Wealthsimple Cash Card: A New No FX Prepaid Solution

It’s a new year, and with every new year, we at Prince of Travel are very excited to look at fresh products.

The prepaid credit card scene, in particular, is really starting to take off here in Canada. It seems as if every week, a new fintech company wants to disrupt the banking industry (even if their cards require you to link a bank account as a funding source!)

While we did publish a roundup a while back, I now feel it’s important to go on a deeper dive into the prepaid market to determine if the products on offer are right for you. Therefore, I’m excited to announce today’s article will be the first in an ongoing feature column on prepaid credit cards.

Today, we’ll be starting with the Wealthsimple Cash Card, an option that I feel has the potential to become a big fish in a rapidly-filling pool.

A Primer on Wealthsimple

Wealthsimple is a Toronto-based emerging fintech company that offers a suite of financial products, mostly geared towards millennials. The company began with Wealthsimple Invest, an online investing platform, and has since expanded to a range of other products.

In addition to Wealthsimple Cash and the Wealthsimple Cash Card, the company offers two other app-based products: Wealthsimple Crypto and Wealthsimple Trade.

I myself use Wealthsimple Trade to occasionally play the stock market via their taxable trading account, for which I received two shares in random companies as a signup bonus a while back. There’s also a Tax-Free Savings Account (TFSA) product available, albeit without a signup incentive.

Then there’s Wealthsimple Crypto, which makes buying crypto assets such as Bitcoin a lot easier. However, be warned that you are buying crypto on a regulated app, and so your crypto is only listed on the exchange.

Wealthsimple Cash App

Wealthsimple Cash is the company’s peer-to-peer money transfer product, which offers you a decent trade: if you use their platform, you get access to infinite transactions at the top speed your wifi can achieve.

Want to send money? So long as it’s to another Wealthsimple Cash user, your transfer is instantaneous. No more waiting around for an Interac e-transfer to clear.

Not only can you transfer and receive money via the app, you can also request it from your friends – awesome for when you’ve given someone a ride and need to get gas money.

Fancy dining out like our correspondent Rohin? You can easily split the bill via the app, too. Nothing here is revolutionary, but the features are quite convenient.

In addition, you get access to infinite transactions so long as you don’t spend more than $10,000 at a time. If, like me, you aren’t a high-roller, this shouldn’t be an issue.

Wealthsimple Cash Card

Wealthsimple has recently launched its prepaid card product: the Wealthsimple Cash Card, tied to the Wealthsimple Cash app. This card was previously invite-only, but has now been made available to the general population.

Earning Rate

When the Wealthsimple Cash Card first launched, it had offered 5% cash back on weekend restaurant and bar purchases.

While that’s been canceled (just in time for another round of lockdowns), at least it’s been replaced by a 1% cash back earn rate on all purchases across the board – something that Wealthsimple deserves praise for.

So many other prepaid cards in my wallet, such as Mogo, have devalued their rewards programs into oblivion, so 1% cash money is not to be scoffed at for this type of product.

(Before anyone gets mad at me: yes, you are still far better off using your organic spend to maximize travel rewards. That’s what I’ll be doing. But I’ll take 1% returns on occasional spending over nothing!)

Deposit into Wealthsimple Trade & Crypto

This money doesn’t have to be earned to your Wealthsimple Cash account – you could also deposit it into your Wealthsimple Trade or Crypto accounts so you can engage in investing.

I’d like to warn you about potential tax implications, though: if you deposit your cash back into an investment account, any profits you make could still be subject to capital gains taxes.

Make sure you consult with an accountant if your $100 in cash back goes into the next Gamestop and rockets to the stratosphere!

No FX Fees

The Wealthsimple Cash Card offers a powerful solution to the conundrum of accessing foreign currency: the card has no foreign exchange (FX) fees!

Any foreign purchases or ATM cash withdrawals you make will be charged at the Visa spot exchange rate. You won’t get the absolute #1 exchange rate out there – but neither will you be fleeced.

I’ll level with you: there’s nothing in the Canadian credit card scene that annoys me more than the 2.5% FX fees imposed by 90% of credit cards on the market.

