The problem is, that cash has to come from somewhere. In the case of most "rewards" cards, it comes from the retailers where you use the card, who have to pay a larger percentage to the credit card companies in transaction fees.A great way to save some cash is to get a dividend dollar credit card. As long as you pay off the full balance every month is like free money. I just signed up for the new scotia momentum card: 2% cash back on groceries, gas, etc; and 1% on everything else.
I don't care. It's an expense to the retailer just like any other. If they don't want to pay it they can simply stop accepting credit cards. But they will have to balance the "savings" of not having that expense anymore against the loss in revenue from people who will simply not shop there because they don't accept CC's.The problem is, that cash has to come from somewhere. In the case of most "rewards" cards, it comes from the retailers where you use the card, who have to pay a larger percentage to the credit card companies in transaction fees.
I don't care what the CC company's motives for offering rewards are. I am simply going to take full advantage of them whenever I can. I never even think of the 1% when I am considering a purchase. I simply use my CC for things that I was going to buy anyway. The 1% is just a bonus.I've never seen credit card "rewards" (of any type) as anything more than a gimmick designed to get people to spend more money. I prefer to set up incentives that ensure I spend LESS money and seek out better deals. As a rule, if I use cash (or debit), I think more about purchases and am more careful to ensure I'm getting good value. On the whole I think I get more "free money" that way than if I signed up for a cash-back credit card.
If I can get a better deal by paying cash, then I will pay cash. But if the price is the same no matter the method of payment, I might as well get my 1%.On top of that, if you use cash for purchases you can often get a discount straight away if you ask for it - far better than getting a "reward" at the end of the month or year.
I don't get offered discounts at random either. The job of a seller is to maximize his/her profit, so they tend to not offer discounts "just because", nor do they permit their staff to do so.I doubt I could have responded better ghostryder, nicely done.
And to add my vote, I have never, in my entire credit card using life, been offered a deal if I paid in cash over credit.
That may be true, but as I indicated, I only use my card for general day to day spending, and if I can get a better deal with cash I will take it. If not, I might as well get my 1%.Getting a cash discount usually involves actually asking for it. The deals are out there, but you'll never know about them unless you ask, and they tend to be a lot sweeter on items with higher markups or when the store gives its employees a little more latitude on pricing (furniture and cars are two examples that come to mind).
It makes sense as long as you are able to manage your credit card use responsibly. When you're putting off actual payment into the future, it's easy to overextend yourself and end up in a situation where you can't pay off your bill in full. And if you do that a few times per year, the interest you pay is likely to zero out (or worse) any of the rebate rewards you've earned.In one of my latest post, I actually suggest to use a credit card for regular expenses such as grocery, gas, internet, cable, etc. You have to pay for them anyway, why not getting a few bucks back from your purchase?
Depending on where you are doing your spending this card trumps your card!There are lots of credit cards that offer points to be redeemed for rewards. I haven't heard of redeeming for GICs, but I doubt those would give you a great reward. Usually the best ones are for travelling, like the MBNA SPG mastercard that you can redeem for stays in Starwood hotels, getting 3% or more back (card is now discontinued). For less specific travel, Capital One offers a pair of "miles" cards that you can redeem on ANY travel expenses after you've charged them to your card, so there's no blackouts or restrictions like you'd get with Aeroplan or Air Miles point systems. The no-fee card gives you 1% back (no tiers, just solid 1%) and the $99/yr card gives you 2% back (also no tiers). The extra percentage pays for the annual fee if you spend over $10,000/yr on it.
In terms of cash-back vs rewards, I find that the best reward cards are better than the best cash-back cards. Taking the annual fee into account, the Capital One Miles Plus card earns me $901 worth of travel if I spend $50,000 on it. The MBNA Smart Cash card would only earn a max of $644! I challenge anyone to find a cash-back card that can even earn $800 on the same amount (adjusted for fees).