and to be a permanent resident in Canada.
Referral And Sign Up Bonuses
When you sign up to open your Tangerine account, you will receive an Orangekey that you can use to refer your friends and earn 50$ bonus in cash for both you and your friend.
In order to earn $50, your friend needs to sign up for an account using your Orangekey and deposit a minimum of $250 within 60 days.
Tangerine often provides special offers and promotions for people who open a new checking account so keep an eye on their website. In some cases, you might earn an extra sign-up bonus of $300-400.
This amount needs to remain on the account for at least another 60 days from the day the deposit has been made.
Besides regular chequing and savings accounts, Tangerine also provides retirement savings accounts such as TFSA (tax-free savings account), RSP (retirement savings plan) or RIF (retirement income fund).
Similar to KOHO, Tangerine has the option to apply for a joint account too.
- No annual checking and savings account fees
- No minimum balance
- possibility to earn interest with Tangerine savings account
- 2% cash back on up to 3 purchase categories and 0.5% cash-back on all other purchases with Tangerine Money-Back Credit Card
- 50$ bonus for opening a new account by using the Orangekey 59975031S1 at signup
- 50$ bonus for each friend referral to Tangerine (up to 3 people a year)
- Mobile wallets compatible
- Online cheque deposits
- Joint account option
- slow customer service
- overdraft fees
- long wait times for customer support
How do KOHO and Tangerine work?
They work exactly like any other bank account. You can add funds via Interac e-transfer or by direct deposit. Once your money is in, you can spend it on whatever you like, whether it’s paying for your bills or making purchases online or in-store.
The main difference between online banks and traditional banks is that there are no branches. This allows online banks to reduce costs which benefits clients by minimizing banking fees and offering more competitive interest rates.
With this being said, Tangerine does offer the option to meet in person at selected cafes and pop-up locations in major cities across Canada.
You can use any ATM for withdrawals for both KOHO and Tangerine. KOHO won’t charge you any fees, however, keep in mind that other banks might!
Tangerine won’t charge you any fees when you use Scotiabank ATMs, with non-Scotiabank ATMs it will cost you $1.50 per withdrawal + whatever the ATM provider charges.
If you need any assistance with your finances, you can use their online customer support which is available 7 days a week from the comfort of your home. However, the waiting times can be sometimes very long.
Koho vs Tangerine Conclusion
Both KOHO and Tangerine are great free banking in Canada and are fantastic alternatives to regular brick-and-mortar banks with physical branches.
The main benefits of KOHO and Tangerine are saving on banking fees, high-interest saving rates, and bonuses for referrals.
Personally, we use both KOHO and Tangerine. We use KOHO for fun personal spending.
KOHO is a great option to keep your finances in check while still enjoying cash-back rewards on your purchases.
KOHO also stands out with its automatic Roundup feature which can be useful to put money aside towards specific saving goals. The downside of KOHO is they don’t offer online cheque deposits.
Tangerine satisfies most of our banking needs. The minor setback with both KOHO and Tangerine is if you often need to deposit cash. With this being said, cash deposits nowadays are rare, so it’s not a big issue. Besides that, the customer support waiting times can be too long sometimes.
The advantage of Tangerine compared with KOHO is that it’s more versatile. You have a wider variety of accounts available including TFSA and RSP. Tangerine can also be used for secure log in to some official government websites such as CRA or Service Canada.
If you think Tangerine might be the right fit for your banking needs or as a savings account option, make sure to take advantage of a $50 sign-up bonus with this Orangekey 59975031S1.
To earn a 20$ bonus with KOHO, use this referral code KNOL0VLR at sign-up.
If you’re not a fan of online banking, you also have the option to get the newcomer’s banking packages with no monthly fees that are usually valid for a year.
(***However, when I phoned CIBC with a request to close my bank account after the first year to avoid paying fees, they decided to extend my zero-fee promotion to keep me as a customer. Perhaps you might have the same luck.)
Although I keep my CIBC account active, I only use Tangerine, KOHO, EQ bank to get a high-interest rate on my savings and WISE for purchases in other currencies and during travels)
Ditch traditional banking and say hello to free banking in Canada thanks to digital banks!