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Chexy is well-known these days, but have you heard of Neobanc — a direct competitor? Neither have I until recently, but there are quite a few things that catch my eye. In addition to paying your rent or bills with a credit card, Neobanc lets you pay credit card bills and mortgages — with the perk of earning Neobanc cashback.
Neobanc cashback is really the game-changer here, and every payment comes with some money back, which you can apply to your next bill to reduce your fees. It all seems pretty sweet, so let’s look at the details.
The Basics of Neobanc
At its core, you can think of Neobanc as a way to use your credit cards to pay bills that don’t normally accept credit cards. Think condo strata payments, rent, car lease, and more.
Examples of bills you can pay using Neobanc
With Neobanc, you can pay these with a credit card at a 1.5% fee. But you get 1% cashback as Neobanc funds, so it’s effectively only a 0.5% fee. Note that the cashback percentage varies by bill payment type, but a 1.5% fee with 1% cashback is the most common.
The way it works is quite similar to Chexy where you select which day your bill is due and then complete payment immediately on the Neobanc platform. Then Neobanc will send money to your payee by your selected deadline.
Here, I selected June 17 as my due date
I like how clearly it shows how much cashback you’re getting on each transaction. Neo credits the cashback to your Neobanc account once the transaction clears, and you can then apply it toward your next payment.
Paying Rent with Neobanc
Paying rent is Neobanc’s biggest marketing bullet, and it offers two different ways to get cashback:
- Pay a 1.5% fee, get 1% cashback towards your next rent payment
- Pay a 2.25% fee, get 2% cashback paid out every 6 months
Pay rent with Neobanc
Whichever you select, that’s the plan you have to stay on, as it cannot be changed later. The one with a 2.25% fee has a lower net fee (0.25% vs 0.5%), but is subject to an 183-day holding period.
Paying Mortgage with Neobanc
Here is where it gets interesting: as far as I know, Neobanc is the only company in Canada that lets you earn rewards when paying mortgage. “Earn rewards” come in the form of Neobanc cashback since only Interac e-Transfers are allowed for mortgage. Here’s how it works:
- Send mortgage payment to Neobanc by e-Transfer
- Neobanc deposits funds to your bank account 1 day before lender collects mortgage payment
- Same bank account as used for the e-Transfer
- Earn 0.5% as Neobanc cashback, which you can apply towards your next mortgage or bill payment
Earn rewards on mortgage payments with Neobanc
Unlike rent or bill payments, mortgage and credit card payments don’t incur a fee. Assuming Neobanc continues operating the program as advertised, this is effectively free cashback on payments you’d be making anyway. To be frank, it does seem a bit circular, since it sounds like you’re earning 0.5% by sending money through Neobanc and getting it back a few days later.
Nevertheless, while not as cool as earning credit card rewards on your mortgage, this is still a 0.5% earning on payments you’d be making anyway, and there’s no fee to send e-Transfers.
Paying Credit Cards with Neobanc
This is where it really gets interesting — Neobanc offers cashback rewards for making payments to your credit card. How it works is you send money to Neobanc by e-Transfer, and then Neobanc pays your credit card with the details you provided.
Use Neobanc to pay your credit card bills
Assuming Neobanc continues to operate the program as advertised, it’s essentially a 1% rebate on credit card payments, since there’s no fee to use eTransfer. As with all other bills, make sure to submit your payment with ample lead time since it takes around 5 days for the cycle to go through on Neobanc.
Neobanc’s Other Features
Neobanc has a few other features, such as rent reporting, loan offerings, gift card sales, and referrals to other members. Rent reporting is interesting since Neobanc says it will report to the credit bureaus every time you make an on-time rent payment, which could help improve your credit score — since rent is not usually reported on a credit file.
Buying gift cards with Neobanc offers a modest amount of Neobanc cashback, and “Buy a Home” is a new Neobanc feature that offers extra cashback on rent payments, which can be saved toward the down payment. Of course, you only earn this cashback when using one of Neobanc’s partnered realtors/brokerages for your home purchase.
Earn extra cashback towards your home purchase
Rent-day loans are available for up to $1,500 CAD and personal loans of up to $35,000. Neobanc’s referral program offers up to $100 per friend referred, split into 10 $10 credits. Essentially, you get $10 of Neobanc credit every time your friend makes a payment of $1,000 or more, up to $100 total.
A Warning About Neobanc
Now, it wouldn’t be a fair article to not acknowledge some of the challenges we’ve seen with Neobanc. Chexy at this point runs like a well-oiled machine, while Neobanc very much feels like a disruptor. A new entry to the market with kinks to work out. There are online reports of some payments taking longer than they should and of trouble editing existing payments, and my own friends have experienced Neobanc sending bill payments to credit cards 2-3 business days after the selected date.
A frustrating aspect of using Neobanc is that the online interface often shows the payment as “sent” on the date selected when setting up the bill payment, but Neobanc does not actually send it until two days later.
Takeaway
In my opinion, Neobanc’s main value proposition is using your credit card to pay bills and rent. You’ll earn 1% cash back in exchange for a 1.5% fee, which brings the net cost to just 0.5%. Paying credit card bills and mortgage is by e-Transfer only, but you still earn 0.5% cash back, which beats paying directly through your bank.
The biggest differentiator versus Chexy is the ability to earn rewards on mortgage and credit card payments. In the big picture, it’s great to see Chexy competitors in Canada, and I’ll be giving Neobanc a whirl for property tax in the coming months, as its fee is significantly lower than Chexy’s (unless you have Chexy referrals), especially when you factor in Neobanc’s cashback. I’m curious to try out credit card and mortgage payments, too.
All that said, Neobanc is still a relatively new player, and it doesn’t appear to have the same level of polish and reliability as Chexy just yet. If you decide to give it a try, I’d build in a healthy buffer before any payment due dates while the platform continues to mature.
Have you ever tried Neobanc and if so, how was your experience?
Featured Image Credit: Neobanc
