The end of cash back incentives? ING Direct, ME and Citibank ditch their freebie offers

The end of cash back incentives? ING Direct, ME and Citibank ditch their freebie offers

Customers of ING Direct were less than happy when the online lender decided to remove its 2% cash back incentive, from 30 September 2016, for contactless purchases under $100 on its Orange Everyday account.  

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However ING Direct isn’t the first provider to scrap its freebie bank account offer. ME Bank in July 2015 and Citibank more recently in May this year, who were both offering 5% cash back, also removed these “tap and go” incentives from the table.

In Mozo’s bank account database, which compares around 100 bank accounts, there is just one account left that comes with a cash back offer – the Australian Military Bank Military Rewards Account earning you 2% cash back for payWave purchases.

So is this the end of the short lived bank account cashback era? Well, it could be for now, as providers tighten their belts in the face of low interest rates and greater competition in the market.

Of course, while debit card cash back incentives being axed, is disappointing news for customers (I should know, as I loved nothing more than tapping my orange card for free cash), there are still ways consumers can plump up their stash cash. It just takes a little strategising…

1. Stash the majority of your cash in a high interest savings account

Okay interest rates might not be what they used to be but it’s still better having the majority of your cash in a high interest savings account, rather than it sitting in your everyday bank account earning you zip. At the moment the highest rate is 3.40% for the first 4 months offered by Citibank with its Online Saver, which would earn you $85 interest over the intro period with a $10,000 balance.

2. Take advantage of cash back offers on other products

While providers may be ditching cash back offers attached to bank accounts, the same can’t be said for other products like credit cards, as here at Mozo we’ve seen a great number of providers roll out cash back offers over the last month.

Just take the American Express Essential Credit Card for an example, which not only has a $0 annual fee but will give you $50 cash back when you spend over $500 in the first 2 months. Just make sure you pay your balance in full and on time, as a late payment fee and 14.99% interest rate, will quickly outweigh the value of the cash back offer.

The end of cash back incentives? ING Direct, ME and Citibank ditch their freebie offers was last modified: August 17, 2016 by Rebeccah Elley

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  1. We reckon the reason ING Direct has put their 2% cashback on the chopping block is due to the new legislation in which the RBA will regulate both the fees charged by merchants for using a credit card (as a contact-less payment transaction such as PayWave or PayPass goes through as a credit purchase and not through the banks-owned EFTPOS network) AND the percentage of merchant fees issuing banks can keep to themselves (as opposed to % going to the card scheme operators such as Visa and Mastercard).

    Basically, it is becoming less profitable for banks to operate through the two major card schemes based solely on the revenue they generate from transactions (which is the ONLY revenue they generate from DEBIT cards where people use their own money).

    It is obviously a different story altogether when a CREDIT card holder pays an annual fee to have the card and, better yet, accrues an interest bill.

    If that happens, they are off to the races and with interest rates on many cards still around the 20% mark (especially for cards with reward schemes), the banks well and truly have their party hats on! 🙂

    Reply
    1. Mozo

      That’s a good point and definitely aligns with how credit card providers are reducing the value of their rewards programs, after the RBA announced it will be introducing caps on interchange fees.

      Reply
  2. I’ve been enjoying the paywave rebates from ING. Even though ING charges the merchant 3% and passes on 2% to us, they have decided that’s not enough, they want the whole 3%. Well they’re not getting it from me. I’ll go back to using my (ANZ) credit card and ANZ can receive the 3%. ING has made a bad business decision here.

    Is there anyone else offering a cashback/rebates promotion on their cards?

    Reply
    1. Mozo

      Hi Elle,

      At the moment the only provider offering cash back with their debit card is the Australian Military Bank with its Military Rewards Account, which offers 2% for contactless payments under $100.

      Reply

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