Are you getting the most out of your credit card spending categories?

Imagine you’re someone who has a daily commute, spending $200 per month on gasoline. With the CIBC Dividend Platinum Visa credit card you could earn $72 back a year. But with the CIBC Dividend Visa Infinite credit card, you’re getting back $96 from gas annually. If you’re a student with a bus pass who takes the occasional rideshare, which works out to $200 per month, with both the CIBC Dividend Platinum Visa and the CIBC Dividend Visa Infinite cards you could earn $48 a year. However, if you drive and take public transportation, a card like the CIBC Dividend Visa rewards you for both—but at 1% rate.

In the end, it does pay to compare cards and build your budget with the right one.

Know what’s included in a spending category

We distinguished between “transportation” and “gas” above, and it’s an important lesson. Being versed on your spending categories will help you make lucrative spending decisions.

For example, sometimes a credit card will describe a category as “food and drink.” In its broadest sense, this could mean groceries, restaurants, food delivery, cafes, bars and lemonade stands. In reality, it’s probably less general. Understanding which purchases count in which categories is a key to maxing out your bonus cash back. The CIBC Cash Back Rewards program splits food and drink purchases into more specific categories, such as groceries as one classification and dining in another. And alcohol depends on where you purchased it, from a grocery store or an independent retailer or even a gas station.

Check the base rate

Most cash back cards, namely those without an annual fee, carry a base rate of 0.5%. Getting more than that is a perk—one that can add up. If your “everything else” spending comes out to $150 monthly, and your card has a 0.5% base rate like the CIBC Dividend Visa, you’ll get an annual return of $9. With a 1% base like the CIBC Dividend Platinum Visa that doubles to $18.

Watch for welcome bonuses

Credit card companies frequently run promotions for new customers, including welcome bonuses. Don’t underestimate these offers, as they can be extremely lucrative. For example, the CIBC Dividend Visa Infinite are the CIBC Dividend Platinum Visa are both offering new cardholders 10% cash back for the first four months on everything up to a maximum of $2,000 in purchases (worth $200 in cash back). The CIBC Dividend Visa Infinite and the CIBC Dividend Platinum Visa are also waiving the first year’s annual fee, a value of $120 and $99 respectively. If you’re planning on big spends, such as furniture or a road trip, getting a new credit card can be worth it.

Do the math with annual fees

If you’re looking to save some money on a new card, at first it might seem like a no fee card is the way to go. But you can’t truly determine that until you do a little math.

With the above four CIBC cash back credit cards, each lists groceries in their top-tier rewards and two of the cards also include gas. For these credit cards, the groceries category includes purchases at grocery stores and supermarkets. Spends at service stations and automated fuel bars make up the gas category. The no-fee cards cap their top-tier at 2% and only include groceries. Let’s imagine a $400 monthly spend which would net $8 cash back. Over a year, that’s $96 earned just from grocery purchases. Now, consider the CIBC Dividend Visa Infinite card with a $120 annual fee, which gives you 4% back on groceries and gas. With the same $400 on groceries, you’d earn $16 per month which is $192 per year—that’s $72 more than the annual fee.  The lesson here? Don’t choose your card until you’ve crunched your spend numbers.

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