Sunday, February 12, 2006

Frugal Focus Bank Shopping Part 3 - Incentive Programs

So in looking at a new bank for my everyday needs, I wanted to figure out which offered the better incentive program - either PC Points (PC Financial) or Air Miles (Bank of Montreal). Grocery savings were the 'unit of measure' in comparing the point systems (frugal!). PC Points earn one grocery dollar per 1000 points, while a $20 Dominion gift certificate can be earned with 140 Air Miles.

(Geek alert warning- yellow) I actually built a calculator to help me figure it out, which, if anyone is interested, (geek alert warning- orange) is available for download below.

In general, if I do not change my debit and credit card usage behavior, Air Miles via BMO is a better offer, even factoring in the service fees with the BMO i.connect plan. However, once I begin to start using the related credit card (i.e. Mosaik Mastercard or PC Financial Mastercard) instead of my debit card for the same purchases I make today with a debit card, PC Financial is the winner by a landslide.

Here are the details:

Scenario 1: Points are estimated based on everyday banking activity and credit card transactions are not taken into consideration.
BMO - Air Miles: $80 savings on groceries annually
PC Financial - PC Points: $33 savings on groceries annually
Scenario 2: Points are estimated based on everyday banking activity and current annual credit card purchases, using either a 1point/$40 Mosaik MC (Air Miles) or the PC Financial MC (PC Points).
BMO - Air Miles: $80 savings on groceries annually
PC Financial - PC Points: $45 savings on groceries annually
Scenario 3: Assumes I will replace a percentage of current debit card usage with credit card usage in order to maximize points, in addition to my current average annual credit card spend.
BMO - Air Miles: $80 savings on groceries annually
PC Financial - PC Points: $213 savings on groceries annually
As I think scenario three is quite reasonable (if not simply the most intelligent), again, PC Financial looks like the leader. One more quick test (online banking facilities) and I think we can wrap this up!
Download - Incentive Points Calculator (28 Kb)

1 Comments:

Anonymous Stephan said...

I have found the easiest deal is my CIBC dividend card. This is my primary card and I use it for my regular spending. 1% credit applied directly to my card, no muss, no fuss, no paperwork. It seems Citibank also offers a 1% back card too. My secondary card is a Canadian tire MC. CT money on gas and store purchases and there is one grocery store I go to regularly that doesn't take visa. Needless to say I pay in full at the end of the month.

Were these cards an option for you?

The other option I have heard about and considered is to set up a line of credit and deposit your pay into this account and use it like a bank account. As long as you never dip into the credit you never pay a penny of interest, and often they will offer reasonably liberal Interac usage.

Requires self control though.

2/13/2006 11:42 PM  

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Disclaimer: These articles are for information only, and are not to be construed as financial advice, legal advice, or a solicitation to buy or sell securities.