Is a paid budgeting app better than a free one?

Not automatically, but you're buying a simpler incentive. A subscription app such as YNAB or Monarch Money is paid by you, so it has nothing to sell you afterward. A free app can be excellent too. The difference is that you have to know who else is paying.

How do I check how an app makes money before I sign up?

Three places, and it takes about five minutes. The pricing page tells you what the free tier requires. The privacy policy's sharing and advertising sections tell you who receives your data. The App Store or Google Play listing lists in-app purchases, which is where an undisclosed paid tier shows up.

What happens to my data if a money app shuts down?

Under Canadian privacy law a company can only keep your personal information as long as it needs it, so a closing app should delete or de-identify it. Don't rely on that alone. Unlink the app at your bank or through the data provider it used, then ask for deletion in writing before your account closes.

Do the banks' own budgeting tools work differently?

Yes, and it's worth knowing why. Tools built into a bank's app, like RBC's Nomi or TD's MySpend, are free because the bank already earns from your accounts, your mortgage and your card. There's no third party paying, and no separate connection to grant. The trade is that they only see what's at that one bank.

How Do Free Money Apps Make Money in Canada?

Intuit announced Mint’s closure in November 2023 and shut the app down in March 2024. It was free, it had about 3.6 million monthly active users as of 2021 (the last count Intuit disclosed), and Canadians had been budgeting on it since homegrown banks were added to it in 2010 (opens in a new tab). Being free and being popular kept it running for exactly as long as something was paying for it.

Free money apps in Canada are paid for in five ways. None of them is dishonest on its own. They don’t all affect you the same way, though: one changes what the app shows you, and one is why an app you like can be switched off with a few months’ notice.

How do free money apps make money?

Five business models pay for a free money app in Canada: interchange, a small cut of what a shop pays to accept your card; referral fees from lenders, banks and insurers; paid subscription tiers; a spread on deposits the company holds; and venture capital covering the gap until one of the first four works. Most apps run two or three at once.

Model	Who actually pays	What it costs you	Canadian examples
Card interchange	The merchant, on every tap	Nothing directly, but the business grows when you spend	KOHO, Neo Financial
Referral fees	The lender, bank or insurer you get sent to	Recommendations chosen partly on what pays	Borrowell, Lodavo, comparison sites
Paid tiers	You, if you upgrade	A free tier with a limit or a condition on it	KOHO, YNAB, Monarch Money
Spread on deposits	You, in yield you don’t receive	A rate below what the company earns on the money	EQ Bank, Wealthsimple
Investor funding	Venture investors	Nothing yet, and the bill comes later	Most early-stage apps

The mix matters more than any single row. An app that charges you a subscription and takes referral fees is being paid by two sides at once. An app living on investor money has no customers paying for it yet, which is its own kind of risk.

Why free works differently in Canada than in the United States

American apps like Chime run largely on debit interchange, because a US rule lets small partner banks charge roughly double the regulated rate on a swipe. Canada has no equivalent, and the numbers aren’t close. So a Canadian app that runs on interchange revenue has to put a Visa or Mastercard in your hand instead of an Interac card.

An Interac tap earns a card issuer almost nothing

Every time you tap a card, the shop pays a small fee to accept it, and part of that fee goes to whoever issued the card. That part is called interchange, and when the card came from a money app, it’s how the app gets paid. You never see it, because the shop absorbs it rather than adding it to your bill. Interac’s own rates for a contactless tap are flat amounts rather than percentages: 2 to 3.5 cents (opens in a new tab) on anything under $100, depending on the shop, and 5.5 cents between $100 and $250. On a $60 tap at an independent shop, that’s three and a half cents.

Credit cards are in a different league. Under the federal small-business agreements, Visa and Mastercard cut their in-store rate to an annual weighted average of 0.95 per cent (opens in a new tab) as of October 19, 2024. On that same $60, about 57 cents.

Why your money app’s card is a prepaid Mastercard

That gap is the whole reason the card in a Canadian fintech app is almost never an Interac debit card. KOHO and Neo Financial both issue a reloadable prepaid Mastercard, which earns them a percentage of everything you spend. An Interac card would earn them three or four cents a tap. None of this is hidden, and it’s a fair trade for an account with no monthly fee. It does mean the business does better in a month where you spend a lot than in a month where you save a lot.

The 2024 cut shrank the same pool

The October 2024 reduction was a win for small merchants, taking up to 27 per cent off their interchange rates and covering more than 90 per cent of businesses that accept credit cards. Interchange flows to whoever issued the card, so the same change shrank the pot that pays for Canadian cashback offers. That’s part of why the richest cashback rates here now sit behind a paid plan.

Why running online makes free possible at all

Earning money is only half of a business. The other half is spending it, and an app that never opens a branch spends far less: no rent, no tellers, no ATMs, no vault, no armoured truck. That’s what makes giving something away possible in the first place, before any of the five models earns a dollar.

