The power of plastic points

credit-cards-in-wallet

If you’re like most people, you probably have a wallet full of colourful plastic cards that are taking up space and making it harder and harder for you to close the clasp!

If you look through them, you’ll likely discover that while some of these cards are useful credit and debit cards than a few are loyalty cards you just never use.

It’s understandable how anyone can end up with such a collection. Practically every retailer offers a loyalty point scheme. At the time, it can be hard to think of a good reason to refuse and with a little effort, the points we collect with plastic can be worth it … as the following tips show.

 

Be selective

 

Before saying yes to every loyalty point card which is put under your nose, think about how often you shop in a particular store. Is it really worth the effort of filling out the application form?

Think about where you would shop regularly even if you weren’t part of a loyalty scheme. Once you’ve identified these stores then take advantage of the schemes that they offer.

On the other hand, if you only shop somewhere once in a while then do yourself a favour and refuse a card. Owning it may make you more inclined to shop there, increasing your overall spend.

 

Pick credit cards carefully

 

Loyalty cards aren’t the only ones which offer points schemes. Many credit cards reward customers with attractive points which can be redeemed for a range of goods and services.

For Canadians, this is a huge attraction when selecting a credit card. According to a survey by American Express Canada, 89% of Canadians carry at least one credit card in their wallet with more than half (52%) carrying more than one. Of those who own credit cards, 68% claim rewards programs are important.

An Amex Credit Card is an example of a card which pays customers in points for spending. Again, take advantage of this type of scheme for planned or routine purchases like a new set of furniture or Christmas shopping.

It also makes sense to use a credit card for travel-related purchases such as flights and hotels. The accrued points can be used for future vacation expenses.

 

Control spending

 

A word of warning – when you know that every time you spend you are ‘earning’ money, there is the danger of developing a habit of spending more than you normally would.

In order to make a points system on a credit card or retail loyalty card really work for you, stick to what you buy routinely. Once you’ve gathered a useable number of points, decided carefully how to spend it so your efforts are not wasted.

 

Track your history

 

The best tips concerning card management involve looking at your past behaviour to identify patterns and understand your habits. By tracking your history you can not only establish what sort of cards attract the most of your attention but also how much they’re saving – or costing –  you overall.

To track your history you need to record each use of your card and how much it saves or what reward it offers. Compare this against the amount you spent at the time and work how much better off you are through your use of cards. If you find you don’t use them enough to warrant having them then clear some space in your wallet or purse by getting rid.

Understand all the rules

Loyalty cards generally fall into specific categories, offering set rewards for continued spending over a long period time. However, not all loyalty systems operate in exactly the same way so it’s important you understand all the rules for the different cards in your possession.

This means looking into when you can use them and what rewards you may be eligible to claim. Check to see whether the provider of your loyalty card is associated with any other brands or companies as sometimes you may be able to get rewards or benefits from these places too.

To make the most of your must first understand them so ensure you read all of the terms and conditions in full before making any agreements. This is a tip which you should apply to all other types of card – including your credit card.

 

Earn cash back

 

Generally applied to credit cards, cash back is an option which many loyal spenders forget to take advantage of and is therefore something you should look out for. Cash back essentially offers you a small return on your purchases. This may be for a set amount but is more typically represented as a small percentage of the amount you spend.

Depending on the type of card you have, cash back may be available on all purchases you make or only at items which you buy from specific retailers. The important thing here is to know where you get cash back and make the most of it. Don’t go out of your way to buy items in the appropriate places but if you’re shopping there anyway then consider using your card to benefit from the reward.

If you have enough money to pay for these items via other means (such as a debit card or even cash) then you can always use this to pay off your credit card balance straight away so that you aren’t left to deal with the bill later on down the line.

 

Know when to use cards and when not to

 

The most important financial lesson to learn when dealing with cards is to know when to use and when not to use them. At present, a campaign is running in Canada to encourage shoppers to leave the plastic at home one day a week with the Canadian Federation of Independent Businesses calling for ‘Credit Free Fridays’.

The main reason behind this is the preservation of businesses (as credit card purchases force retailers to hand over a share of the purchase price to credit card companies) but there are some interesting points to take on board from this incentive.

The main idea is that not every situation is the right time to use a card – whether it be a debit card linked to a bank account, a credit card or even a loyalty card. To ensure that your finances are not adversely affected you need to understand when to use these cards and when to leave them be. Once you’ve mastered this you’ll find it much easier to stay on top of your finances and reap the rewards due to you.

 

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Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
Mr. CBB

Comments

  1. Mary F. Campbell says:

    A topic that I love! Obviously right??

    I use loyalty cards and credit cards and track every single point that I should receive and follow up when they don’t arrive in my account. My point is … don’t assume you got the right number of points. I regularly have to chase down what we are owed and I am like a dog with a bone – I don’t give up until I get my due. I currently have two rewards that I am waiting for the “75 days since purchase date” to elapse on so I can get them corrected on my Air Miles account. The difference between what was posted and what should have posted is about 250 air miles. It doesn’t sound like a lot but… how hard is it to chase them down?

