What’s More Important Than Earning Rewards?

With a blog dedicated to finding the best loyalty programs and rewards cards, you might think rewards are the most important thing in the world to me.  But that couldn’t be further from the truth.

Here’s what matters more to me than earning and redeeming rewards points:

Saving money

There’s no point earning 1 or 2 percent cash back buying something at one retailer when you could’ve saved much more at a different retailer.  A perfect example is Safeway, which offers the Air Miles program.  A basket of goods at Safeway costs more, on average, than the same basket at other supermarkets.

Related: My best financial tip: Spend wisely

Once a month, CTV compares grocery prices at major Calgary stores.  All coupons and membership programs are included.

They priced out 35 items at Safeway, Co-op, Sobeys, and Superstore.  The best deals were at Sobeys and Superstore, where the grocery basket cost $144.09 and $144.16 respectively.  At Co-op, it cost $147.69.  It was most expensive to shop at Safeway, where the grocery basket cost $165.77.  That’s 15 percent more than the cheapest store!

Even the most loyal Air Miles collector has to admit they’d be better off shopping at Sobeys or Superstore.  Funny enough, after Sobeys bought Safeway it plans to change its Club Sobeys program and adopt Air Miles at its stores across Canada.  Watch for prices to increase accordingly.

Sticking to a budget

Critics of rewards programs argue that members spend more because they’re trying to earn more points and rewards.  To fight this psychological tendency, I make sure that my spending is dictated by my monthly budget, and that I’m not a slave to any rewards program.

Related: 4 dumb reasons for not getting a rewards credit card

I keep detailed tabs on my spending by category and try to stick to a pre-determined budget every month.  When I make a purchase, I use the method of payment that gives me the most points or cash back.

Since retailers don’t give out discounts for cash paying customers, and using debit can actually cost money depending on your bank plan, I use a rewards credit card to save more on my purchase.

Not paying interest

Trading a 1 or 2 percent reward for 18 or 19 percent interest doesn’t make a lot of sense.  Rewards credit cards are best suited for a disciplined spender who diligently pays off his or her balance in full every month.

I funnel all of my spending through a credit card and take advantage of the interest-free grace period, which essentially gives me a cash float for the month.

My paycheque goes into my account, where I keep a $1,500 minimum balance to waive the monthly bank fees.  There’s no need for overdraft protection or to carry a small cash emergency fund – it’s already there.

I set up account alerts so that I remember to pay my credit card bill on time at the end of the month, then rinse and repeat.

Final thoughts

Sometimes it feels a bit obsessive to pore over rewards programs and credit card perks to try to find the best deals.  But the effort is justified when I see that this year alone I’ll redeem points or cash back for nearly $1,000.

Related: Where to find the top rewards credit cards today

That said, all of the rewards in the world wouldn’t matter if I didn’t try to save money on every purchase, track my spending and stick to a budget, and avoid paying credit card interest at all costs.

Sneak Peak At New Costco Capital One Platinum MasterCard

Costco members are getting a sneak preview of the new Capital One Platinum MasterCard.  The co-branded card is set to replace the TrueEarnings Card once the Costco and American Express agreement expires at the end of the year.  Card applications are already available online and at Costco stores, with details suggesting the card will be hit the market in late October.

The wholesale giant moved quickly to secure a new credit card agreement once talks with American Express broke down.  It teamed up with Capital One to offer a co-branded card and struck a deal with MasterCard to allow credit card acceptance to MasterCard cardholders – which has already been rolled out across the 88 Costco locations in Canada.

The Capital One Platinum MasterCard looks to offer the same rewards as the TrueEarnings Card.  You’ll get 3% back on restaurant purchases, 2% back on gas purchases, and up to 1% back on everything else.  What that means is you’ll get 0.5% on your first $3,000 annual spend, and then 1% after that.

There’s no limit to the amount of cash back you can earn in any calendar year.

Double cash back

Apply now and you’ll get double cash back for three months after your account is opened.

Earn 6% cash back at restaurants and 4% at gas stations on all your purchases – up to a combined total spend of $1,500 for both during the three-month promotional period.

Earn 1% cash back on the first $3,000 you spend on all other purchases annually, and 2% after that.  You’ll earn at these rates up to a total spend of $8,500 during the three-month promotional period.

You’ll earn double cash back until your three-month promotional period expires, or you reach the promotional spend limit within a category – whichever comes first.  After that, you’ll earn cash back at the regular rates set out above.

Doubles as a Costco membership card

Like the TrueEarnings Card, the Capital One Platinum MasterCard will double as your Costco membership card, with your picture and membership number on the back of the credit card.  Your Costco membership fee will automatically get charged to your credit card unless you tell Costco otherwise.  There is no annual fee for the Capital One Platinum MasterCard.

Cardholders will be issued a rebate coupon once per year in January.  Rebate coupons are good for one-time use and can only be redeemed for goods, services or cash at Costco warehouses in Canada.

Other benefits

What sets this card apart from the TrueEarnings Card boils down to the difference between MasterCard and American Express benefits.  Here’s what you get when you use the Capital One Platinum MasterCard:

  • Price Protection – When you buy a new item in Canada that is advertised for sale at a lower price within 60 days of purchase, Price Protection refunds the price difference up to $100 per item and $500 per calendar year.
  • Purchase Assurance - Most personal items purchased are automatically insured against theft, loss or damage anywhere in the world for 120 days from the date of purchase.
  • Extended Warranty - Automatically doubles the original manufacturer’s warranty for up to two years.
  • Travel Accident Insurance - Get up to $250,000 automatic travel insurance coverage for you, your spouse and your dependent children.
  • Car Rental Collision/Loss Damage Waiver - Decline the collision damage waiver insurance offered by the car rental agency and you’ll be insured if your rental car is damaged or stolen when you rent the car for a period of up to 31 days.
  • Baggage Delay - If your checked baggage is delayed for more than four hours at your away-from-home destination, you, your spouse and your dependent children may be eligible for reimbursement of up to $100 per day for up to three days to purchase essential items.

Final thoughts

Costco and Capital One were smart to put out a strong offer with a double cash back incentive for the first three months.  But folks who already carry a top-tier rewards MasterCard might not see the benefit of having a second MasterCard in their wallet – even one that can double as their Costco membership card.

Related: Amex jumps into cash back market with new SimplyCash cards

That’s where American Express had an advantage: If you liked shopping at Costco and wanted to earn credit card rewards then you HAD to carry an American Express card in your wallet.  And if you had to carry one then it just made sense to carry the TrueEarnings Card which could also act as your Costco card.

I’m not convinced Costco members will feel the same way about the new Capital One Platinum MasterCard.  What do you think?  Will you get one?