As we detailed in a previous post the yet to be released Neo Financial World Elite Mastercard is being tweaked but the information we had at the time of writing that article only told part of the story. Neo has since reached out to RWRDS Canada with the complete changes being instituted on the World Elite Mastercard and the complete details on the newest addition of the Neo World Mastercard.
And boy are they in it to win it. They are really striving to have some of the best cash back cards in the market. What the waitlist page for the Neo World Elite Mastercard and Neo World Mastercard didn’t tell us, is the information provided on the page is for anyone who gets the card and doesn’t hold any money in a Neo Everyday account. So here you have a card (World Elite) that at first appeared to have been devalued as the offering shown on that waitlist page was lower than the first iteration of the card but in the end that was comparing apples to oranges.
When the World Elite Mastercard was first announced the information on Neo’s waitlist landing page was based on holding $10,000 in a Neo Everyday Account. Now, the newest waitlist landing page’s information is based on getting the card and not holding any money in an Everyday account. So you can understand my confusion in my last post and saying the card was devalued. It has, for the most part, actually been made more competitive. It really does appear they took customer and market feedback into consideration – and made some strong, competitive cash back credit cards.
And let this be a lesson to me that I should have dug deeper and reached out to Neo right from the get go (especially seeing as I do work with them!) Granted, many times with all the various issuers all we have to go on is what they provide on their public pages which is what I based my initial article on. So in the end I am glad Neo reached out to me to set the record straight.
All right let’s dive into the details now!
New lower annual fee on the World Elite Mastercard
This hasn’t changed from the last post but I do have to change my tone, as they have lowered the annual fee while improving the card outside of the base earn rate.
When the card was first announced earlier this year the annual fee was set at $149 and this latest update has the card with an annual fee of $125.
The Cash Back Earn Rates
Here are the latest details on the cash back earn rates for the Neo World Elite Mastercard
Up to 7% Cash Back on Groceries
When the World Elite Mastercard was first announced, the earn rates for grocery store purchases ranged from 2% when not holding any funds in an Everyday account to 5% for holding $10,000 or more.
These have now been increased to 5% for those who choose not to hold any funds in a Neo Everday account and an industry high of 7% if you hold $10,000 or more.
That 5% without having to hold any funds is Neo’s direct attack on other cards in market like the BMO CashBack World Elite Mastercard, CIBC Dividend Visa Infinite Card, Scotia Momentum Visa Infinite Card and others as it meets or beats what they offer for groceries
And 7%? That’s a big wow and it is now the highest earn rate on any credit card in Canada in any category, notwithstanding several specific travel reward redemption options on card’s like the Cobalt Card or an Avion Card/ION+ card combo.
Up to 5% Cash Back on Recurring Bills
In my previous post it was revealed that the World Elite Mastercard had a new accelerated earn rate of 4% added for recurring bills. That 4% is for those who hold no funds in a Neo account or for those holding up to $3,000 while those who hold $10,000 or more will earn 5%.
Again, another direct attack on other cash back cards in market where this card meets or beats what is being offered on recurring bills.
Up to 4% Cash Back on Gas
This is one earn rate that has been made better and worse in the latest changes to the World Elite Mastercard. When the card was first announced it was set to offer 2% on gas for those who did not hold any funds with Neo and 5% for those who held $10,000 or more in their Everyday account.
Now the rates are set at 3% when not holding funds (a 1% boost) while for those holding $10,000 or more the rate is now set at 4% (a 1% drop)
Again, another direct attack on other cash back cards in market where this card meets or beats what is being offered on gas purchases.
1% Cash Back on all other spending
The all other spending earn rate of 1% remains the same for those holding $0 or low amounts in an Everyday account but it has been cut for those holding $10,000 or more. Initially, this card was set to offer an excellent 2% cash back on all other spending for those holding that $10K or more but it has now been dropped to 1%.
Given the increases in grocery and addition of recurring bills this could come out a wash for some but it will depend on an individual’s spending habits. I’m sure some Costco consumers really had their eye on this card’s originally announced 2% as driver to get the card to have one of the highest earn rates for Costco warehouse purchases but alas that will not be the case. Although I believe (correct me if I am wrong) Neo offers additional rewards for all their cardholders at Costco?
Here’s the thing, 1% isn’t bad for this category – most of the cash back cards that Neo appears to be targeting (the big 5 banks) only award 1% back for “all other” spending so this card matches them. It is the smaller issuers like American Express, Rogers etc. that have cards which will earn more on the everything else spend. So do your due diligence on your spending habits especially if it heavily weighs towards non-accelerated categories.
What about spending caps?
It should be noted all of the above mentioned accelerated earn rates are subject to annual spending caps. This was known from the previous iteration where they were set quite low, $6,000 annually for gas, $6,000 for groceries and $40,000 for the old 2% all else spending.
