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New Halifax Cashback Debit Card launches Feb
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MSE_Martin
Posts: 8,272 Money Saving Expert
HALIFAX LAUNCHES FIRST CASHBACK ON DEBIT CARDS - BUT YOU CAN BEAT IT!
The Halifax has today announced it will be launching cashback of 1% on all spending up to £10,000 on its new Moneyback current account.
This is the first time we've ever seen cashback on a debit card (i.e, a normal bank account card). The account which launches in February 2005 will pay 0.5% interest in credit.
This is clever marketing, and not a particularly bad deal, but it is beatable.
Current Account
First of all the interest is poor (not compared to the big four banks but compared to the best on the market). Alliance & Leicester's current account pays 5.5% interest. Both require you to pay in a salary of £1,000 per month Best current account article (includes contact details)
Cashback
While 1% is good amount, especially so for those who only spending a few thousand a year (as then it competes well with credit cards), the cashback is only earnable up to £10,000 spending. The Amex Platinum card pays up to 2% cashback and there are other cards paying 1% Best cashback card (includes contact details)
Best Practice
Set up a direct debit from Alliance & Leicester to pay off the Amex Plat in full and you
a. earn cashback at a possibly higher rate
b. are not charged interest or annual fee by Amex
c. Earn interest from A&L at a much higher rate.
Plus as the credit card cost doesn't hit your account for 50 days, whereas the debit card hits immediately, you also earn interest on the money spent.
Is there anytime Halifax is good?
It definitely wins on convenience. In that case it isn't a bad option and can do you pretty well.
Best cashback card
Best current account article
WARNING: Halifax Launch Press Release:
The following is Halifax's view on this. Take this with a MASSIVE pinch of salt as it's a press release designed to sell the product. This is not my view.
A MAJOR NEW ATTACK ON THE BIG FOUR
The Halifax is stepping up its attack on the Big Four banks by launching the first ever current account in the UK paying cashback on debit card purchases. More major banking initiatives will follow in the New Year.
The new product, called the Moneyback current account, offers 1% cashback on debit card purchases up to a total of £10,000 automatically payable tax-free once a year to the account holder. Halifax calculates that cashback potentially worth approximately £100 a year is available to the average UK household.
A First in UK Banking
Bank Cashback Credit Interest Rate Authorised Overdraft Rate
Halifax 1% on total purchases
up to £10,000 0.50% 13.9%
Barclays Not Available 0.10% 15.6%
Lloyds/TSB Not Available 0.10% 18.2%
RBS/Nat West Not Available 0.10% 13.9%
HSBC Not Available 0.10% 14.8%
Source: Moneyfacts, December 2005. The Halifax rates and cashback apply to accounts funded with £1,000+ per month. The Big Four rates refer to their standard current accounts where the balance is up to £100,000.
Cash Is No Longer King
Launching in February 2005, Moneyback is in tune with the premier position that debit cards occupy in the UK consumer's wallet. Debit cards now account for 65% of all card purchases and more than eight in ten adults have one. This year, plastic should overtake cash payments with the total value of card transactions expected to exceed £269 billion. (Source: APACS)
More/….
The UK consumer is ready for change, especially the 27 million current account holders with the Big Four. NOP World research, conducted on the Halifax's behalf, found that 71% of UK adults would find a current account offering cashback an attractive proposition.
The Halifax Strategy
Halifax has led the way in UK banking by offering 30 or 40 times more credit interest than the Big Four. This strategy is paying dividends. Halifax and Bank of Scotland increased their combined current account market share from 9% to 14% in just three years, a significant move in a mature market.
With the launch of Moneyback, Halifax opens up a new front by targetting the millions of frequent debit card transactors who bank with the Big Four. According to the Household Expenditure Survey, the average UK household of 2 adults and 2 children spends over £16,000 a year on everyday items and treats like food, clothing and holidays. All of these items would earn cashback if paid for with a Moneyback debit card (see Editor's Notes).
