What is the Wealthsimple Cash card?
The Wealthsimple Cash card is a prepaid Mastercard available to anyone with a Wealthsimple Cash account. With this card, you can use the funds in your account to make purchases in-store or online. It’s essentially a debit card.
Despite the simplicity, the Wealthsimple Cash card has two significant features. First, you’ll earn 1% back in rewards on all purchases. This cash back can be applied to your account or invested into stocks or crypto through your Wealthsimple self-directed account.
Additionally, the card has no foreign transaction fees. Most traditional credit cards charge a foreign transaction fee of 2.5% when you make a purchase in any currency that’s not Canadian dollars. The Wealthsimple Cash card also waives foreign transaction fees on ATM withdrawals, so having the card is a cheap way to get cash in the local currency when you travel. (You may still be charged a fee by the retailer or financial institutional involved in your transaction, or a fee by the ATM provider.)
Is Wealthsimple Cash safe?
The deposits in your Wealthsimple Cash account are insured for up to $1 million through the Canada Deposit Insurance Corporation (CDIC). This is ten times the amount of CDIC insurance protection typically offered by HISAs in Canada. Because Wealthsimple isn’t technically a “bank,” your deposits are kept in trust with up to 10 federally regulated CDIC-members. Each provides the standard amount of coverage. Meanwhile, you continue having access to all your funds through Wealthsimple, as you would with any other account.
Wealthsimple Cash pros and cons
Wealthsimple Cash and the Wealthsimple Cash card are tied together, so you must consider the pros and cons of each before deciding if they suit you.
Wealthsimple Cash pros
- High interest rate: You can earn from 2.75% to 3.75% interest on your savings.
- Strong CDIC protection: Your funds are CDIC-insured for up to $1 million.
- No foreign transaction fees: When using the Wealthsimple Cash card, you won’t pay foreign transaction fees on purchases or ATM withdrawals.
Wealthsimple Cash cons
- Potential distractions: Through the account’s rewards scheme, Wealthsimple encourages you to use your savings to invest in riskier assets such as cryptocurrency and stocks.
- Not a true credit card: The Wealthsimple Cash card is a prepaid Mastercard, not a credit card. So, you’re limited to what’s in your account (which may not be a bad thing).
- Does not build credit: Since it’s a prepaid product, you do not build a credit history with the Wealthsimple Cash card.
Alternatives to Wealthsimple Cash
Wealthsimple Cash’s claim of being Canada’s highest-interest chequing account is accurate, but you shouldn’t immediately dismiss the competition. It’s always best to weigh your options to see what fits you best.
There are a handful of savings accounts offering high interest rates in Canada. But Wealthsimple’s closest competition is EQ Bank’s new Notice Savings Account. With this account, you can earn up to 3.65% interest on your deposits with no minimum asset requirements and no fees. However, there is a catch. There’s a 10-day or 30-day waiting period to withdraw your funds if you want to earn 3.50% or 3.65% interest, respectively. EQ Bank does offer a personal account from which you can withdraw your funds at any time, but you’ll only earn up to 3.75% interest (it includes 2.00% interest by default and another 1.75% if you direct deposit your pay). EQ Bank also offers a no foreign exchange fee prepaid Mastercard that can be used for purchases and ATM withdrawals.
If no foreign transaction fees is what you’re after, another option is Wise. Like the Wealthsimple Cash card, it’s a prepaid card. The difference with Wise is that you can hold multiple currencies and preload your account whenever the exchange rate is favourable.
Of course it encourages you to put money into investments. That is the primary purpose for Wealthsimple existing. The cash account is just a perk of holding your investments with Wealthsimple. If you don’t plan on buying stocks, why even have an account with them over a local credit union or one of the big 5 banks? And investing is only “risky” if you don’t know what you’re doing. What you mean is that stocks are volatile, which is just one component of risk. If you don’t know what you’re doing you should probably learn before investing, or use Wealthsimple’s robo advisors to build a portfolio for you. But you should probably learn about investing regardless.
You’re missing two of the biggest cons.
1) no cash withdrawals from ATMs
2) no SWIFT
So you will always still be tied to one of the traditional banks.
Another thing to note is that traditional credit cards usually gives you points on automatic debit orders (gym memberships, Netflix, etc) but WSC doesn’t.
I still use WSC for 95% of my banking needs.
In addition to the perks mentioned, you can also use your Wealthsimple Cash card to withdraw from any ATM in Canada and Wealthsimple will reimburse the ATM fee, up to $5 per transaction.