Update to this post: As of 30 September 2016, ING direct will no longer offer the 2% cash back on Visa Paywave transactions (at least for now). It’s a shame, and it was good while it lasted (3 years). I’ll be keeping an eye out for similar offers and won’t hesistate to move banks if all else is equal. In the 7 months I received this rebate, I was ‘rewarded’ with $127.78. More than I earned on my emergency fund in a high interest online savings account.
Oh my god! A free money post! It must be a scam right?! No, it’s not a scam, but the details are mainly for residents of Australia.
I use contactless payments (e.g. Visa Paywave, MasterCard Paypass, Apple Pay etc.) for most transactions, primarily for electronic record keeping and because, well… convenience. My main card is a no annual fee AMEX card which provides Velocity points redeemable through Virgin airlines and various participating stores. Although I use them I’m not a raving fan of credit card reward programs, the kind where for every dollar spent you receive a certain amount of points – usually 1 or 2, which can be redeemed for goods or services. My main qualms with this system are that the dollar value of the redeemable points is often very low (from 0.5 cents to 3.5 cents per dollar spent) and the qualifying purchases are too often paid for on credit where any interest due/annual fee more than wipes out the value of the reward. The best value return is gained through redeeming points on flights and that’s generally what I intend to use them for. As an aside, the other important caveats to using these reward (credit) cards are
- to pay them out prior to interest charges being applied,
- to avoid nasty credit surcharge fees, which currently range to 3.5% (the Australian government intends to introduce legislation in 2016 which should lead to a substantial reduction in processing fees)
- to negotiate for or find a no annual fee reward credit card
Wait a minute, I said this post entailed information on how to get free money! True or not?! Ok, here it is!
In contrast to reward or cash back credit cards, ING Direct¹ have offered a 2% cash back debit card with their Orange Everyday (OE) transaction account for a while now, which cash back is paid directly into your account (real money!). A key advantage of the debit card is that there are no interest payments or annual fees gnawing away at your cash back dollars. Personally, the avoidance of credit also fits very nicely with my 2016 financial goals.
What’s the catch?
The main condition is that cash back is only receivable on Visa Paywave purchases under $100 if a deposit of $1,000 was made into the account during the previous month (e.g. your salary). The OE account has almost no account or transaction fees and no monthly fee ever which is great and something I always look for in a bank account. The debit card also allows for free cash withdrawals at any ATM Australia wide provided the qualifying deposit was made. So the ING OE account appears a useful way to implement a slightly advantageous rebate on small Visa Paywave purchases.
How to use the cash back Visa Card?
The ideal way to use the Orange Everyday account/debit card is probably as a primary account/debit card for all regular Visa Paywave purchases less than $100. I ran a calculation on my transaction record from Pocketsmith over the past 12 months and figured had I used the card in 2015, I’d have been rebated slightly less than $450AUD – almost 2x all my account interest earnings for the year! I’m in the process of moving my main transactions to this account, keeping my former transaction account with Bankwest as a dedicated account to implement the envelope method of budgeting for eating out (another of my 2016 financial goals which I’ll put together a post on soon). I’m keeping my savings accounts with Bankwest too, as I think they offer the most competitive online savings account interest rates and have done for a while.
If you’ve found other cash back accounts/debits cards, or have any other useful tips please post them in the comments below. As always, thanks for reading!
Footnotes. ¹ME Bank and CitiBank have offered similar cash back rewards on certain accounts in the past but, unlike ING Direct, theirs were 5% for 6 months with no cash back there after and to my knowledge, these accounts are not currently on offer.
Disclaimer: The above products are mentioned because I feel they offer some value, I’ve not been compensated for mentioning them nor was this post solicited by any of the institutions mentioned 🙂 Please read through the relevant Product Disclosure Statement and consider personal and professional financial advice prior to signing up with any financial institution.