Halifax and Bank of Scotland are committed to increasing their benchmark market share in current accounts to the upper end of the published 15% - 20% range. The bank aims to do so by doubling the number of current account customers who have their main banking relationship with Halifax or Bank of Scotland: Moneyback will play an important role in meeting this target.
How the Account Works
Customers who credit their account with £1000+ a month, an amount significantly less than the average UK net monthly earnings of £1,404, will be eligible to apply for Moneyback.
For qualifying Visa Debit transactions up to a total of £10,000 each year, customers will receive 1% cashback and 0.1% thereafter. At the end of each calendar year, the cashback earned will automatically be paid to the relevant account.
All purchases by debit card of goods and services will qualify for the 1% cashback. Cash advances, bill payments and foreign money/travellers cheque orders will not qualify.
A dedicated switching team at the Halifax will manage the smooth transfer of accounts for new customers. The team will transfer all the direct debits and standing orders on the customer's behalf. The Moneyback account will be available to existing eligible Halifax customers, unlike a number of recent current account deals offered by some competitors.
Andy Hornby, CEO, HBOS Retail, said:
"Moneyback is a genuine first in the UK banking market. The Moneyback account is a simple, value for money product that we know will appeal to the many UK consumers fed up with the poor deal they get from the Big Four banks.
Value for money is here to stay and the Big Four will just have to get used to that uncomfortable reality. We aim to make life even harder for them next year when we back the launch of Moneyback with a new high profile advertising campaign."
Peter Jackson, Head of Banking at the Halifax, said:
"Moneyback opens up a new front in the battle for UK current accounts. Up until now, loyal customers, who frequently pay by debit card have been ignored by the major banks. Not any more.
Those customers who are disloyal to the Big Four and join the Halifax will get a much better deal. It is as straightforward as that."
Ends.
EDITOR'S NOTES
1. Banking Strategy
Halifax, and then Bank of Scotland, launched a market leading, high interest bearing current account in 2001. Since then, the HBOS market share has grown from 9% to 14%.
The success of the account, and the offer of a hassle-free switcher service, including an interest free overdraft, has seen HBOS regularly take 25% of the new to banking and switchers market.
More/….
2. Developing the banking market.
Twenty-five years ago, only 38% of the population had current accounts and a third of all adults had no account of any type. Now 93% of all adults have an account of some sort. (Source: BBA).
Segmentation is now the key to developing the market further. Halifax and Bank of Scotland have lead the market in delivering banking products that meet customers' specific needs. Having addressed the "high interest" segment, we have now opened a new customer segment: "transactors". For the first time, loyal customers will be rewarded directly for conducting their day-to-day business through one account.
3. Debit Cards in the UK
The first Debit Card was launched in the UK in 1987. Since then, the number of Debit Card transactions has risen to over 3.4 billion annually. Debit Cards represent 65% of all plastic purchases worth at total of £130.5 billion in 2003. (Source APACS)
4. Earnings and Household Expenditure
Halifax calculates that the average annual net income in the UK currently stands at £16,852, or £1,404 per month. In addition, approximately 80% of households have a net monthly income of more than £1,000.
A household of two adults and two children spends, on average, £16,993 on food, drink, clothes, holidays, transport and entertainment annually. On average, single households spend approximately £8,000. (Source: Household Expenditure Survey)
The Halifax has today announced it will be launching cashback of 1% on all spending up to £10,000 on its new Moneyback current account.
This is the first time we've ever seen cashback on a debit card (i.e, a normal bank account card). The account which launches in February 2005 will pay 0.5% interest in credit.
This is clever marketing, and not a particularly bad deal, but it is beatable.
Current Account
First of all the interest is poor (not compared to the big four banks but compared to the best on the market). Alliance & Leicester's current account pays 5.5% interest. Both require you to pay in a salary of £1,000 per month Best current account article (includes contact details)
Cashback
While 1% is good amount, especially so for those who only spending a few thousand a year (as then it competes well with credit cards), the cashback is only earnable up to £10,000 spending. The Amex Platinum card pays up to 2% cashback and there are other cards paying 1% Best cashback card (includes contact details)
Best Practice
Set up a direct debit from Alliance & Leicester to pay off the Amex Plat in full and you
a. earn cashback at a possibly higher rate
b. are not charged interest or annual fee by Amex
c. Earn interest from A&L at a much higher rate.
