Loyalty points and other usage incentives

(James) #21

Another points hoarder here. My debit card is used for cash withdrawals only, and that’s something I try and avoid if at all possible.

I have an airline Amex/Visa dual account, higher points rate with the Amex but a backup Visa for anywhere that doesn’t accept Amex.

I imagine there’s a correlation here, those who were interested in being early adopters with a bank are already pretty organised and relatively good at money management. I enjoyed Monzo as a technology demo, but it’s not successfully become my day-to-day card because I don’t need the budgeting help or awareness, and there are incentives elsewhere.

What would make me replace my current account with Monzo? I already get free FX withdrawals and I pay a pretty low fee (£10) for a lot of extras which I use (Nationwide FlexPlus). Given that things like current account spending notifications are irrelevant due to using a credit card, and I don’t feel like I need budgeting help… I’m really not sure :confused:

(Scott Robson) #22

I don’t know about everyone on here I’m not lucky enough to have a credit card with such attractive rates but if other banks offer such good incentives surely they do this because they make more money from it. One thing I’ve learned working in banking and retail sector is they don’t offer you something unless it makes the company money. I’m happy how I can talk to someone real who does not read from a script. I like how I don’t get charged for using my card abroad. Why ask for something for spending their money why not have a system like some supermarkets run where the amount is always rounded up to the nearest pound 5 pound etc helping save and I can adjust that request. Or if people want incentives borrowing money why not have more money you set aside the more you can borrow for instance have money in a locked savings account and allowed to borrow money on a certain multiplication on understanding you repay each month your interest rate is offset by securities in the savings abbot like credit union. I do earn a fair amount but I would like to see more facilities for if I save money regularly or percentage of income not because I believe I’m winning one over on the bank by using my credit card for everything and paying it off. As I’m just spending my money in another way. I think it’s time to think outside the box more facilities to help me save money a bank that helps me manage my money better by making sure I save. But that’s just one persons opinion

(Brexit Day Is Gonna Be Shamayzing.) #23

I want discounts on Pret, Slug & Lettuce, Just Eat and Dominos

(Michael) #24

Personally I find the idea that targets are equivalent to cashback is a bit weird. I appreciate that knowing how much I spend can help me spend less, but that’s a question of self-discipline and I don’t think I have a problem with uncontrolled or ill-considered spending.

Credit card cash-back is me getting what I want at the best possible price (and in my case adds up to about £150 / year) and for me falls in to the same category as shopping around and using cashback websites for purchases. My point really is that they’re not mutually exclusive and they don’t address the same ‘problem’.

(James) #25

I don’t think anyone is suggesting that they are equivalent? Monzo is competing to be my day-to-day card - all it offers (at the moment) is awareness of spending and budgeting. It is competing against cards which offer significant rewards. They are not equivalent and don’t have to be mutually exclusive.

(Alex Sherwood) #26

That’s a fair point, I’m glad you raised this :slight_smile:

It sounds like we agree that the result of using the targets or getting cashback is that you save money.
The assumption is, you should be able to spend less & earn cashback at the same time, right? So if the two methods of saving aren’t mutually exclusive, then there’s not a trade off between one or the other…

Here’s the thing, according to a study by an American bank, people who earn cashback on their purchases spend more than those who don’t -

The initiation of a 1% cash rewards program yielded, on average, a $25 reward each month — and an increase in spending by $68 a month and in credit-card debt of $115 a month

cashback is a really clever concept because it shifts user’s focus from how much they’re spending to how much they’re “earning” or saving while spending (& funnily enough, that’s beneficial for the credit card providers). On the other hand, the targets focus the user’s attention on how much they have left to spend before they exceed their target which makes the user weigh up whether the purchase is worth it or not.
There will be exceptions to that rule but unless you’ve checked carefully, the chances are, it’s not you - nothing personal, I don’t trust myself to make a casual accurate assessment of my own spending either.

