Friday, February 12, 2021

Neo Financial expands credit card reward options and goes nationwide except for Quebec

 
Back in October we provided you with details about Neo Financial and their rewards credit card offering. At that time they were only a few months past their beta stage and now less than half a year later they changing things up. When Neo first launched they wanted to be a different type of credit card and reward program but the approach they were taking at the time limited their market to select cities namely Calgary, Edmonton and Winnipeg with more cities coming down the line. That's very limiting when you want to grow your company and clientele base, so what does Neo do? They go down the traditional line of offerings that we see from most other card issuers by expanding their credit card portfolio to have cards that have a traditional cash back rewards component. And now that they have that all encompassing cash back reward option they have opened up applications to all Canadians except for those living in Quebec. They state Quebec is coming soon!

 So what are the new card offerings? They are two higher up versions from their standard Neo Financial Mastercard:



The original card product now termed essential does not change from before. You'll earn discounts at local partners of Neo when you use your card at those locations. Gone is the wording of 20% or more cash back and now you see it as an average of 4% cash back. That's due to the fact that you'll usually get a bigger discount the first time you use Neo at a partner and then you may not get another discount until you have completed several more purchases at that same retailer. New to the Neo portfolio and the Plus and Max versions of the card which boosts your discounts at their partners but then also adds in a cash back reward for all your spend on the card at non-partners. This is big for shopping a places like Costco where they only accept Mastercard. You do have to pay a monthly fee for the Plus and Max versions which again is kind of following suit of traditional rewards credit cards so Neo rather than trying to be different as they highly market to potential clients they are actually shifting the needle towards the other offerings in our market. But hey they have to do what they have to do to compete and grow their market share so this to me is a right by move by Neo. Back to cards now, the Plus version awards 0.5% cash back on all non-partner transactions for a monthly fee of $4.99 while Max offers a 1.0% cash back rate for a monthly fee of $9.99 which puts it right near those premium card annual fee of $120. It's nice the Neo puts a recommendation of what need to spend to make it worthwhile to pay that fee for those card options.

Now, the question is, is it worth it to spend $119.88 a year for the Max card? Really depends, I would say not for the 1% cash back but only if you shop a lot at Neo partners. Otherwise you are better off paying $120 a year for a card like the CIBC Dividend Visa Infinite Card or Scotia Momentum Visa Infinite Card, $99 for the American Express SimplyCash Preferred Card or any other host of cash back cards. The reason why is they offer higher cash back returns across a broader range of merchants across the nation and even globally. On top of that these others cards provide insurance packages and other benefits whereas Neo has none of that. You are simply paying the monthly fee with Neo to earn that cash back outside of their partner stores - even their closest match in terms of our market which is Brim Financial offers more on their fee based cards than Neo.

Overall I think this is a step in the right direction for Neo but to compete nationally with the big guys they'll really need to up their game for their fee based products as their one differentiator, the local partnerships are so limited right now that it doesn't make sense for someone in Charlottetown or Kamloops to get a Neo card when the can get better value out of other cards in the market. Let's hope that they continue to evolve and make their product better so the Neo can be the market disruptor they want to be.

Learn more about the Neo Financial credit card here

Images via Neo Financial

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