The number of credit card options out there today is a little staggering, and there are more joining the party, virtually every day. Despite this proliferation, and even though companies are aggressively competing with generous welcome rewards, category rewards, (get double points when you spend on gas and groceries, for example), perks and features, very few Canadians bother to research their credit card, or charge card options.
American Express Canada hopes this trend of inactivity is changing. It conducted a survey recently, to better understand how Canadians choose their credit cards, how much we value our rewards programs, and how aware we are when it comes to the different options available.
The results are a little surprising: 53 per cent of those surveyed, said they are keen rewards points collectors, many who will shop at particular stores to earn more points (44 per cent). Still, it found 60 per cent of the credit card holders surveyed, simply signed up to a bank-offered card program; only 15 per cent researched their options.
In perspective, this can mean that a huge percentage of the card-carrying population, is leaving a significant amount of money on the table, in unclaimed, unusable, or uncollected rewards.
"These are little opportunities you're missing out on, that could add up to thousands of dollars," says Smart Cookies CEO Sandra Hanna.
Although it might seem strange for a smart money advocate to speak in favour of credit card use, she says the strategy works, because each day, little purchases are budgeted for, points accumulate, and the balance is paid off every month.
The American Express Gold Rewards Card too, is not a credit card in the traditional sense. The "charge card," a concept that is somewhat unique in the money-lending universe, requires cardholders to pay off their balances completely, each and every month. In another untraditional move, the card automatically rewards new signees with 25,000 bonus points – enough for a round trip flight almost anywhere in North America.
"We earn those points and it doesn't get you caught in that cycle that gets so many people in trouble."
Brett Mooney, Vice President of Consumer Acquisition & Management at American Express says the fact that so many people sign up for a credit card from their bank, without doing any additional research, is perhaps the study's most striking finding overall.
Still, he says the level of activity going on in the industry which provides credit, is "unprecedented," with banks and organizations "providing very rich and aggressive offers to attract consumers." Consumers too, he says, are reaching the point where they are beginning to reassess the products they use.
For those who are interested in making the most of this trend, both Mooney and Hanna strongly recommend that people look at their options.
Hanna takes this even further, saying she makes contact with her credit card provider, at least once a month. Not only does this occasionally save money, by identifying recurring, and sometimes unnecessary charges, but it also allows her to keep track of any promotions that might've been missed.
To make the most of your credit card rewards programs, and potentially save a significant amount along the way, Mooney and Hanna recommend people do an evaluation of their needs:
- Evaluate your spending. Do you spend a lot of money in any particular category? For example, the American Express Gold Rewards Card offers an accelerated earn rate on every day and travel spending, with double the points on their everyday purchases at grocery stores, gas stations and pharmacies, as well as on their travel spend. This allows Cardmembers to experience rewards faster.
- What do you like, need or look for in a rewards program? Do you frequently rent cars? Need insurance coverage for travel, medical or both? Do you enjoy getting airport lounge access?
- Understand your program and your redemption options. "Find a card that offers choice and flexibility from a redemption standpoint. For example, earning points and accelerating based on your spending behavior is a great perk but ensuring you find a card that can change with your lifestyle is equally important.," “Mooney says. "The right program will also allow the flexibility to pay for any type of travel with your points, including flights on any airline, hotels, car rentals or vacation packages."
- Hanna, meanwhile, says a lot of consumers who've stayed put, sometimes for years, might find there are significant benefits that come with taking their business elsewhere.
"Right now, people stick with the cards they have, because of the convenience, but I hope that trend changes," she adds. "We don't need to spend days to analyze the different benefits of each card, but spending a little bit of time can certainly save you, and earn you a lot of money over the long run. It's definitely worth the 30 minutes of your time that it would take."