Just to point out - that’s £12.50 a month so definitely within range of what I save each month by using the targets. As I’ve mentioned earlier in this topic, I’m not sure that Monzo can compete with Amex’s exceptionally high rewards but another user recently mentioned that they think it does.

So while you may not have a problem with self control or out of control spending, the chances are you do buy a few ‘nice to haves’ each month. There’s nothing wrong with that but since I can see how that adds up, thanks to Monzo, I’ve decided to try to save that money instead & I’m hopeful that other users will do the same.

Having said all that, I’ve not had a chance to sound out these thoughts with anyone else so if I’m missing something, please do point it out!

(Andrew Pepper) #27

Protection v Social v Points

Perhaps it isn’t just the Credit Card points - as they become less and less attractive and plentiful. One significant aspect of putting large purchases on a CC is the consumer protection you receive if something goes wrong - this is incredibly valuable and not something (I think) is available on pre-paid cards like Monzo’s. Correct me if I’m wrong.

I don’t use my CC for credit - simply as an aggregate payment service - I pay the bill off in full every month. It means I have one bill - one payment. This was incredibly useful when I did a lot of self-employed work. Some months very little came in - other months a lot, so, to manage the cash flow, and take advantage of offers and needs (a piece of equipment or materials I needed on offer that month) this provided a valuable way of managing purchases, and saving me money. The points were a nice incidental.

Perhaps social ‘points’ are more interesting - rather than us getting tiny rewards perhaps, as a community, we earn social rewards which could be credited to a selection of chosen projects. A fund to support technology projects and develop speculative improvements which benefit society? A fund to commission artworks and events? A fund to assist individuals in society struggling with debt?

We are all lucky to have money to put on our Monzo cards, be interested in disrupting the normal banking structure and help us manage our own finances - there are lots of people who can’t do this. As Monzo grows it could become a socially supportive service.

(Stephen Morris) #28

Really interesting discussion this, not least because I find myself in the same AmEx boat as some of you guys. I have a charge card, everything I spend goes on it (assuming they take the card!) and I pay it off from my current account once a month.

I accept the argument about how reward schemes get people to spend more - there has to be some reason why big businesses use them - but the weekly family shop and my daily commute give me regular opportunities to earn points (without getting carried away) that could be used to fund a bit of a treat later down the line. The way the points alter my behaviour is to get me to choose the AmEx card over another. And sometimes to route through PayPal where AmEx isn’t an option! But, I’d take lower price points over points every day.

Despite this being my first contribution here, I’m pretty wedded to the Monzo concept. I see no reason why I wouldn’t switch my current account when it becomes available, but I’ll use it the same way. What would be ideal for me, would be Monzo acting as a hub with a feed from AmEx, so I can track and categorise my spending (and savings) across multiple sources in one place.

(Edward Whishaw) #29

I use AmEx, but only really because it collects Nectar Points. So my opinion is that something as agile and useful as Nectar Points would be a great way ahead for Monzo …


I actually already have a pre-paid card from the company I work for which gives me cashback on purchases made at any partner retailer they have onboard and although the cashback is good the actual card functionality doesn’t match Monzo which is why I currently choose to put my money here rather than on that as the functionality for me is more important. What would be good is to partner with a company like this that offers the cashback functionality and would do all of that processing for Monzo as then they’re giving the loyalty benefits without having to manage all of the partner relationships and everything that comes in tow. This could also continue to be offered when pre-paid becomes debit card as it’s the spend data that’s key to process the cashback and has nothing to do with the type of card used.

Just an idea but maybe if Monzo wanted they could introduce membership levels which released these extra benefits or something along those lines if they were worried about cost.

(Sam) #31

Apologies if this has been covered, I had a quick scan and couldn’t see anything though.

