One size does not fit all Canadians when it comes to credit card reward choices. A recent RBC poll shows that one-third (33 per cent) of Canadian cardholders prefer cash back over any other type of incentive, including merchandise (27 per cent) and travel rewards (23 per cent).
“While travel and merchandise rewards remain popular, many Canadians want a straightforward reward card that gives them cash back on everyday purchases,” said Sean Amato-Gauci, vice-president, RBC Credit Cards.
RBC’s payment survey conducted by Ipsos Reid, found that more than half (58 per cent) of Canadians hold a credit card with some type of reward program. Nine-in-ten credit cardholders (88 per cent) say they pay for travel using their card and more than half (53 per cent) use it to pay for retail purchases. Fifty per cent indicate they use their credit card for dining, entertainment or gas purchases, while a third (34 per cent) use it to pay for drug store purchases.
The survey also found Canadian families spend on average $628 at the grocery store each month. The majority (53 per cent) use their debit card at the cash register, with the others split between using cash (21 per cent) and credit cards (26 per cent) to pay for groceries.
“Many cash back cards have complicated earn rates or thresholds that Canadians find confusing and misleading,” noted Amato-Gauci. “Our clients have told us they want a simple and straight forward cash back card, with no tiers to calculate, no clubs to join, or points to track.”
The RBC Cash Back card offers the following features:
– One per cent cash back on all purchases
– Five per cent cash back on grocery store purchases until December 31, 2010
– Purchase Security and Extended Warranty insurances
– Zero Liability fraud protection
The RBC Cash Back card tracks rewards on the cardholder’s monthly credit card statement and pays out the cash back in January each year. A cardholder who spends about $500 a month on groceries, and $500 on other monthly purchases using their RBC Cash Back card for the remainder of this year would earn over $200 by next January.
“The cash back you receive can add up quickly based on the day-to-day spending habits of an average Canadian family,” added Amato-Gauci.
Amato-Gauci provides the following tips for optimizing your credit card rewards:
Don’t spend more, spend smart – If you never carry a balance and always pay your bills on time, you can actually make your card work for you by using it frequently for all kinds of purchases and expenses. Many people rely on their credit cards for larger purchases but may not use it for everyday shopping instead of using cash. Groceries, gas, restaurant and clothing purchases add up quickly and may earn rewards at a higher rate than some other categories of spending. You can also use your card to pay monthly expenses such as utilities (hydro, cable, mobile phones) daycare, tuition, gym memberships and newspaper subscriptions, to bump up your rewards.
Put your monthly payment on autopilot – Choose a card that allows you to set up a monthly payment that automatically pays off your entire balance or the minimum payment. By using your credit card for everyday purchases and paying it off at the end of the month, you will earn cash back but not pay any interest.
Consider insurance benefits – A card feature that is often overlooked is purchase protection which insures against loss, theft or damage up to 90 days after purchase. Another valuable feature is an extension of the manufacturers’ warranty period which can provide additional protection for larger ticket items such as home electronics or appliances.
Double dip if possible – Certain retailers let you earn points for purchases in their own reward program or in other independent programs. If you are a member of these programs, you can present your program card to the retailer to earn the applicable points, while at the same time earning cash back rewards by using your credit card to pay for the purchase.
Look for rewards that offer convenience – With some reward programs, points expire so you need to remember to use the points or call the card issuer to request your rebate. Others send your rebate to you when you hit a certain threshold or credit your account automatically at the beginning of each year. Either way, it makes sense to use a card that gives rewards without any prompting from you.