# Credit Cards for Saving



## Smac20 (Sep 7, 2009)

A great way to save some cash is to get a dividend dollar credit card. As long as you pay off the full balance every month is like free money. I just signed up for the new scotia momentum card: 2% cash back on groceries, gas, etc; and 1% on everything else.


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## George (Apr 3, 2009)

Smac20 said:


> A great way to save some cash is to get a dividend dollar credit card. As long as you pay off the full balance every month is like free money. I just signed up for the new scotia momentum card: 2% cash back on groceries, gas, etc; and 1% on everything else.


The problem is, that cash has to come from somewhere. In the case of most "rewards" cards, it comes from the retailers where you use the card, who have to pay a larger percentage to the credit card companies in transaction fees.

I've never seen credit card "rewards" (of any type) as anything more than a gimmick designed to get people to spend more money. I prefer to set up incentives that ensure I spend LESS money and seek out better deals. As a rule, if I use cash (or debit), I think more about purchases and am more careful to ensure I'm getting good value. On the whole I think I get more "free money" that way than if I signed up for a cash-back credit card.

On top of that, if you use cash for purchases you can often get a discount straight away if you ask for it - far better than getting a "reward" at the end of the month or year.


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## ghostryder (Apr 5, 2009)

George said:


> The problem is, that cash has to come from somewhere. In the case of most "rewards" cards, it comes from the retailers where you use the card, who have to pay a larger percentage to the credit card companies in transaction fees.


I don't care. It's an expense to the retailer just like any other. If they don't want to pay it they can simply stop accepting credit cards. But they will have to balance the "savings" of not having that expense anymore against the loss in revenue from people who will simply not shop there because they don't accept CC's.




George said:


> I've never seen credit card "rewards" (of any type) as anything more than a gimmick designed to get people to spend more money. I prefer to set up incentives that ensure I spend LESS money and seek out better deals. As a rule, if I use cash (or debit), I think more about purchases and am more careful to ensure I'm getting good value. On the whole I think I get more "free money" that way than if I signed up for a cash-back credit card.


I don't care what the CC company's motives for offering rewards are. I am simply going to take full advantage of them whenever I can. I never even think of the 1% when I am considering a purchase. I simply use my CC for things that I was going to buy anyway. The 1% is just a bonus.

As a personal quirk, I actually "think" more about a purchase when I am using my CC. Always nagging me in the back of my mind is "do I really want to see this purchase on my bill at the end of the month, and will I regret it if I do". If I have cash in my pocket it is gone in no time. For example, if I go to put gas in the car I use my CC and pay at the pump. If I have cash I am far more likely to pick up a newspaper, auto trader or some other impulse item if I go in to pay. When I pay at the pump, all I get is the gas I needed.



George said:


> On top of that, if you use cash for purchases you can often get a discount straight away if you ask for it - far better than getting a "reward" at the end of the month or year.


If I can get a better deal by paying cash, then I will pay cash. But if the price is the same no matter the method of payment, I might as well get my 1%.


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## OhGreatGuru (May 24, 2009)

You may not care, but I do, because I'm paying for it. Have a look at this article http://www.ottawacitizen.com/technology/Stores+paying+price+credit+card/1827388/story.html

Those paying cash are subsidizing all credit card users: and those using non-rewards cards are subsidizing those using rewards cards. The government should do what Australia did - mandate maximimum 1% fees.


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## brad (May 22, 2009)

To be honest, I've only once or twice been told by a merchant that I could get a discount if I paid in cash. And I don't think the discount amounted to 1 percent, which is what I get with my rewards card.

Furthermore, most of my credit card purchases are online, where credit card is the only option for payment (some allow you to buy with a debit card, but I'm not going to risk that...I've had my credit card number stolen twice!). 

My general approach to purchases is to use a debit card for almost everything I buy locally unless I don't have enough cash in my account. The exception is gasoline, where again I prefer to pay by credit card rather than debit card due to security concerns. While I realize I'd get more back if I used my rewards card for all purchases, I find I'm better at keeping my finances under control with a debit card.

