The Canadian banking landscape has undergone significant change in recent years. Indeed, the hegemony of the country’s big five institutions (TD, BMO, RBC, Scotia and CIBC) appears to be over as several new financial institutions such as EQ Bank, Tangerine, Motusbank and Alterna gain prominence.
These modern virtual banks offer low-cost financial products. Transactions are also simplified as they are conducted online. A trip to the branch is therefore not necessary.
In addition, their checking and savings accounts have higher interest rates than traditional banks. This competitive return is made possible by savings on rental costs. Indeed, these institutions do not need physical premises to carry out their operations, as their activities are carried out electronically at a distance.
To this end, several other electronic financial platforms have been created. This is particularly true of Neo Financial. In this paper, we will discuss this new financial interface.
What is Neo Financial?
Neo Financial is a Canadian financial institution based in Winnipeg, Manitoba, specializing in offering savings and credit products. Special attention is also being given to the financial literacy of Canadians.
This innovative initiative is the work of Andrew Chau and Jeff Adamson, who previously founded the food delivery app “Skip the dishes.” Most recently, Kris Read joined the management team at Neo Financial.
Neo Financial offers two main services to its users:
- a Mastercard credit card
- and a high-interest savings account.
We will analyze these two Neo services here.
Neo Financial products
The Mastercard Neo credit card
The Neo Mastercard from Neo Financial is affiliated with the credit card provider Mastercard. It has no annual fee and is fairly easy to obtain, although a minimum credit score of $300 is required.
Failure to pay your bills can be costly, as the interest rate charged is between 19.99% and 24.99%.
The credit limit can vary depending on different criteria such as your payment history, the presence of debts and your annual salary.
The maximum credit limit is $10,000. This product is available in Quebec.
This card allows you to accumulate cash rewards after each of your expenses. To do so, the user must choose between three distinct options.
Here is a brief overview of the three possibilities:
- Essential: A no-load account that offers 4% cash back on all retail partner* spending at Neo Financial. There is no return on other expenses. This account is recommended if you make less than $750 in purchases each month.
- Plus: Account with a monthly management fee of $4.99, offering a 5% return on all spending at Neo Financial, retail partners*. A 0.5% return is also available on all other purchases. This account is recommended to make between $750 and $1,000 in purchases each month.
- Max: Account with a monthly management fee of $9.99, offering a 6% return on all spending at Neo Financial, retail partners*. A 1% return is also offered on all other purchases. This account is recommended if you make more than $1,000 in purchases each month.
Neo Financial has several partners. The best known in Quebec are :
- Pharmaprix and
- Hudson Bay.
The Neo Financial e-application is easy to use and you can easily track your cash rewards accumulation.
Here is a visual overview of the mobile interface of the rewards program:
Neo High Interest Savings Account
Neo Financial’s savings account is a great find as it stands out favourably from its competition. Here is an account of the main advantages and disadvantages of this account.
- High Interest Rate: The interest rate on this account is 1.80%. This is one of the best rates in Canada. It is currently superior to EQ bank and KOHO.
- Year-round promotion: The interest rate is in effect for the entire year, an advantage over competitors such as Tangerine, who offer promotions over a shorter time frame, generally between 3 and 6 months.
- Many free services: Wire transfers, Interac transfers and bill payments are all free. It is also important to mention that there are no fees for managing your account.
- No debit card: Neo Financial does not currently have a debit card. However, it appears that this may change sooner rather than later as discussions are underway to create this financial product.
- Unavailable in Quebec: The Neo Financial High-Interest Account is unavailable in Quebec. However, there is a short memo on the official Neo Financial website announcing the upcoming arrival of this financial product in Quebec. We’ll be sure to keep you posted on the exact date of the launch.
Advantages and disadvantages of Neo Financial
- Excellent virtual application that allows you to track your rewards accumulation and credit card transactions
- Easy-to-obtain credit card with an innovative rewards program offering generous cash returns
- Savings account with a high interest rate (1.80%) that is among the best in the country
- Debit card not available
- Neo Financial’s savings account is currently not available to Quebec users
Verdict on the Neo Financial platform
Overall, we find Neo Financial’s financial products attractive to Canadians.
First, we note that the best financial product of this new financial institution is its high-interest savings account. The interest rate offered is excellent and stands out favourably from other financial institutions. The terms of this interest rate are also excellent while they are valid for the whole year.
The Neo Mastercard is also interesting because it is free and easy to use. However, we feel that the rewards program, as generous as it is, could have benefited from lower management fees on some of its accounts. We are thinking in particular of the fees attached to the “Plus” ($4.99 per month) and “Max” ($9.99 per month) accounts, which seem high to us.
Secondly, we like the simplicity of Neo Financial’s mobile interface. The information contained is clear and concise, and easy to find.
Finally, we note some shortcomings concerning Neo Financial’s offering of certain financial products. We are thinking in particular of the absence of a debit card. It is also surprising that Quebec’s high-interest savings account is currently unavailable.
However, it seems that changes are imminent for these two products if we rely on the memos found on the official website of Neo Financial.
We remain optimistic that Neo Financial will continue to build on its current momentum by developing additional financial products. We believe that developing a low-cost virtual investment platform would be a great initiative.