Plus as the credit card cost doesn't hit your account for 50 days, whereas the debit card hits immediately, you also earn interest on the money spent.
Is there anytime Halifax is good?
It definitely wins on convenience. In that case it isn't a bad option and can do you pretty well.
Best cashback card
Best current account article
WARNING: Halifax Launch Press Release:
The following is Halifax's view on this. Take this with a MASSIVE pinch of salt as it's a press release designed to sell the product. This is not my view.
A MAJOR NEW ATTACK ON THE BIG FOUR
The Halifax is stepping up its attack on the Big Four banks by launching the first ever current account in the UK paying cashback on debit card purchases. More major banking initiatives will follow in the New Year.
The new product, called the Moneyback current account, offers 1% cashback on debit card purchases up to a total of £10,000 automatically payable tax-free once a year to the account holder. Halifax calculates that cashback potentially worth approximately £100 a year is available to the average UK household.
A First in UK Banking
Bank Cashback Credit Interest Rate Authorised Overdraft Rate
Halifax 1% on total purchases
up to £10,000 0.50% 13.9%
Barclays Not Available 0.10% 15.6%
Lloyds/TSB Not Available 0.10% 18.2%
RBS/Nat West Not Available 0.10% 13.9%
HSBC Not Available 0.10% 14.8%
Source: Moneyfacts, December 2005. The Halifax rates and cashback apply to accounts funded with £1,000+ per month. The Big Four rates refer to their standard current accounts where the balance is up to £100,000.
Cash Is No Longer King
Launching in February 2005, Moneyback is in tune with the premier position that debit cards occupy in the UK consumer's wallet. Debit cards now account for 65% of all card purchases and more than eight in ten adults have one. This year, plastic should overtake cash payments with the total value of card transactions expected to exceed £269 billion. (Source: APACS)
More/….
The UK consumer is ready for change, especially the 27 million current account holders with the Big Four. NOP World research, conducted on the Halifax's behalf, found that 71% of UK adults would find a current account offering cashback an attractive proposition.
The Halifax Strategy
Halifax has led the way in UK banking by offering 30 or 40 times more credit interest than the Big Four. This strategy is paying dividends. Halifax and Bank of Scotland increased their combined current account market share from 9% to 14% in just three years, a significant move in a mature market.
With the launch of Moneyback, Halifax opens up a new front by targetting the millions of frequent debit card transactors who bank with the Big Four. According to the Household Expenditure Survey, the average UK household of 2 adults and 2 children spends over £16,000 a year on everyday items and treats like food, clothing and holidays. All of these items would earn cashback if paid for with a Moneyback debit card (see Editor's Notes).
Halifax and Bank of Scotland are committed to increasing their benchmark market share in current accounts to the upper end of the published 15% - 20% range. The bank aims to do so by doubling the number of current account customers who have their main banking relationship with Halifax or Bank of Scotland: Moneyback will play an important role in meeting this target.
How the Account Works
Customers who credit their account with £1000+ a month, an amount significantly less than the average UK net monthly earnings of £1,404, will be eligible to apply for Moneyback.
For qualifying Visa Debit transactions up to a total of £10,000 each year, customers will receive 1% cashback and 0.1% thereafter. At the end of each calendar year, the cashback earned will automatically be paid to the relevant account.
All purchases by debit card of goods and services will qualify for the 1% cashback. Cash advances, bill payments and foreign money/travellers cheque orders will not qualify.
A dedicated switching team at the Halifax will manage the smooth transfer of accounts for new customers. The team will transfer all the direct debits and standing orders on the customer's behalf. The Moneyback account will be available to existing eligible Halifax customers, unlike a number of recent current account deals offered by some competitors.
Andy Hornby, CEO, HBOS Retail, said:
"Moneyback is a genuine first in the UK banking market. The Moneyback account is a simple, value for money product that we know will appeal to the many UK consumers fed up with the poor deal they get from the Big Four banks.
