--- title: 'Credit Cards and Rewards' url: 'http://www.samansaadi.com/blog/credit_cards_and_rewards' markdown: 'http://www.samansaadi.com/blog/credit_cards_and_rewards.md' lang: en date: '2020-05-30' description: 'You can find a lot of Credit Cards with different Rewards Programs. Basically we have two rewards category: cash-based cards and point-based cards. Cash-B' taxonomy: category: - en_blog en_tag: - 'credit card' - finance - money archives_month: - may_2020 archives_year: - '2020' --- # Credit Cards and Rewards [ Home ](http://www.samansaadi.com/) [ Blog ](http://www.samansaadi.com/blog) Credit Cards and Rewards You can find a lot of Credit Cards with different Rewards Programs. Basically we have two rewards category: cash-based cards and point-based cards. ## Cash-Based Rewards You can find a lot of Credit Cards in this category. When a card for example is 2% cash-back, it means for every $100.00 that you spent, the card issuer gives you $2.00. In other words: \\\[ \\begin{align\*} \\frac {\\text{gain}} {\\text{spend}} &= \\frac {\\$2.00} {\\$100.00} \\\\ \\Rightarrow \\text{gain} &= \\frac {\\$2.00} {\\$100.00} \\times \\text{spend} \\\\ &= \\$0.02 \\times \\text{spend} \\end{align\*}\\\] As you can see there is no complication here. A more mathematically accurate calculation is as follow: \\\[ \\begin{align\*} \\$100 \\text{ spend} &= \\$2 \\text{ gain} \\\\ \\Rightarrow \\$1 \\text{ spend} &= \\$0.02 \\text{ gain} \\\\ \\Rightarrow \\$1 \\text{ spend} &= \\$2\\% \\text{ gain} \\end{align\*}\\\] So spending $1 earn us 2 cents. As another example spending $200 earns us $4: \\\[ \\begin{align\*} \\$1 \\text{ spend} &= \\$0.02 \\text{ gain} \\\\ \\Rightarrow \\$1 \\times 200 \\text{ spend} &= \\$0.02 \\times 200 \\text{ gain} \\\\ \\Rightarrow \\$200 \\text{ spend} &= \\$4 \\text{ gain} \\end{align\*}\\\] ## Point-Based Rewards For me points are a type of currency that you can only spend in some specific places. Because of that some people, including me, prefer to have cash-back cards. After all you can spend dollars everywhere. Sometimes understanding the value of points is tricky and needs calculation. For example see [President’s Choice Financial Credit Cards](https://www.pcfinancial.ca/en/credit-cards): ![PC Credit Cards](http://www.samansaadi.com/user/pages/02.blog/credit_cards_and_rewards/pc_credit_cards.png) Fortunately PC mentioned on the website that `10,000 points = $10`. So it's easy to find the worth of 1 point: \\\[ \\begin{align\*} 10000 \\text{ points} &= \\$10 \\text{ gain} \\\\ \\Rightarrow 1 \\text{ points} &= \\$0.001 \\text{ gain} \\end{align\*}\\\] Let's assume for a specific category (e.g. [SHOPPERS DRUG MART](https://www1.shoppersdrugmart.ca/en/home)) the card gives us `p` points per $1 that we spent: \\\[ \\begin{align\*} \\$1 \\text{ spend} &= p \\text{ points} \\\\ \\Rightarrow \\$1 \\text{ spend} &= \\$0.001 \\times p \\text{ gain} \\\\ \\Rightarrow \\$1 \\text{ spend} &= \\$\\frac{p}{1000} \\text{ gain} \\\\ \\Rightarrow \\$1 \\text{ spend} &= \\$\\frac{p}{10}\\% \\text{ gain} \\end{align\*}\\\] So we need to divide the points by 10 to convert it cash-back percentage. If you couldn't get the premuim ones and ended with [PC Financial Mastercard](https://www.pcfinancial.ca/en/credit-cards/pc-mastercard), then it means 2.5% cash-back in pharmacy, 2% in travel and 1% in grocery and everything besides gas. Of course you are limited to Loblaw's [divisions](http://www.loblaw.ca/en.html). As you can see the gas points is per litre and not per dollar. [This is where the fun begins!](https://www.imdb.com/title/tt0121766/quotes?item=qt0333039) Each [Esso](https://www.esso.ca/en-ca) station has different price per litre. So we cannot convert gas points to cash-back without considering the price in a specific station. According to [GasBuddy](https://www.gasbuddy.com/), the price of gas in Esso station in downtown is 101.9 cents but Costco sells it at 93.5 cents. Let's assume we have another cash-back card with 2% cash-back for gas. The net gas price per litre for Costco is \\(93.5 \\times (1 - 2\\%) = 91.63\\) cents and for Esso is \\(101.9 - 30 \\text{ points} = 101.9 - 3 = 98.9\\). So Costco is cheaper. As you can see point-based credit cards require a lot of calculation! Anyway this is a good Credit Card; considering that for pharmacy you get 2.5% and at least 1% cash-back for the rest without paying annual fees. You can combine it with [Tangerine Credit Card](https://www.tangerine.ca/en/products/spending/creditcard/) to have the best of both worlds. 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