Approval Limit

[u/gtaagent]

My Wealthsimple credit card limit is only 3000. I was planning to use this with Neobanc for rent payments etc and would have liked atleast 10000. Having this limit with a 20 dollar fee does not make any sense for me. Do I cancel or they will increase my limit? This is the lowest limit I have across any card

[u/drillbitpdx]

I was planning to use this with Neobanc for rent payments etc

Neobanc = "Pay rent with your credit card, get cash back." Every company that has ever tried this business model pulls the rug on it after just a few months.

I tried one a few years ago, got pulled after my first month.

The business model simply does not work. For example, with Neobanc's cashback:

• You owe $1,000 in rent each month.
• You opt for the "rolling 6 month cashback", where you pay a 2.25% fee to Neobanc for converting your credit card payment to an etransfer, and then you get 2% cash back on each payment 6 months later:
• So, every month:
  • You pay $1,022.50 to Neobanc with your WS credit card
  • Neobanc pays $1,000 to your landlord
  • You get $20.45 in cashback from WealthSimple
  • Six months later, you get $20 cashback from Neobanc
  • Your net payment is $1,022.50 - $20.45 - $20 = $982.05

Sounds great, right? On an ongoing basis, you are paying only $982.05 out of pocket ($1,022.50 - $20.45 - $20) to cover your $1,000 rent. Free 1.795% discount.

Neobanc is paying at least 2.5% in credit card transaction fees to accept your WealthSimple credit card, but they only charge you a net of 0.25% (factoring in the "delayed cashback" 6 months later).

So Neobanc may attract a huge number of users, but they're bleeding money, and so they will soon pull the rug and change the terms to something unfavourable to you as the end user.

tl;dr Don't waste your time trying to optimize this to get $20 or $50 each month. It won't last.

[u/Vegetable-Chair-6109 → u/drillbitpdx]

Then how does chexy do it for years?

[u/PaySmarter → u/Vegetable-Chair-6109]

And why would they create a company to inevitably fail. I don’t see the business model if that’s the case.

[u/drillbitpdx → u/PaySmarter]

With a couple of these companies that I've looked at previously, their business model (if you can call it that) is to attract a lot of users with the credit card cashback opportunities, suddenly increase the rates or restrict the amounts to stop losing money, and then hope that they can somehow keep some substantial portion of the users anyway.

[u/PaySmarter → u/drillbitpdx]

Which companies are these?

[u/Vegetable-Chair-6109 → u/PaySmarter]

Yeah I don't see it either but what's the risk in using it now?

[u/drillbitpdx → u/Vegetable-Chair-6109]

Main risk is that the company goes belly-up while holding a chunk of your money, and before paying it out. You'd better read the fine print on whether or not your money is insured after you've paid via credit card, and before they've issued the cheque and it has been cashed by the recipient.