Value for money is here to stay and the Big Four will just have to get used to that uncomfortable reality. We aim to make life even harder for them next year when we back the launch of Moneyback with a new high profile advertising campaign."
Peter Jackson, Head of Banking at the Halifax, said:
"Moneyback opens up a new front in the battle for UK current accounts. Up until now, loyal customers, who frequently pay by debit card have been ignored by the major banks. Not any more.
Those customers who are disloyal to the Big Four and join the Halifax will get a much better deal. It is as straightforward as that."
Ends.
EDITOR'S NOTES
1. Banking Strategy
Halifax, and then Bank of Scotland, launched a market leading, high interest bearing current account in 2001. Since then, the HBOS market share has grown from 9% to 14%.
The success of the account, and the offer of a hassle-free switcher service, including an interest free overdraft, has seen HBOS regularly take 25% of the new to banking and switchers market.
More/….
2. Developing the banking market.
Twenty-five years ago, only 38% of the population had current accounts and a third of all adults had no account of any type. Now 93% of all adults have an account of some sort. (Source: BBA).
Segmentation is now the key to developing the market further. Halifax and Bank of Scotland have lead the market in delivering banking products that meet customers' specific needs. Having addressed the "high interest" segment, we have now opened a new customer segment: "transactors". For the first time, loyal customers will be rewarded directly for conducting their day-to-day business through one account.
3. Debit Cards in the UK
The first Debit Card was launched in the UK in 1987. Since then, the number of Debit Card transactions has risen to over 3.4 billion annually. Debit Cards represent 65% of all plastic purchases worth at total of £130.5 billion in 2003. (Source APACS)
4. Earnings and Household Expenditure
Halifax calculates that the average annual net income in the UK currently stands at £16,852, or £1,404 per month. In addition, approximately 80% of households have a net monthly income of more than £1,000.
A household of two adults and two children spends, on average, £16,993 on food, drink, clothes, holidays, transport and entertainment annually. On average, single households spend approximately £8,000. (Source: Household Expenditure Survey)
Martin Lewis, Money Saving Expert.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.
Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
0
Comments
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Hmmm, would debit card payments to credit cards count ?
Would be great IF they did - Get an extra 1% when you pay off the balance on a 0% by debit card payment, or th regular monthly payments.
Theres probably a clause in the terms and conditions excluding credit cards.... otherwise its an easy FREE £100.0 -
Strange... I always thought the commission Banks made on payments made by debit cards is abysmally lower than on credit cards... If so, is this not a loss-leader for Hfx? Clearly, as the press release itself says, it is to lure account holders from the big four onto Hfx, but it might be prove very costly - much more than anything seen in the freebies that Banks have given till date..
Probably reinforces the fact that Current accounts offer the best POS opportunities for cross-selling among all Banking products...It's always the grass that suffers, irrespective of whether the elephants are fighting or making love !!!0 -
Having just paid £8000 by debit card to clear off some Bank of Scotland "One" card balances, that was also my thought. I eagerly await the fine print.Hmmm, would debit card payments to credit cards count ?
Perhaps this will force other banks to do the same - isn't competition great?0 -
Strange... I always thought the commission Banks made on payments made by debit cards is abysmally lower than on credit cards... If so, is this not a loss-leader for Hfx? Clearly, as the press release itself says, it is to lure account holders from the big four onto Hfx, but it might be prove very costly - much more than anything seen in the freebies that Banks have given till date..
Probably reinforces the fact that Current accounts offer the best POS opportunities for cross-selling among all Banking products...
Before people start wiping a tear from their eyes for HBOS
Remember this company is awash in cash ! They just MADE a £4.6billion profit !, thats enough to finance 46 million moneyback current account offers PER YEAR !!!
£100 per new current account is NOTHING ! a drop in the ocean.... of what is the success of HBOS.