I use my rewards Visa card for gasoline and everything I buy online, which usually ends up being the big-ticket items like airline tickets, hotel bills, computers and other electronics, etc. With all of those higher-price purchases combined over the course of the year I am likely to max out my annual rebate limit, so I wouldn't gain anything by using the rewards card for my local purchases.


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## SavingMaster (Aug 1, 2009)

I doubt I could have responded better ghostryder, nicely done.

And to add my vote, I have never, in my entire credit card using life, been offered a deal if I paid in cash over credit.


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## George (Apr 3, 2009)

SavingMaster said:


> I doubt I could have responded better ghostryder, nicely done.
> 
> And to add my vote, I have never, in my entire credit card using life, been offered a deal if I paid in cash over credit.


I don't get offered discounts at random either. The job of a seller is to maximize his/her profit, so they tend to not offer discounts "just because", nor do they permit their staff to do so.

Getting a cash discount usually involves actually *asking for it.* The deals are out there, but you'll never know about them unless you ask, and they tend to be a lot sweeter on items with higher markups or when the store gives its employees a little more latitude on pricing (furniture and cars are two examples that come to mind).


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## Shayne (Apr 3, 2009)

I use my rewards card exclusively for all my purchases and get 1% - 3% cash back at the end of the year depending on the type of purchase I am making.

I can't remember the last time I actually took cash out of an ATM. I don't see a problem with this at all. The extra expense to the retailer is the cost of doing business.

I pay my phone, internet, cable and cell with my cc. I wish I could pay my utilities and insurance with my cc and then I would be set!


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## Elbyron (Apr 3, 2009)

Smac20, 
It's great that you discovered cash-back credit cards (welcome to the world of those who are subsidized by the foolish cash-paying people). It's true that merchants pay higher fees when you use a platinum card, but they've already accounted for that in their expenses. Even if a miracle occurred and every consumer stopped using platinum cards, it's not like the businesses would lower their prices accordingly - they'd just keep the extra profits. Perhaps if the concept of platinum cards had never appeared (or if higher merchant fees were never associated with them) then prices *might* be lower than they are today, but there's really nothing that any consumer can do about it now. It doesn't matter how many people boycott these cards, it's not going to stop credit card companies from charging higher fees - only the government can do that.
So don't feel bad about using a card that benefits you, because you aren't really hurting anybody, even the cash-paying people. 

By the way, the Scotia Momentum card is not as good as the no-fee MBNA Smart Cash card which gives 3% on gas & groceries. There's a $600/month limit on the 3%, whereas Momentum has a much higher $25,000/year limit on the 2%. But, even if you spent $1000 per month on gas & groceries, the MBNA Smart Cash card still would give you $63 more per year (accounting for Momentum's annual fee of $39). Read more about it in this post by FrugalTrader. And if you spend over $36,000 in a year, the best cash-back card is the Capital One Cash Back Plus Platinum mastercard.


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## Retired at 31 (Apr 20, 2009)

I put everything I can through td's gold elite (1% - no fee, no tiers, no cap) including a whack of business stuff. Last couple years I've averaged about 2500 back per year. Not bad for just swiping the plastic.

I'll still attempt to haggle a better cash deal, but it's typically small retailers that'll do this. Try it at your grocery store and let me know how it works out for you! 

Merchant fees are creeping up for business owners - they're tacking on fees for the premium cards and for non-Canadian cards, etc. etc. There's a cost associated with cash though that consumers don't always realize - take a look at business account fees and you'll see the banks charge fees based on the amount of cash deposited.


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## Berubeland (Sep 6, 2009)

A saving credit card sounds like an oxymoron to me. 

After having made horrible choices with my credit cards due to my personal circumstances at the time I will say BEWARE !!! 

