According to a recent study by Payments Canada, the COVID-19 pandemic is changing Canadians’ spending habits. The study found that 62% of Canadians are using less cash, and 42% avoid shopping at places that don’t accept contactless payments altogether.
Moreover, 53% of consumers reported using a card or mobile tap for payment more than pre-pandemic.
Further findings suggest 38% of Canadians are using e-commerce platforms more often, and 26% of consumers are prioritizing food delivery services.
These shifts in payment method preferences and spending behaviours are likely to stick around as Canadians become more comfortable with these consumer options.
- Select a rewards credit card based on your spending habits
- Shopping with your credit card can have its perks
- Should you cancel your current credit card if you apply for another?
- Rewards are not always the top credit card feature
Select a rewards credit card based on your spending habits
As Canadians’ spending habits change, it may be time to update what is in your wallet so you can benefit the most from your credit card.
According to the fourth report from RBC’s COVID Consumer Spending Tracker, discretionary spending is increasing as restrictions ease up. Additionally, spending on dining out is recovering as the industry adapts to alternative delivery methods.
However, travel is down 86% over last year. But gas and automotive purchases are on their way back up. This consumer data suggests travel-focused credit cards may not be rewarding cardholders presently. So, is it time to make a switch?
More Canadians are baking up a storm and shopping for groceries online and in-store. Some big retailers offer a co-branded credit card with rewards specifically to their brand. However, not all grocery rewards cards offer loyalty points; some offer cash back, which you can spend anywhere you like.
The BMO®* CashBack Mastercard®* offers cardholders 3% cash back on grocery purchases, 1% back on recurring bill payments, and 0.5% unlimited cash back on all other purchases. Plus, for a limited time, get 5% cash back in your first three months. Some conditions do apply.
Gas prices fell 39.3% year-over-year in April. Filling up your tank is cheaper, for the time being, giving you more incentive to hit the road. For those planning more road trips this summer, a gas rewards credit card may be what you need.
For loyal shell customers, the no-fee Shell CashBack MasterCard® from BMO is a great choice. Earn 1.5% cash back per dollar spent at Shell locations across Canada, and 0.5% cash back everywhere else. Plus, new cardholders can get an extra $50 back when they make their first purchase.
Although this next option has a $120 annual fee, the Scotia Momentum® Visa Infinite* Card offers cardholders 4% cash back on groceries, recurring bill payments and subscription services, 2% back on gas and daily transit, and 1% back on everything else.
Takeout, Delivery, and Subscriptions
Takeout Tuesdays is gaining popularity to support local businesses and restaurants, and patios will soon be opening for reservations. Some credit cards offer you rewards for dining out and dining in, earning rewards for groceries as well as delivery.
The Scotiabank®* Gold American Express® Card offers five Scotia Rewards points for every dollar you spend at grocery stores, restaurants, fast food, delivery, and food subscriptions. Get three Scotia Rewards points per dollar for eligible gas and transit purchases, as well as streaming services, and one point per dollar everywhere else.
Although credit cards typically don’t reward you for online shopping specifically, some reward programs allow members to spend their rewards through online partners. American Express Membership Rewards can be used for purchases through Amazon.ca.
AIR MILES Cash Rewards also offer customers the opportunity to shop for groceries and order food delivery.
The BMO® AIR MILES®† Mastercard®* offers cardholders 2X the Miles for every $20 spent at participating AIR MILES Partners and 1 Mile for every $20 spent everywhere else, all for no annual fee. Plus, you can double-dip on points when you use your AIR MILES Collector Card when checking out.
Shopping with your credit card can have its perks
More Canadians are resorting to using e-commerce platforms and online shopping, which can be convenient but somewhat risky. Sometimes, orders get lost in the mail, get damaged, or arrive not as described. Often, companies have excellent customer service, but when they don’t, it can pay-off to choose your payment method wisely.
Paying for purchases with your credit card can have additional benefits and safety features to safeguard your spending. Perks will vary by the credit card provider, but here are some terms you may see.
Extended warranty, sometimes referred to as extended protection, will increase the manufacturer’s warranty for items you purchased on the card. The length of time and requirements vary by issuer.
Purchase protection, sometimes called purchase assurance or purchase security, may cover purchases against damage or theft. Typically, there is a monetary threshold that a cardholder can claim—for example, $500 per claim, up to $50,000 per account holder.
Some credit cards offer a price protection guarantee. If cardholders purchase an eligible item within Canada and the product goes on sale within a timeframe, the difference will be refunded. Generally, there is a cap for the amount that can be claimed per purchase or annually.
Additional security features
Most Mastercard and Visa credit cards offer Zero Liability coverage, so cardholders won’t be held responsible for unauthorized transactions on their account. This feature adds another layer of protection against credit card fraud.
Should you cancel your current credit card if you apply for another?
Choosing to open another credit card does not necessarily mean you should cancel the card you are currently using. Having a primary and secondary credit card can be beneficial if used responsibly.
Top considerations when choosing to cancel or keep your credit card:
- Variety of rewards: Using your credit cards strategically can help you earn a variety of rewards faster. For example, you may choose to pay for grocery purchases with one card and use another for travel. That way, you can earn the top value for each spending category.
- Credit score: Keeping your credit card active and in good standing can have positive effects on your credit score from the payment history perspective as well as the amount of available credit and your credit utilization ratio.
- Annual fee: If your current credit card has a yearly fee and you don’t plan on using the card, it may not be worthwhile to keep it active. However, if your credit card has no annual fee, it won’t cost you anything to keep the account open.
- Rewards balance: Depending on the card you currently use, you may forgo your rewards balance when you cancel your credit card.
If you have a credit card from one of the three leading issuers in Canada—Mastercard, Visa, and American Express—consider choosing a credit card from the other two providers. This can ensure you always have a payment method that is accepted.
Rewards are not always the top credit card feature
For those looking to consolidate their debt or take advantage of a low-interest rate, a balance transfer credit card can be more valuable than a rewards feature. A balance transfer can help you put all your debt onto one card and more comfortably manage your debt.
The True Line® Mastercard® credit card has no annual fee and a standard low-interest rate of 12.99%. That is considerably less than the average interest rate of 19.99% on credit cards. New cardholders can get a 0% promotional interest rate for 10 months on balance transfers completed within 90 days of opening the account. A 3% balance transfer fee does apply (minimum charge of $7.50).
Although these types of cards typically charge a balance transfer fee, the amount you pay would be far less than you would otherwise owe in interest. If you are facing financial hardships, being proactive about debt management can help you work toward a more positive financial future.