They are effectively using their massive profits to put a squeeze on their competitors and this is one way of doing so, expect more to follow..........0 -
Strange... I always thought the commission Banks made on payments made by debit cards is abysmally lower than on credit cards... If so, is this not a loss-leader for Hfx? Clearly, as the press release itself says, it is to lure account holders from the big four onto Hfx, but it might be prove very costly - much more than anything seen in the freebies that Banks have given till date...
Yes, typically the charge obtained for debit card transactions might be something like 20p per transaction so it's not going to cover the cost of the cashback. BUT as Martin pointed out, the credit interest on this Halifax account is only 0.5% as opposed to the 3%+ offered by other providers (including Halifax's standard current a/c) so the cashback is just clever marketing.
Say you had a £2000 balance over a year in a current account with a 4% interest rate, you would earn £80 in interest. With the new Halifax account you would only earn £10 interest, then to make £70 cashback you would have to spend £7000 on your debit card.
Now obviously if you have a low balance but manage to spend a lot on the card somehow (say you get a large salary paid in but you spend most of it on a debit card right away) you could earn much more cashback. But I reckon on average this won't cost Halifax much more than having a decent credit interest rate would, and of course it's a good way to attract customers.
As for paying off a CC with a debit card, it's an interesting idea (how about paying large bills on a cashback CC then getting more cashback paying off the CC with your debit card! 8)). I'm not sure how they would actually prevent you doing this - surely a CC payment just shows the same as any other debit card transaction? (last time I paid a CC bill by debit card it was my Halifax CC online and they used WorldPay to collect the payment!)student100 hasn't been a student since 2007...0 -
I work for HBOS and although the press release is out this product doesn't actually launch until Feb next year...0
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All purchases by debit card of goods and services will qualify for the 1% cashback. Cash advances, bill payments and foreign money/travellers cheque orders will not qualify.)
Yep, it can't be used to cream cashback simply by moving money around...
And with the average interest free period with credit card purchases worth around 0.4% [there is NO interest free period with debit card purchases] it's starting to look like a bit of 'confusion marketing' IMO
HALIFAX! wake up and take notice... your products are just plain 'average' ... what one would expect from a former building society?
Does anyone know if 'large' purchases over £100 - the sort covered by Section 75 of the Consumer Credit Act when using a credit card - are similarly covered by this 'debit' card? If they are not that is another good reason for Halifax to have a rethink about what they are conning [opps 'offering'] consumers by this account.....under construction.... COVID is a [discontinued] scam0 -
Milarky - Section 75 plain and simple does not cover debit cards. Can't think of any reason why it would cover this one
Martin Lewis, Money Saving Expert.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 0000 -
Thanks for that Martin. Although some banks [maybe not Halifax] do chose to offer equivalent benefits on the use of their own debit cards AFAIK.
As to which transactions would qualify [or not] for cashback they say 'bill payments' don't. Now one thing that you definitely can use a credit card for cashback is paying your Council Tax [available in some areas only]. The transaction counts as a 'purchase' because it goes through a merchant [RBS - I think]. So far so good. You click on a logo such as 'Visa' to proceed. So such a payment made would still pass through the same Visa 'clearing' payments system and be presented to Halifax in this case. But I assume that it is still up to Halifax whether or not to award cashback at this stage because it comes under the 'rewards scheme' rules - which are devised by Halifax rather than Visa......under construction.... COVID is a [discontinued] scam0 -
Does anyone know if 'large' purchases over £100 - the sort covered by Section 75 of the Consumer Credit Act when using a credit card - are similarly covered by this 'debit' card? If they are not that is another good reason for Halifax to have a rethink about what they are conning [opps 'offering'] consumers by this account
I'm sure there was something on Working Lunch last Friday regarding this, apparently the protection offered by Visa applies to to Visa Debit also. I'm not sure of the details as I only heard part of it.
If you have an existing Halifax Switch card you can get this replaced with a Visa Debit card.As to which transactions would qualify [or not] for cashback they say 'bill payments' don't.
I'm sure that by this they mean bill payments directly from bank account to bank account (i.e funds transfers). I'm pretty certain all transactions processed using the debit card are included (that includes paying bills by debit card)
I work for Halifax so I will try and get some clarification regarding this tomorrow.0
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