The service already moved to the phone

Statistics Canada’s Canadian Internet Use Survey found 82% of internet users banked online in 2022 (opens in a new tab), and the sharpest move was among people 65 and over, from 62% in 2018 to 70% in 2022. A branch network costs the same whether people walk in or not, and more and more of what they do happens on a phone. That’s why an online-only bank can pay a better rate on the same deposit, and why a free app can sit beside a bank charging monthly fees for something similar.

An app still has bills to pay

The engineers, the cloud bill, support staff, compliance, the security review, and the marketing that got the app in front of you all still have to be paid for. Spending less explains why free is possible. It doesn’t cover the whole bill, so one of the five models is making up the difference. That’s why the useful question isn’t whether an app charges you. It’s who else is paying.

Which model should make you read the fine print?

Three of the five deserve a closer look before you connect an account. Each one puts a condition somewhere the marketing page doesn’t. A free tier with a monthly requirement, a recommendation engine paid by the recommended, and an app with no revenue yet all behave differently from what “free” suggests.

When free comes with a condition attached

KOHO lists Essential at $0 a month, and its own accounts page (opens in a new tab) sets out what that depends on: direct deposit, or $1,000 deposited a month. The upper plans run $18 and $22 a month, or $12 and $14.75 a month billed annually, as of August 2026.

That’s a normal freemium structure and KOHO publishes it plainly. It’s worth reading because free in a Canadian money app usually means free at a tier, and the tier that gets advertised is rarely the one priced at $0.

When the recommendation is the product

Borrowell gives away credit scores and reports, and says exactly why: it reads your credit profile, works out what you’re likely to be approved for, and recommends products to match. When you’re approved for one, the partner pays Borrowell a referral fee (opens in a new tab). That disclosure is the good version of lead generation. You get a real free service, and you know the list you’re being shown is a paid one.

The version worth watching is the same model with no such disclosure. If an app is free, shows you products, and won’t say who pays, assume the ranking has money behind it and compare somewhere else before you apply.

When there’s no model yet

Mint is the case study. Free, huge, and closed anyway. Intuit’s stated reason was consolidation into Credit Karma, and the widely reported one is that the referral revenue behind it had stopped covering what the app cost to run. An app funded by investors isn’t a red flag on its own, since almost every new app starts there. The question to ask is which of the other four models it’s heading toward, because that’s the one it will lean on once the funding round ends.

Does a free money app sell your financial data?

Selling identifiable transaction data is rare among reputable Canadian apps, and both federal privacy law and Quebec’s Law 25 make it an expensive thing to attempt. The realistic version is narrower and more common: an app paid by referrals uses what it knows about your finances to choose which product to put in front of you. That falls well short of a sale, and it still changes what you see.

Some apps still ask for your banking password

Some services still ask for your online banking username and password so they can log in as you. The Financial Consumer Agency of Canada has warned about this since 2018: handing those credentials to a third party may breach your agreement with your bank (opens in a new tab) and leave you liable for unauthorized transactions, whatever security the service has in place.

The modern alternative is a read-only connection through a data provider, where the app receives balances and transactions and never receives your login. Canada’s open banking framework is built to retire the password-sharing method entirely, with a first phase that’s read access only. Our guide to whether Plaid is safe walks through how that connection actually works.

So how does Lodavo make money?

From companies, not from you. The weekly prizes are what get people saving and coming back to Lodavo. Once you’re here, we suggest financial and savings products that help you save more or earn better rewards. Signing up for one is optional. If you do, it earns you bonus tickets, and the partner pays us a referral fee at no extra cost to you. That fee is what funds the prizes. Not interested in any of the offers? No problem at all, you keep earning your tickets exactly the same way.

The rest comes down to what we spend. We run fully online, so we keep costs low and put that into cash prizes rather than charging you fees. We’d rather you read all of that here than work it out later.

None of that changes what you get for saving. Every $25 you keep saved earns you a free ticket in a weekly cash draw, at least $100 goes to a user every week, and the top prize is $10,000. Lodavo holds none of your money, so it keeps earning wherever it already sits. Past results are on the winning numbers page.

Before you connect the next app

Three questions sort almost any money app quickly. What does the free tier actually require. Who pays when you take a recommendation. And where the revenue comes from once the funding round ends. Every company worth trusting with a bank connection can answer all three, and most of them have already published the answers.

Ready to make saving worth looking forward to? Get Lodavo free on the Apple App Store (opens in a new tab) or Google Play Store (opens in a new tab) and start earning tickets for the weekly draw.

Terms and conditions apply. No purchase necessary (alternate method of entry available). Skill-testing question required. Open to legal residents of Canada who are the age of majority. Odds depend on the number of eligible entries received. Full rules and odds at our contest rules.