When it comes to choosing a credit card, most people skip annual fee credit cards and look for other benefits like lower interest rates, cash back and travel rewards. The best credit card features typically come with fees, however, by paying the annual fee you can often save money and earn more rewards points.
Annual Fee Credit Cards
If you carry a balance, consider switching to a low interest annual fee credit card like the TD Emerald Visa. This card comes with a $25 annual fee, but depending on your credit assessment the current interest rate can be as low as 4.75 per cent, and no higher than 12.75 per cent.
The TD Emerald Visa can save you money as long as you carry a balance, unlike balance transfer credit cards that lure customers in with an introductory rate for six months before jacking it up to 20 per cent.
This chart compares the total interest paid for one year on a $4,000 balance using three different credit cards:
| Credit card | Interest rate | Annual fee | Monthly interest | Total cost (interest/fees) |
| Basic credit card | 19.99 | $0 | $66.63 | $799.56 |
| Balance transfer card | 0.99* | $0 | $3.30 / $66.63 | $419.58 |
| TD Emerald Visa | 9.75 | $25 | $32.50 | $415 |
*for six months – 19.99 per cent thereafter
The TD Emerald Visa comes out ahead, even after paying the annual fee. If it’s going to take a few years to get rid of your credit card debt, you can save money by switching to a low interest rate card. Paying an annual fee for a better rate may be worthwhile.
Once you’re out of debt and have a good grasp on your finances – including paying off your credit card balance in full each month – consider switching to a rewards credit card.
A cash back credit card like the Scotia Momentum Visa Infinite comes with a $99 annual fee; however cardholders earn four per cent cash back on groceries and gas, two per cent cash back on recurring bill payments and drug store purchases, and one per cent cash back on all other purchases.
Compared to a no-fee rewards credit card, your rewards can really add up when you spend $3,000 or more per month on your credit card.
| Credit Card | Annual fee | Reward % | Total rewards (minus fees) |
| PC Financial MasterCard | $0 | 1 | $360 |
| MBNA Smart Cash MasterCard | $0 | 3 / 1 | $432 |
| Scotia Momentum Visa Infinite | $99 | 4 / 2 / 1 | $561* |
*assumed $700 spending on groceries and gas, $300 spending on recurring bills and pharmaceuticals.
Credit card issuers charge a premium fee for special features associated with the card. Annual fee credit cards can make sense in some circumstances, whether you’re struggling to get out of debt or you’re trying to earn more rewards.
Canadian Tire recently announced an upgrade to its loyalty program, which will be launched on February 24th, 2012. The new Canadian Tire Money Advantage rewards program should rank among the best loyalty programs in the country for customer value.
Canadian Tire Money Advantage Rewards
This new program offers members the option to collect Canadian Tire Money Advantage rewards points electronically with a new loyalty card or key chain fob.
Customers who aren’t enrolled in the new rewards program can still collect Canadian Tire Money in paper form as it has existed for 54 years. Rewards can be redeemed for more than 90,000 products at Canadian Tire stores or donated to Canadian Tire Jumpstart or other eligible community groups.
When Canadian Tire Money Advantage was initially designed, customer research showed that many consumers wanted a more convenient and electronic option to collect and redeem Canadian Tire Money, while other Canadians continue to prefer the iconic Canadian Tire Money paper bills.
Canadian Tire’s upgraded loyalty program provides customers with the best of both worlds.
Earning Advantage Rewards Points
Customers joining the program will earn Canadian Tire Money Advantage rewards points on eligible purchases, even when paying with a major credit card, as well as collect exclusive bonus points on products weekly in flyer and in store.
Points will be redeemable like Canadian Tire Money, with members earning the most points when they use their Canadian Tire Money Advantage card and pay with their Canadian Tire Options MasterCard. In addition, customers can earn Canadian Tire Money Advantage rewards points everywhere else they shop with their Canadian Tire Options MasterCard.
Customers who choose not to use a Canadian Tire Money Advantage Rewards card will continue to collect paper Canadian Tire Money, by paying with debit and cash – just as they do today. Customers can look forward to a new release of Canadian Tire Money later this year.
In designing the program, Canadian Tire sought the input of consumers as well as industry experts, including engaging a leading North American customer loyalty firm to review ten of the most comparable and well-known customer loyalty programs in Canada.
According to the study, the Canadian Tire Money Advantage rewards program will rank among the top two in Canada for loyalty programs. Canadian Tire will use the pilot period to gather firsthand customer feedback on the program.
How Canadian Tire Money Advantage rewards works:
Collecting points:
- Earn 1 point for every $1 you spend at Canadian Tire stores
- Earn points with a multiplier when you fill up at Canadian Tire gas bars
- Earn 3 points for every $1 you spend at Canadian Tire stores when using the Canadian Tire Money Advantage card and paying with a Canadian Tire Options MasterCard
- Exclusive bonus points in-store, in the flyer, or sent directly to members
Redeeming points:
- Redeem points in-store for eligible merchandise, just like Canadian Tire Money
- 100 points = $1
- There is no minimum – so you can use a few points or save them up for something big
- Donate points to Jumpstart, or eligible community groups
- Points have no expiry date and can be redeemed any time towards the thousands of eligible products in-store
Final Thoughts
The new Canadian Tire Money Advantage rewards program was long overdue, as the company held on to the traditional paper money far too long. As their research indicated, consumers are looking for easy and convenient ways to earn and redeem their rewards points. That’s one of the reasons why the new Air Miles cash feature was introduced, to offer a more convenient ways to redeem points.
I like that you can earn triple points in-store when combined with the affiliate credit card, and I like that the Canadian Tire Money Advantage points don’t expire. With a spending to rewards ratio of $1:1, that puts this loyalty program on par with the likes of PC Points from PC Financial.
The Canadian loyalty program offering the best value for their customers is still Shoppers Optimum, but the new Canadian Tire Money Advantage rewards program is a step in the right direction.