Searching for the right credit card program

Credit cards can play an important role in your financial portfolio. There are many credit card programs out there willing to give you free stuff for using their cards. Using a credit card more than a debit card often makes sense these days given that a lot of chequing accounts have limited use amounts for debit transactions to avoid fees.

If you carry a balance on your credit card then the first priority for picking a card should be ones offering low interest rates. The potential points you could earn are not worth the interest fees you will be charged. I will not be addressing low interest fee cards in this post รขโ‚ฌ” only ones with a points system (usually meaning high interest rates).

When picking a credit card points system you need to cost out the reward you will receive in order to compare. If there is a fee associated with the card in order to receive the points program, in my experience, this never equals out to a financial plus.

I want to share a good points program card I have found in my research. It’s the CIBC Shoppers Optimum Visa card. You receive 3,000 bonus points for signing up and then receive 5 points for every dollar you spend. Interest rate is 19.5%. You also receive 50% more points when you use your card at Shoppers Drug Mart with your Optimum card. If you spend $15,000 a year on your credit card (which is the amount I was using to compare cards), you will receive 75,000 Shoppers points, this equals their highest reward level of $150. This reward ‘cash’ can be used to buy anything at Shoppers Drug Mart. You can likely earn more than just the 75,000 points for $15,000 because of bonus points and extra redeeming programs through Shoppers (for example at certain times of the year for the 75,000 points you actually receive a reward of $200). It gives you the most value to reach their highest reward level before cashing in, although technically you can start redeeming for ‘cash’ at 3,500 points (value of $5). See the regular points table here.

Points earned at Shoppers are good value for money for two reasons. First, items available for purchase at Shoppers Drug Mart are extremely varied (you have a lot of choice on what to buy). Secondly, although you can choose to buy ‘fun’ items you can also use it to buy necessary items that would already be in your budget, thus saving money (ex: toothpaste, shampoo, makeup etc).

Credit card point systems are most associated with travel rewards. However it can be to your advantage to search for cards giving you rewards at retail stores you actually use. At a $15,000 level of spending travel rewards points will just not offer you yearly value. It would likely take you 2 to 3 years to save up points to receive a mid sized trip. So although over the long run, you might gain more ‘cash’ value from these cards, the long wait before you can redeem does not always make it. If you have a higher level of spending you can put on your credit card, these travel programs may offer you more value. If you want to pick a travel rewards program you should pick one tied to an existing travel rewards entity (not a private one) – for example Aeroplan or Airmiles – this is because you will be able to earn points faster since you can earn in other circumstances such as when you take a flight that is not bought on points.

Some locations to start your research are CIBC (they offer a fairly large collection of cards with points programs) – and Citizens Bank (who offer some innovative points programs tied to charities).

The bottom line when searching out a credit card points system is to estimate how much you can put on a card a year, how many points that will earn you, and what the ‘cash’ value of those points are. This will help you make an informed decision and make your money do some work for you.

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11 thoughts on “Searching for the right credit card program

  1. Tiffany says:

    Nice post! Noticed you didn’t mention citifinancial’s enrich card.. it offers a full 1% cash back on all purchases and it’s not tiered (unlike, for example, cibc’s dividend card which only pays you 1% after you’ve spent x amount of dollars). The CIBC shoppers card example is basically earning you 1% as well ($150 for $15,000 spent). I have a citi card and I really love it beacuse it feels like I’m being actually getting cash back (they mail out a cheque to you in february) and I like that I don’t need to spend it on anything (e.g., trading in points for rewards, travelling, etc).. I can pretty much just cash it at my bank, hahaha Yay! ๐Ÿ™‚

  2. Leah Tse says:

    Great article Julia!

    I use the Starbucks Duetto Visa offered by RBC. For me this is a great option as I love Starbucks but can’t really afford to have it all the time; therefore the points I accumulate provides me with a nice “reward” from time to time.

    The Starbucks Duetto Visa acts as a Visa and as a starbucks card (kind of like a gift card you purchase from their store). For any purchases you make using the Visa, you get 1% back in Starbucks dollars. In addition, you can receive 3% when you reload your starbucks card. In addition, there is a promotion right now where you will receive $25 to start if you sign up for the card before October 31, 2007; otherwise the initial bonus is $10.

    Also note, about 4 times a year, they give me anywhere from $2.50 to $4 as a loyalty reward. In addition, when new drinks or products come out at Starbucks, they will send a coupon with your bill so you can try it out!