It really frustrates me that so many companies try to either nickel-and-dime you on foreign currencies, or entice you with the advertisement of no FX fees only to add them later (I’m looking at you, Stack).

Therefore, I applaud Wealthsimple for launching their prepaid product FX-free, and hope that they can sustainably keep this card that way – it seems to me like the #1 concern many prepaid consumers such as myself possess.

Even when withdrawing cash at a foreign ATM using the Wealthsimple Cash Card, you may still need to pay the $2–3 withdrawal fees imposed by the ATM itself. However, with no further fees levied on the Wealthsimple side, these smaller ATM fees are more palatable to swallow.

I will state that there’s no way to transfer no-FX money outside of your Wealthsimple account – you need to withdraw cash or make purchases. I hope that foreign currency transfers are under development.

Also, the card can’t be used in the Democratic People’s Republic of Korea, so frankly, I hope acceptance improves.

The list of ineligible foreign countries also includes fairly common destinations like India, Indonesia, or Turkey, so I’m sure this concern isn’t unique to myself.

How to Get the Wealthsimple Cash Card

Recently, Wealthsimple opened up the Cash Card for all Cash app users. All you have to do is sign up for Wealthsimple Cash, pass the app’s Know Your Customer (KYC) verification, and fund your account. 

Do be aware that the minimum age to open an account varies by region, as detailed by the following chart.

Once you’re all signed up and funded, you’ll be able to request a Wealthsimple Cash Card through the app. Quick and easy, with no long and draining application forms!

As soon as you’re approved, you’ll receive a digital card number that you can start using right away. If you want a physical card, all you need to do is order one via your app and one will be shipped to you within the standard 2–3 week time frame for letter mail.

And that’s it! You now have access to No FX foreign spending and 1% cash back on any transactions you need to use the card for.

Will I Be Getting the Wealthsimple Cash Card?

I’ve already received my Wealthsimple Cash Card, and plan on breaking it in very soon. I could do without the vertical design (which I think is no longer very original), but I am happy to have the card.

The ease of use of the app, the lack of FX fees, and the option to deposit any cash back where and how I want are all too good an opportunity to pass up.

Don’t get me wrong, I wish that Wealthsimple retained its 5% cash back earn rate on eats and drinks, but that probably wasn’t sustainable. I likewise would prefer for Wealthsimple to make transferring money abroad streamlined and simple – but for that, I might need a different prepaid card.

My other biggest issues is a foible that I feel Wealthsimple shares with other prepaid credit cards: lack of loading options.

Most prepaids, including this one, require you to load with back-end integration… into your traditional bank. I’m a bit perplexed as to how a prepaid will disrupt the banking industry if it relies on legacy financial institutions as its lifeline to being able to load and use the product.

Technically, you can have your employment payroll direct deposited onto this card, but this only adds another bag of issues. Not everyone works at a job with the most up-to-date direct deposit system.

Moreover, should your card get frozen for any reason, you’ll be obligated to resolve the issue by calling back during limited business hours which obey Eastern Standard Time. This would be very stressful in the event you’re overseas with limited connectivity!

Lastly, because this is a prepaid Visa, you don’t get any of the benefits of debit: you can’t make Interac e-transfers or pay the CRA directly with the Wealthsimple card.

Hopefully, these issues are just growing pains within the prepaid credit card industry and will be worked out in time.

For the moment, the benefits outweigh the costs in my eyes. The Wealthsimple Cash Card doesn’t require a hard credit check, so you should apply if you think you’ll gain any utility from its features.

Conclusion

Overall, I hope more fintech companies offer a product as competitive as the Wealthsimple Cash Card. It’s not a perfect option, but it is a useful one that solves the basic problems of foreign transaction fees and cash withdrawals when travelling abroad, and offers a slightly more innovative use of cash back rewards than most products out there.

Time will tell if the benefits will last, but I certainly hope that they do, and for the moment feel no guilt in stating that this is the type of prepaid credit card I think most of us want to see in the future.

See you next time to look at another prepaid product. Until then, stay comfy.