    We don’t spend what we don’t have though. I would heavily underline that statement. I merely use the reward and loyalty cards for already budgeted expenses, where the money to cover the transaction is sitting in our bank account already. Any credit card we use during the month is zeroed at month-end… I absolutely refuse to pay interest. Hubby and I use our rewards to travel, and we get to travel significantly more than we would if we had to pay cash for everything. :-)

    Hubby and I actually just got a new loyalty card the other day for Rite-Aid pharmacy in the US. It was worth the time to fill it out the application because we saved $12 on a purchase of 3 cans of Planter’s Deluxe canned nuts without peanuts. We buy the nuts for the holiday season at that store every year. So if it saves us $12 a year… it’s well worth it. It’s better to have that cash in our account instead of theirs! LOL We also tend to buy little candy and chocolate gifts there as well, so we’ll use it sporadically. It’s just another card to add to the US wallet for the times that we do shop there. We paid for the purchase using our Starwood AMEX – so we earned our SPG travel points as well on the same transaction. Happy, happy!

    I NEVER use a debit card when we are shopping… why risk having our bank account fraudulently compromised at a point of sale machine? I monitor the credit cards every couple of days and can catch any fraudulent transactions pretty much as soon as they post to our account and long before the month-end statement is even issued. Prompt reporting means I am not liable for the charge, and that suits me far better than risking our hard earned cash.

    The “know your rules” statement by Mr CBB is one that I completely agree with. Do your points expire? When? Make sure you use them before they do. Is there a requirement for a certain amount of activity to keep the points in good stead? If so, why not set up a bring forward on your calendar to make sure you don’t accidentally lose some points? I love my online calendar that I sync across all my devices. It makes life so nice and easy in this department.

    If you don’t get a lot of points, maybe some loyalty cards offer other rewards. Our local Save On Foods has “free” items every week with the redemption of points. Why not use some of those points for that jug of milk or carton of eggs? I am not in love with most of the rewards options on that loyalty card so we’ll start enjoying those points. I love getting a free turkey for Christmas! See what works for you.

  2. We just started tracking when and where we used our credit cards. We are surprised that most of the purchases are splurge or unexpected. Must get better at that! We also will never pick a credit card that doesn’t have airmiles anymore. We realize that those are our most used rewards.

  3. Credit cards are just not for me. I am still in the process of paying off my consumer debt :(

  4. We have only one credit card, a cash back MasterCard with a comparatively low interest rate. The “cash back” is given annually as a credit balance. I don’t, as a rule, carry it with me unless I’m making a planned purchase. Other plastic in my wallet: My debit card, loyalty cards for the four grocery stores I shop at most often, my Fabricland paid membership card, my paid pass to the local pool and rec center, my library card, and – of course – my driver’s license. I do have additional loyalty cards for places where I make less frequent purchases but purchases that are large enough to benefit from the program, and a Costco membership. These are stored safely at home until I need them.

  5. I love getting rewards for buying things I would normally buy anyway, and have gotten lots of free travel that way. However, you certainly have to be careful not to buy more than normal or not pay off your balance every month, which negates the rewards.

  6. Christine Weadick says:

    I have a number of loyalty cards, some see the light of day more than others. The one that gets used most by me is the Guardian card from the drug store down the street. I’m saving those points for Christmas gifts, especially for the grandson. It’s 10 points for every dollar spent and they do have bonus times. Wed. night after 5:30 is 10X as is the last Thursday of the month when they also run the blood pressure clinic. Every 5000 points is worth $10.00. I currently have 18275 points, so $36.55.
    For credit cards I have M/C and a Sears card. I get air miles on the M/C and points on those rare occasions I use Sears. The main reason I keep the Sears is if a major appliance craps out here I can get it replaced at Sears, worst case scenario. We don’t travel so I had been using those air miles to get gift cards for shopping and gifts. I picked up a couple of Chapters cards and HBC cards that were used for shopping.They have cut back a lot on the gift cards, much to my dismay!! They have a cash program going but unless I’m reading it wrong it limits where you can get/use the cash back. One of the places is a gas station but I would have to go out of town to get that. So that is rather useless to me.
    I used to have a Fabricland card but haven’t been able to renew it in a couple of years. I do have one for SDM, Chapters, HBC, M&M Meats, Sobey’s and one for GNC. Hubby picks up a protein powder there occasionally, enough to make it worth what the thing cost. If the new PC card will work at No Frills I might consider that one. I’ll see what I can cash in with points to help out the Christmas shopping this year. SDM I had high hopes for but right after I got that one they quit putting the flyers in our paper! I’m not going to go in unless I know what is on sale ahead of time. I’ve complained to management but the decision is made at HO, not store level.

  7. I love, love, love my travel cards. It’s so convenient to just use it to spent, and it’s easier to track spending with a card too.

  8. We don’t use credit cards but when we do it will likely be one with Aeroplan since we have a boatload of them already from our mortgage.

  9. Churning credit cards for rewards is my hobby! I love it! I mostly churn for sign-up bonuses, though.

  10. Great post! We’re big proponents of using credit cards to get rewards, especially on travel.

  11. Great post! Yes I agree. Before saying yes to every loyalty point card which is put under our nose, think about how often we shop in a particular store.

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