Most of us know what we want to buy, even before stepping into a store.
That’s because we’re a generation of savvy pre-shoppers, who click, swipe and do our research beforehand. Part of this innovation though is still missing in the very tools that allow us to spend in the first place–our everyday credit cards.
Three-quarters of Canadians carry a rewards credit card, but somehow $16 billion worth of rewards go unused. This begs the question if we truly know how to make smarter spending decisions that reward us.
What’s the difference between cashback, travel miles and rewards points? Are they the same thing, but with different names? Spending willy nilly can cause you to lose out on the best deals, but these credit cards don’t make it easy to wrap your head around them. Figuring out how to redeem points can get you running in circles and most of the time, the rewards either miss the mark or aren’t relevant for daily use.
So we asked ourselves: why isn’t there a better way to integrate rewards into our daily spending and lifestyle - and without the need to carry around 12 loyalty cards in our pockets? We’ve made it our mission at Neo to give Canadians the rewarding experiences they deserve when they spend and save. That means coming up with a seamless way to earn rewards when you’re on the go.
Let’s zero in on credit card points and how the Neo Card and its rewards differ for the better.
The difference between cashback, travel miles and rewards points
The three most common types of credit card rewards are cashback, travel miles, and points.
Cashback is the most straightforward type of reward and it’s all in the name. You get money back into your pocket when you spend. Although it varies card to card, the caveat is that the cashback isn’t very much. You’ll typically earn 2% back in very limited spending categories and 0.5% for all other purchases. Plus, there are usually annual fees associated with these cards.
Travel miles and reward points on the other hand, aren’t as cut and dry as cashback. These both need to be converted into cash to determine the points-to-dollar value. They might seem like the same thing, but the main distinction is that travel miles can only be converted to future travel purchases–things like airfare, hotel bookings and car rentals.
Rewards points have a little more wiggle room. They can be used more broadly on top of travel purchases and can be redeemed for gift cards, merchandise and non-travel related purchases.
How to earn credit card points
Traditionally, a points credit card will earn you at least one point per dollar spent on all purchases. Some cards will offer the same amount of points across all purchases, but more often than not, you’ll see that cards will reward certain categories of spending over others.
Here are some common ways to earn credit card points:
- Everyday spending. Points credit cards reward you for every dollar spent. Depending on the types of purchases, you may even get extra points.
- Sign-up bonuses. You’ll earn some points when you sign up for a card, but only after spending a specific amount within the first three months of having it. And unfortunately, those annual fees will quickly eat up any sign-up bonus points you managed to earn.
- Milestones. These are earned by reaching a certain number of purchases per month and spending a certain amount over a year.
While there’s a few ways to rack up points, what most people forget is that they can be devalued. The credit card issuer calls the shots on how many points it costs to redeem a reward and that value can be lowered at any time. Cash on the other hand, can’t be devalued as its worth is locked in for good.
How to redeem credit card points
The options for figuring out the real worth of your credit card points can be cumbersome. If you’re not keeping mental tabs on the points you collect, then you’re logging in and out of multiple third-party apps or websites. There’s no quick and easy way to do the math with traditional credit card points.
But once you figure out where to go to redeem your rewards, you can trade in your points for these general options:
- Travel (airfare and hotel bookings)
- Gift cards
- Cashback in the form of a statement credit
- Loyalty programs
Although there’s some choice with where you want to put your points, these options vary significantly in value. For one, credit cards aren’t normally meant for cashback redemption, unless they’re specifically cashback rewards cards. The value won’t be as great when you redeem your points this way.
When you redeem points for gift cards or merchandise, there’s usually a limited number of retailers to choose from. If you decide to transfer your points into loyalty programs, it essentially is no different from redeeming points for travel because the points are often transferred to the loyalty programs of airlines or hotels. And don’t forget about blackout dates if you do decide to redeem for travel.
A fair bit of thought needs to go into selecting traditional points cards. Deciding if you want consistent points across all purchases, or increased rewards in specific spending categories can affect the value you get in return. Weighing in how often you can and will redeem points depends on your spending patterns, if you have any interest in the rewards or whether or not they’re relevant to your specific needs.
At Neo, we make choices easier.
Reward your daily spending, big time
We watched, we listened, and we learned. Traditional credit card points don’t give Canadians their best shot at earning back more from their daily purchases. At Neo, we change that. We get personal. The science comes down to what you like and what you don’t.
The Neo Card is our no-annual-fee credit card that unlocks exclusive offers and earns you instant cashback rewards at the places you love. We partner with thousands of merchants, including your favourite local stores and national and e-commerce brands. We’re all across Canada, from restaurants, coffee shops, grocery and liquor stores, to gyms, gas stations and more.
Meet up with friends for drinks downtown, cook up a storm with ingredients from your favourite market, or kick it into high gear with a fitness class. Whatever you’re interested in doing, Neo has found a way to reward you for your everyday spending.
To top it off, these are just a couple of the types of exclusive offers we send:
- One-time offers. We like curious cats. Try a new place out, and get rewarded for doing so. Earn up to 20% cashback when you visit that neighborhood restaurant or coffee shop you’ve been meaning to try for the first time and pay with Neo. Discover what your city has to offer, support local businesses and reel in some pretty substantial rewards.
- Punch card offers. The more you visit your favourite places and pay with Neo, the better the rewards get. Our brand partners are in it to reward their most loyal customers and it shows. Think of things like a free coffee on your eighth visit, or $10 off your favourite restaurant after just a few times in.
The tech you expect: automatically earn and redeem rewards with Neo
We’ve built technology that not only makes our everyday financial lives easier, but also removes the confusion and time it takes to redeem traditional points, like Air Miles. When you pay with the Neo Card, you’ll earn rewards automatically without ever needing to manually redeem them. No more calculating points-per-dollar values, and definitely no more leaving it to memory to cash in on rewards.
Neo is a fully digital experience for your spending, saving and rewards. It’s all your money in one, and can be controlled right from your phone. No more logging in and out of multiple apps or websites to see your rewards balance.
Discover exciting offers by pulling up your merchant offers map and see how close you are from your next cashback reward. Or if you know what you’re after, search by category. It’s designed to be easy.
A more rewarding life
Today, saving you time is just as valuable as saving you money. Neo does both. Our seamless app empowers you to spend smarter and earn more from your daily lifestyle and buying decisions.
We add a personalized touch to where you’re spending and saving from with a variety of exclusive offers, both online and right in your neighborhood. No more generic rewards and confusing points that go nowhere. It’s time you get the rewarding experiences you deserve.
To learn more about Canada's most rewarding spending and savings experience, check out the Neo Card.