This post is also available in: FR
The world of banking has changed quite a bit over the past decade in Canada.
There is now a new trend among Canadian investors who are moving away from physical banking institutions to online banking platforms. These institutions offer financial products similar to traditional banks, but at lower costs. The low cost of these products is made possible by saving on rental costs, as all activities are carried out electronically and do not require the rental of a physical branch.
Thus, several online banks have emerged in recent years such as Tangerine, EQ bank, Alterna and Motusbank.
Other financial institutions offering specialized services, such as mortgages, credit rebuilding loans, and secured cards, have also been created. This was particularly the case for Refresh Financial.
To this end, we will analyze in detail the components of this new financial institution.
What is Refresh Financial?
Refresh Financial is a Canadian financial institution based in Kelowna, British Columbia, specializing in rebuilding credit scores and providing accessible financial products to Canadians in difficult financial situations.
This institution offers two main services to its users: a credit-building loan and a secured Visa credit card. We will analyze these two services here.
Refresh Financial products
This innovative Credit Building Loan service is somewhat different from a loan agreement made with a normal banking institution. Indeed, it is not Refresh Financial that will finance the user’s loan, but the user himself who will contribute to this loan through regular deposits.
|Amount of the loan
|Interest on the loan
|Terms of the loan
|36 to 60 months
|No credit check required
Here is a brief description of how the Refresh Financial credit building loan works.
1- Determining the amount of the loan
The user chooses the amount of the loan. The amount is $1,250, $2,500, $5,000, $10,000 or $25,000. The loan does not require a credit check. The applicable annual interest rate is 19.99%.
2- Determining the terms of payment of the loan
The user chooses the terms of payment of the loan, either bi-monthly or monthly over a period of between 36 and 60 months. Payment must be made through pre-authorized payments.
3- First payments and involvement of Refresh Financial
Refresh Financial’s involvement will begin when the first user payments are successfully made.
This transmission of information will help rebuild the user’s credit report, as it demonstrates his or her ability to pay in the long term.
Refresh Financial Secured Credit Card
The Refresh Financial secured credit card is affiliated with the credit card provider Visa.
It works similarly to a normal credit card with one difference: a deposit must be made on the card before credit can be granted. The amount of the deposit depends on the financial situation of the user. Some users will have to pay the full amount of credit requested while others will only have to deposit a percentage of the credit limit requested (the credit limit is generally between $200 and $10,000).
This deposit protects Refresh Financial against any default on the part of the user.
|Secured Visa Credit Card
|$200 – $10,000
|Required credit rating
|300 (equivalent to a very low rating)
Using this card to pay for monthly expenses helps rebuild your credit score.
In fact, like the credit building loan, all transactions followed by a repayment at term are directly transmitted to the two credit reporting agencies.
This process allows the user to improve their credit rating. It should be noted, however, that non-payment of an invoice can be costly when an interest rate of 17.99% is applicable.
The Refresh Financial Secured Visa Credit card has an annual fee of $12.95 plus a $3.00 monthly management fee for a total of $48.95. The minimum credit score to apply for this financial product is 300 and there is no minimum income requirement.
Also, note that Refresh Financial offers a premium program for its users through “Black Tier .”
This service is, in fact, a platform that allows you to see the evolution of your credit score in real-time, in addition to offering educational videos on credit and finances in general.
A rewards program is also available, offering discounts at over 600 Canadian retailers. The first month of use of this platform is free. The fee is $16.95 per month thereafter.
Advantages and Disadvantages of Refresh Financial
Here are the advantages of Refresh Financial:
- Excellent option for anyone in a precarious financial situation who wishes to have a credit-building loan or a secured credit card
- Affordable annual fee and reasonable payment terms
- Very interesting Black Tier interface providing access to educational content, promotions with several suppliers and a global picture of its credit score and its evaluation in real-time
Here are the disadvantages of Refresh Financial:
- Financial service aimed at a specific clientele. It would be better to abstain from this service if you are not in a precarious financial situation
- Term payments must be repaid or significant additional amounts will be incurred
- The Black Tier interface appears to us to be expensive ($186.45 per year) considering the clientele targeted by Refresh’s financial products.
All in all, we believe that the financial products offered by Refresh Financial are excellent options for Canadians in financial distress. It is also important to recognize that these products are not intended for Canadians with stable financial situations.
The credit building loan seems to us to be a great innovation that will allow Canadians to regain their financial health in the medium term.
The secured credit card is also interesting, if the repayments are made on time of course.
Finally, we like the educational vocation of Black Tier. However, we would have preferred a more affordable annual fee, considering the clientele targeted by these financial products.
This is a good start for Refresh FInancial. All that is needed now is to make the necessary adjustments to optimize the supply of financial services to individuals in a situation of financial insecurity.
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