Neo listened to the feedback given to them and have adjusted the annual spending caps for the better. These are the new caps:
They have doubled the caps on Grocery and Gas to $12,000 annually, Recurring bills has been set to $6,000 and they still list All Else at $40,000. I will have to ask Neo about the “All Else” and whether it was accidentally left in this chart or if they really will cap the 1% earning at $40,000 annually and then perhaps award 0%? As soon as I hear back I will update this!
The cap on Groceries is still on the lower side compared to some cards ($30,000 Cobalt, $50,000 Scotia Gold Amex etc.) but we have to also consider it is earning up to 7% on that $12,000. When you compare it to the cards they are directly going after such as the BMO CashBack World Elite card, Neo’s are better. Neo’s cap on groceries is double what BMO offers and the gas cap (ha!) is nearly triple of what BMO offers. And to put that into even better perspective – Neo’s “not holding any funds” earn rates are the same or better than BMO’s earn rates.
A quick look at the newly announced Neo World Mastercard
In this latest update from Neo they have also announced the launch of the Neo World Mastercard. This is a no annual fee cash back card that avails of the standard benefits provided on all Canadian issued World/World Elite Mastercards.
Here’s a look the earn rates on this new World Mastercard:
Not bad at all, I don’t think it will stack up as the best no fee card in Canada but it will definitely be up in the ranks. The earn rates for not holding any money in Neo Everyday account are 2% on Grocery, Recurring and Gas purchases with 0.5% on all else.
If we compare this to the no fee Rogers World Elite Mastercard, it has a flat 1.5% cash back earn rate for those who are not Rogers customers (it’s best to compare not holding any money with Neo with not being a Rogers customer) so the Rogers card is beaten by 1/2 percent in three categories (up to Neo’s cap of course) but the base earn rate on Rogers is triple that of the Neo World Mastercard. So the best card here will come down to spending habits.
Then you also have the no fee SimplyCash Card from American Express – it offers 2% on gas and groceries so it matches the Neo card with no money held and the SimplyCash has a 1.25% base earn rate, which is significantly higher than Neo. Neo only beats the SimplyCash for recurring bills.
Once you hold $10,000 in a Neo Everyday account the earn rates jump to 4% in the accelerated categories and to 1% for all else. That’s pretty impressive for a no fee card and comparable to the Rogers World Elite Mastercard when you are a Rogers customer. The Rogers card provides a 2% flat cash back earn rate but bumps that up to 3% if you redeem the cash back towards Rogers services or products. Simple math shows 3% is less then Neo’s 4% (up to the caps, Roger’s has no caps but your 3% is limited to how much you can redeem for your Rogers services before it is free) but Rogers’ 3% is also triple Neo’s base earn of 1% – that’s a pretty significant difference but I need to stress that’s only if you are a Rogers customer.
Here the spending caps that have been set for the Neo World Mastercard:
Again, I don’t think Rogers or even Amex are Neo’s targets here. In fact, I recently attended an event that featured Neo and Wealthsimple, who technically speaking are competitors but they stated they like to consider themselves as complementary businesses who have both set out to challenge the old school banking system in Canada. And I think that the same goes for credit cards, Neo’s target (and even Wealthsimple’s target with their new Visa Infinite card) are not the smaller issuers but rather the big 5 banks and this Neo World Mastercard does just that, it will challenge the no fee offerings from the big guys.
Wrapping it up
With the complete updated details for the upcoming Neo World and World Elite Mastercards, you can tell the Calgary based Fintech is really looking to take a chunk of the market away from the big 5 banks. Whether it’s the up to 5% cash back being awarded for just having the World Elite Mastercard or the up to 7% for holding money with them, this card will be in the top echelon of cash back credit cards in Canada.
As to whether the World Elite version will be the actual best cash back card in Canada, that’s hard to say, I ran some quick numbers using our standardized spend rates across various categories for cash back cards and the SimplyCash Preferred Card from American Express still came out ahead (albeit only slightly) when compared to the “hold no money with Neo” earn rates on the World Elite Mastercard. However if you take the higher earn rates that can be achieved, then the Neo card would beat the SimplyCash card.
I do want to stress however that you should do the math to see if it is worth it for you to hold $10,000 in a low interest bearing account to receive the higher earn rates on either of the new Neo cards or if it is better to have the $10K in a high interest savings account combined with the lower earn rates for not holding money in a Neo Everyday account.
All that being said we definitely have some real contenders here from Neo and what impresses me the most is that they actually listened to feedback. Whether it was feedback from the market (some of us left comments on Neo’s Linkedin early in the summer) or their customers, Neo obviously saw that the Mark 1 version of the World Elite Mastercard wouldn’t cut it. Now they’ve adjusted accordingly and have made the card really competitive, regardless of whether you hold money with them or not.
Click here to learn more and to join the waitlist for these cards
All images and screenshots via Neo Financial