The only reason I can think of not switch to Monzo 100% when the current accounts are rolled out is the added benefits I get from my Lloyds Platinum account - mobile & travel insurance and AA cover being the most important. It’s a lot cheaper than I can buy the same benefits for direct from the suppliers (you’ve got to love economies of scale) and 99% easier than messing around with quotes, renewals that invariably go up each year and dealing with numerous companies.

Will Monzo be offering something similar to this? I really hope so, that way I can take the plunge with both feet!


The short answer is No

(Alex Sherwood) #33

I’ve moved your post here, as I think this follows on nicely from the earlier discussion, I hope that’s ok :slight_smile:

My answer here is focused on insurance but covers all of those types of products -

Click the :arrow_down_small: in the top right hand corner of the quote, to view the full post.

it would be good to hear your thoughts on this!

(Alex Sherwood) #34

Tom’s now shared his predictions for the evolution of loyalty / reward schemes & how Monzo users could benefit from them, here -

(Chris) #35

From the medium post -

all my spending is done via credit card for one simple reason; Rewards. While minimal (I’m not at companion voucher spending levels yet), my credit card usage gives me access to various offers and the chance to save on future flights

You didn’t seem to address why you would want to stop earning Avios/miles?

re: a competitor for my current account

I use my BA Amex for everything, so the only two transactions in my current account every month is paying the BA Amex and paying rent. Every other transaction is done on the BA Amex so I can get miles (or sometimes a Visa equivalent when Amex not accepted).

I’d use Monzo a little bit more if it did visa rate of Avios (1/1). I would use Monzo a lot more, almost exclusively, if it gave the same Avios as BA Amex card (1.5/1).


The issue is the recent regulation changes that will reduce the merchant fees such that the BA Amex will be unviable.

I use it too, have had it for years (so long that I don’t pay the fee for it), but at 0.3% merchant fee they simply cannot afford to give us 1.5 avios per pound. The notional value of an avios is around 1p, so whilst they almost certainly get them at a discount, they must lose money on it once the fee reduction is in place.

(Chris) #37

From my understanding the vendor would still pay fees, it’s just that they would absorb that in the costs of products generally, not charge a separate fee for it. The coffee shop I go to would still pay just the same for Amex transactions, it’s just they would not pass that on to me directly, instead increase the prices of the coffees in the shop generally.

Transaction fees aside, I assume Amex would make the majority of its money from interest from the debts people owe it, and providing Avios gives incentives for more people to sign up with Amex, get in debt, and owe Amex interest. Some of that interest would pay for Avios.

Also, Amex does charge a pretty hefty annual fee, that somewhat covers some of the cost of giving Avios. Especially given that most Avios go unused.

Even if I’ve misunderstood and I’m wrong about those three things, and you’re right the regulation is going to influence it, I don’t think Amex and other card providers wouldn’t just stop providing Avios, they would probably try to influence the Avios programme to devalue them slightly, so it costs more Avios to get the flight you want, and makes them cheaper for Amex to allocate. It would still be worth while for medium household incomes.

Either way, it still makes sense for me to use my BA Amex up until the point that it’s no longer value for money. I’m getting companion vouchers and free flights. So I’d stick to using it for now. I can always jump back to Monzo at any time.

(Jolin) #38

What are the recent changes? I thought the directly issued AmEx cards (such as the BA one) were exempt from the interchange fee caps? I don’t use any of these points cards, so am just curious.


Here’s a little info

Sounds like it was ruled they should be included in the cap (although the article is old and I’ve seen no impact from American express) but their exception would only last until December 18 anyway?

(Jolin) #40

Thanks, that’s interesting. It seems the reason there’s been no impact yet is because:

In the short term, nothing. American Express has a contract to operate the British Airways card and will presumably continue to do so under the agreed terms unless there are suitable break clauses in place.

I always wonder why retailers even bother to accept American Express, given the higher cost to them. I can’t imagine it would stop anyone purchasing from them, because I’ve never seen anyone who has an AmEx without also having a Visa/MasterCard. There are too many places AmEx isn’t accepted to make it viable to only have that as a card.