Updated: Oct 3
The world of credit cards is vast, and each card comes with its set of benefits. One card that stands out is the Neo Credit Card, thanks to its cashback structure. Unlike credit cards that offer cashback based on specific spending categories like food or gas, the Neo Credit Card takes a different approach by determining cashback based on its partner network. In this article, we will explore the advantages and challenges that come with this system.
The Neo Partner Network
The cashback system of the Neo Credit Card is closely tied to its partners. Each partner offers a percentage of cashback for purchases made using the card. For example, one partner may provide 10% cashback while another might offer 5%. Additionally, certain partners may have conditions attached to their cashback rewards. For instance, some partners require a spend of $50 before granting the cashback bonus. This means that earning cashback does not depend on which category you spend but on where you choose to make your purchases.
To help potential cardholders make decisions, Finly website provides a list of Neo partners. This information is crucial since one limitation of the Neo Credit Card is that it does not offer any cashback rewards for non-partner transactions (Except Gas and Groceries). Therefore knowing where you can earn rewards becomes essential when considering this card.
Take, for instance, when it comes to the fast food chains in Canada. Subway and Boston Pizza have partnered with Neo to offer enticing cashback deals. However, known chains like Tim Hortons and Mcdonald's are not part of this partnership.
1% Cashback on Gas and Groceries
As mentioned in the previous section, no cashback is earned when purchases are made at non-Neo partners. The one exception to this is the cashback on Gas and Groceries. Neo provides 1% cashback on all eligible purchases in these categories, which is a nice addition. So, if the purchase is at a non-Neo partner, you know you earned something at the gas station and the grocery store!
The 0.5% Cashback Guarantee
Neo has come up with a feature called the 0.5% Cashback Guarantee. It ensures that cardholders always receive some value from their card. If the total cashback earned from all purchases falls below 0.5%, Neo will make up the difference. This means that you're guaranteed a cashback rate even if you frequently shop at stores that aren't partners. It's like having a safety net in place that ensures you get something back for your spending.
Now let's look an example to further understand this. You go and spend $50 on a Neo partner and get 2% cashback equal to $1. Then you go and spend another $250 on a Non-Neo partner and earn $0 because non-Neo partner don't give any cashback. So your total spent so far has been $300 and the cashback earned has been $1 which is less than $1.5 that is equal to 0.5% cashback. Because of this Neo will give you another $0.5 so that you get to that 0.5% cashback.
Now although this might sound good, IF you are willing to carry multiple credit cards, it only makes sense to use the Neo card at Neo partners and a Non-Neo card at Non-Neo partners. This is because the Non-Neo card will give you some cashback whereas the Neo one will give you nothing if you use it at a non-partner.
Comparing Neo to Traditional Credit Cards
When comparing Neo to credit cards, there's a difference in how they handle rewards. Traditional credit cards typically offer a fixed cashback rate based on spending categories. For example, you might earn 2% cashback on all food purchases regardless of where you shop. This system is straightforward and predictable because every time you dine out or buy groceries, you know how much cashback you'll receive.
On the hand, the Neo Credit Cards rewards are tied to their partner establishments. The amount of cashback can vary from one partner to another. While this may lead to rewards when shopping at high cashback partners, it also means no rewards at non-partner stores.
The Verdict: Is the Neo Credit Card Right for You?
The Neo Credit Card presents an opportunity. If you often shop at Neos partner stores, you can enjoy rewards that are hard to find elsewhere. Some partners even offer cashback rates that are tough to beat with any card. However, it's important to note that the card's value diminishes when used at partner establishments.
The 0.5% cashback guarantee is an addition ensuring that cardholders always receive some rewards. Nonetheless, if you rarely shop at Neos partner stores, relying solely on this guarantee may not be the way to utilize a credit card.
To sum it up, the Neo Credit Card is a choice for individuals who closely align with its partner ecosystem. However, if your spending patterns don't match their list of partners, it might prove advantageous to opt for a credit card that offers consistent rewards across all purchases. Remember, the best credit card is always the one that best suits your spending habits and financial goals.