Too many things can happen to you in life to casually use these cards. Like for instance say you came home and your husband of 7 years moved out while you were at work into a new home with his new girlfriend. And even thought he kept the business the credit cards for that business were in your name and you ended up with minimum payments totaling more than your salary. Say you were grateful the phone got cut off because that meant you would not get collection calls. Boy that would really suck !!!! I'll bet you would never feel the same way about credit cards even the ones that pay you cash back.


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## ghostryder (Apr 5, 2009)

George said:


> Getting a cash discount usually involves actually *asking for it.* The deals are out there, but you'll never know about them unless you ask, and they tend to be a lot sweeter on items with higher markups or when the store gives its employees a little more latitude on pricing (furniture and cars are two examples that come to mind).


That may be true, but as I indicated, I only use my card for general day to day spending, and if I can get a better deal with cash I will take it. If not, I might as well get my 1%.

I keep asking for a cash discount from the cashier at Sobey's but I have been unsuccessful so far.


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## The Financial Blogger (Apr 4, 2009)

In one of my latest post, I actually suggest to use a credit card for regular expenses such as grocery, gas, internet, cable, etc. You have to pay for them anyway, why not getting a few bucks back from your purchase?

here's the article:
Get a Day-to-Day Credit Card and Make Money!

any thoughts?


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## brad (May 22, 2009)

The Financial Blogger said:


> In one of my latest post, I actually suggest to use a credit card for regular expenses such as grocery, gas, internet, cable, etc. You have to pay for them anyway, why not getting a few bucks back from your purchase?


It makes sense as long as you are able to manage your credit card use responsibly. When you're putting off actual payment into the future, it's easy to overextend yourself and end up in a situation where you can't pay off your bill in full. And if you do that a few times per year, the interest you pay is likely to zero out (or worse) any of the rebate rewards you've earned.

So the trick is to treat your credit card as if it were a debit card and keep a tight rein on credit card spending so you know you can always pay off your bill in full every month. Otherwise you'll be losing money (even with a rebate rewards card), not making it.


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## Phalene (Apr 3, 2009)

I use my PC Mastercard for most purchases, which 'gives' me 1% back to spend in Loblaws or at Superstore. My husband's card has a 1% cashback, but it also has a fee - I keep trying to convince him to switch to a no fee card, but he's very reluctant to do so (mostly due to lazyness, I think!) Hopefully at some point I will be able to convince him to make the change.


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## Soranda (Sep 20, 2009)

Does anyone know how cash-back stacks up against other reward programs? Most banks will let you buy CDs/GICs/etc. with your points, so it's possible that the point return converted to financial products could be worth more than the cash-back return of a similar card.


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## Elbyron (Apr 3, 2009)

There are lots of credit cards that offer points to be redeemed for rewards. I haven't heard of redeeming for GICs, but I doubt those would give you a great reward. Usually the best ones are for travelling, like the MBNA SPG mastercard that you can redeem for stays in Starwood hotels, getting 3% or more back (card is now discontinued). For less specific travel, Capital One offers a pair of "miles" cards that you can redeem on ANY travel expenses after you've charged them to your card, so there's no blackouts or restrictions like you'd get with Aeroplan or Air Miles point systems. The no-fee card gives you 1% back (no tiers, just solid 1%) and the $99/yr card gives you 2% back (also no tiers). The extra percentage pays for the annual fee if you spend over $10,000/yr on it. 
In terms of cash-back vs rewards, I find that the best reward cards are better than the best cash-back cards. Taking the annual fee into account, the Capital One Miles Plus card earns me $901 worth of travel if I spend $50,000 on it. The MBNA Smart Cash card would only earn a max of $644! I challenge anyone to find a cash-back card that can even earn $800 on the same amount (adjusted for fees).