  3. Julia says:

    Thanks Tiffany and Leah for highlighting some good cards out there!

    The dividend cards usually aren’t good deals because they only offer .25% back and are on a graudated program. But a straight 1% back is really worth it!

    Starbucks card sounds like good value as well – especially if it is something that you want to enjoy but don’t have in your budget.

  4. Maxime says:

    I’ve been wirh Citi card Enrich for 1 year now, the same card as you Tiffany.

    I never carry a balance and I’M a student so I only spend around 11,000$ per year and I have no car and don’t spend any dollard at the grocey or drug store. It’s all for sport competion subscription and scolarity fees and school textbooks with are really expansive in med school.

    I’ve checked the Ultramar cash back card with the initial 0.25% on the first 2000
    0.50% on the next 3000 (3000 to 6000)
    1.25% over 6000

    or the Costco American express
    which gets to 1.5% after you reach a certain minimum
    and they’re all for annual spending of over 15000$ for the Ultramar and 12000$ for the Costco compared to the Enrich. Moreover, I have no Costco membership card which is required to have the card.

    All this said, I’ll stick with my Enrich becasue i’m satisfied with it and their customer service and it’s the card that respond to my needs.

  5. Peter says:

    Does anybody have a link to an application form or for more information about the Enrich card? My quick Google search turns up empty. In fact, Google sends me to this post ๐Ÿ˜›

    I get 1% cash back from MBNA, but that’s a bit of a long story — I had an eBay credit card that got discontinued, and they switched the program over to the 1% card. I can’t refer friends and family to the MBNA card since it was a bit of a special case.

  6. dewy says:

    CIBC SHoppers is definitely the best!!! I have it for many years and enjoy their generous promotions (75000 points to get $200 stuff, 20 x points events etc.) many times as a loyal customer of Shoppers drug mart.

  7. Chris says:

    “Points earned at Shoppers are good value for money for two reasons”??? You have got to be kidding.

    At a recent trip to Shoppers as an example, Zest Body Wash was selling for $7.99. I stocked up and bought a couple of bottles last night at the Great Canadian Superstore on sale for $3.90.

    Where is the good value in paying $4.00 nore for a product that was selling elsewhere for less than $4.00?

    You would be better off planning your purchases more carefully by price. If you can save $4.00 on a single item, that can add up over a year to more than people seem to worry about in service charges of where you bank.

    I am using a Royal Bank VISA card that gives me points that I then use in February to deposit into my RRSP giving me an income tax break as well. I can also transfer my ESSO Extra points to my RBC card so I am double dipping when getting gas.

  8. Julia says:

    Chris: you raise a key point, earning rewards at a store you don’t shop at is not a good deal. In finding a rewards program you have to find a program that would provide YOU with good value. However, the argument you make about why the Shoppers program is not good value, is the same argument that can be made of any retail reward programs – you are locked into redeeming rewards at one location, that may not give you the best value on every item. For example, consider if you have the Starbucks Visa, clearly buying coffee there is much pricier than many other retailers, however if you enjoy Starbucks coffee and would buy it anyway, then it’s good value. With travel rewards, you would also be locked into taking flights with one carrier, which may in fact not be the cheapest option.

    Personally I found redeeming points at Shoppers a good deal, because most of the products I purchased could not be found other places at a cheaper price (cosmetics, skin care etc). The main reason the Shoppers Optimum offered good value however, was because of the multiplier/compounding effect of earning points, there are often times you can earn 10x/20x points, or bonus points, therefore meaning you are able to earn even more points (and thus redeem for more) without having to earn every point through a equivalent dollar spent.

    Update to article: I have just received notice the Shoppers optimum Card is being discontinued by CIBC as of August 2008. I suspect this is further proof it was a good card – they were probably loosing too much money because it was such a good deal.

    I am now again searching for a new card. I am leaning towards a dividend card, similar to the Citi one mentioned above. I recently saw an add for a “Citi CashReturns” card ( – this seems ideal, no fee, straight 1% return, no limit, AND they pay out everytime you reach $50 instead of having to wait for a full year, AND you get a bonus 20% back on your first 12 months of purchases. However, this card only is available in the states. This very much irks me because I saw the ad in a ‘Canadian’ Magazine. Please do not advertise to me products I can not purchase!! It’s a shame Citi Canada does not have the same card.

  9. Julia says:

    ps. does anyone know what the tax implication is of a dividend card – do you pay tax on the money you get back?

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