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## Shayne (Apr 3, 2009)

Elbyron said:


> There are lots of credit cards that offer points to be redeemed for rewards. I haven't heard of redeeming for GICs, but I doubt those would give you a great reward. Usually the best ones are for travelling, like the MBNA SPG mastercard that you can redeem for stays in Starwood hotels, getting 3% or more back (card is now discontinued). For less specific travel, Capital One offers a pair of "miles" cards that you can redeem on ANY travel expenses after you've charged them to your card, so there's no blackouts or restrictions like you'd get with Aeroplan or Air Miles point systems. The no-fee card gives you 1% back (no tiers, just solid 1%) and the $99/yr card gives you 2% back (also no tiers). The extra percentage pays for the annual fee if you spend over $10,000/yr on it.
> In terms of cash-back vs rewards, I find that the best reward cards are better than the best cash-back cards. Taking the annual fee into account, the Capital One Miles Plus card earns me $901 worth of travel if I spend $50,000 on it. The MBNA Smart Cash card would only earn a max of $644! I challenge anyone to find a cash-back card that can even earn $800 on the same amount (adjusted for fees).


Depending on where you are doing your spending this card trumps your card!

After fees it could max out at $1380 cash back per year.

http://www.atb.com/Dev/MasterCard/master_platinum.asp


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## Sampson (Apr 3, 2009)

Elbyron said:


> There are lots of credit cards that offer points to be redeemed for rewards. I haven't heard of redeeming for GICs


I know VanCity has a credit card which has a 'cash-back' that can be used for RRSP contributions - around 0.5% I think.


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## faq (Apr 29, 2009)

As far as no-fee card goes, MBNA 3% cashback for groceries/gas + 2% tiered(6500 to breakeven 1% card) Amex gold are the best for now ...


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## Marco Nullamento (Sep 29, 2009)

Using a credit card in this way as a saving tool is very tricky. I think most people do not have enough discipline and will end up accumulating a (big) credit card debt.


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## ghostryder (Apr 5, 2009)

Marco Nullamento said:


> Using a credit card in this way as a saving tool is very tricky. I think most people do not have enough discipline and will end up accumulating a (big) credit card debt.


That's ok. I don't mind. They can pay their big fat interest payments on their debt while I collect my credit card dividend (and my bank stock dividends too).


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## Elbyron (Apr 3, 2009)

Shayne said:


> Depending on where you are doing your spending this card trumps your card!
> 
> After fees it could max out at $1380 cash back per year.
> 
> http://www.atb.com/Dev/MasterCard/master_platinum.asp


To get the $1380 net reward, the full $50,000 would have to be spent on gas, groceries, and hardware stores! Even if half of my expenses were at these stores, the net reward would only be $880. Still short of the $901 worth of travel. But getting cash-back is certainly better than travel points.

It's strange that I've never heard of this ATB card before. Seems like a strong competitor for the MBNA Smart Cash card. The high annual fee of $120 can be negated by it having no limit on the 3% portion, provided you spend over $13200 per year on these types of expenses. And perhaps it doesn't come with all the hassles the MBNA card seems to be generating (or so I've heard).


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## Canadian CC (Oct 14, 2009)

I actually use my credit card for all purchases (starting with my $2 coffee! in the morning!).

At the end of the month, I pay my credit card statement in full. Since I have made a deal with myself where I have to pay it off completely each month, I never overspend.

It's not a gimmick created by credit card. If you car can go up to 200 km/hr, are you driving that fast every time you drive? Well, it's the same thing with your piece of plastic ;-)


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## simarbhalla (Oct 22, 2020)

Smac20 said:


> A great way to save some cash is to get a dividend dollar credit card. As long as you pay off the full balance every month is like free money. I just signed up for the new scotia momentum card: 2% cash back on groceries, gas, etc; and 1% on everything else.


In 2021, the best cashback credit card for savings is *Scotia Momentum Visa Infinite Card*.


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## MrBlackhill (Jun 10, 2020)

simarbhalla said:


> In 2021, the best cashback credit card for savings is *Scotia Momentum Visa Infinite Card*.


Yup. I signed with that card simply because it offers 4% cash back on groceries. I spend over $8,000 a year in groceries. That's $320 cash back right there.

Last year I got over $600 cash back.

It pays on November. Since the payment on November 2020, I'm already at $175 on my current cash back balance.


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