NEW TRENDS IN CANADIAN CREDIT CARDS

This article speaks about the new trends in Canadian credit cards that have changed the way people conduct business there. We provide a mix of differing trends in the market, changes in the economy and particular changes that have taken place in the different cards available. This provides you with a comprehensive as well as an exhaustive selection of changes that have come about here in recent times. In this way, we help you to have better awareness and stay well-informed.

TWO CREDIT CARDS FOR EVERY CANADIAN

Recent studies have shown that there are two credit cards for every Canadian. This clearly reflects the fact that the Canadian economy will soon become the second cashless economy in the world after Sweden. Given this scenario, it becomes extremely essential that we learn about the ways that technology has changed the way in which financial transactions and the implications that it can have.

Here we have presented you with the factors that will even further this trend so that we can develop in a better way to stay well-prepared for the challenges of the next decade. So let us now proceed to discuss the new trends in Canadian credit cards that you definitely need to know about.

1.    RISE IN CO-BRANDED CREDIT CARDS

I often hear my business students sigh when I talk about superior stock returns in the area of 10%+. That is the kind of return that impresses me, but for those students who consider building their own assets a stock return of 10, 15 or ever 25% seems arbitrary. They (luckily) keep pitching ideas of small business ventures to me where the upside of a new app or online business is projected to be in 1,000s of percent.

Having curious and ambitious students is the best thing in the world! I love the eagerness and motivation to build their own business, and surely many students and entrepreneurs get much better returns than what they do in the stock market. But when I have to be a grumpy old man (which is always fun!), I remind them of the concept of “sweat equity” and “risk”.

I think everyone that has started their own business learns pretty fast what “sweat equity” is. It’s all the hours you put into your business. To illustrate this, I often ask my students the mark up they think they can get from setting up a lemonade stand. All they need is lemons, sugar and water. Quickly, they see my point. While they could be making hundreds of percent in a day in return, they also have to factor in all the time they have to spend. That is a very real cost too!

The other thing is “risk”. To me risk is the same as losing the principal on my investment. Most businesses can only resell for a fraction of whatever the start-up bought for the capital they put up if the business doesn’t go as planned. More often, the capital is just completely gone.

Perhaps I’m just lazy, but the element of spending very little time to make money really appeals to me. Yes, stock investing takes time but for the sake of argument, let’s say you simply buy an index tracking S&P500 every month. You can do this yourself in less than 2 minutes, and some services can even arrange that as a portion of your monthly paycheck, where it’s deducted from your account and invested in your favorite index.

I also like the idea of not losing (all) of my money. Can you lose money in stock investing? Sure – I’m as guilty as charged, but by definition, stock investing when set up the right way makes it impossible for you to lose your entire principal. Basically, stocks are real businesses. If you buy the S&P500, you buy into 500 of the very best businesses in America. The likelihood of all of them going bankrupt is as close to 0 as you can get. But, can you have swings of 30% or more? Sure! However, the stock market allows you to wait for the right time to sell your liquid assets. Stay away from debt, single stock picks, and crazy derivatives and a complete loss of capital shouldn’t be possible.

2.    INTRODUCTION OF NEW CREDIT CARDS

A number of new credit cards have been launched into the Canadian market in the past year. This includes a number of benefits and facilities. Some have no foreign transaction fees like the Scotiabank Passport Visa Infinite Card. This card also has a good earn rate and also gives a Priority Pass Membership with 6 annual passes.

Simpli has responded to Amex Cobalt with its Financial Cash Back Visa Card. It gives quite a high earn rate of 4 % on restaurants that are eligible, 1.5 % on medicines, groceries, and gas and 0.5 % on all other types of purchases. Another great card that is now open to the public and also offers great travel rewards is the HSBC Premier World Estate Mastercard.

3.    MORE UNCERTAINTY IN USING CREDIT CARDS

There has been a lot of uncertainty in using credit cards for the past two years. This has been coupled with some companies planning to break their collaborations with others and going solo. This has led to people getting confused about how to use their rewards points and has reduced brand loyalty.

Another problem that has occurred is that many companies decide to devalue or expire their rewards points suddenly. This results in the loss of a number of benefits that they would have otherwise got. The only way to solve this problem is to think of only the short term and utilize your points the moment you are ready to spend. This will ensure that none of them are wasted. This uncertainty in using credit cards is here to stay so you must adapt to the changing situation in this easy and effective way.

4.    AVENTURA CARDS GET NEW BENEFITS

CIBC has added a host of benefits to their Aventura Cards. The best part about them is that these are available to both new and existing cardholders. They include a free Priority Pass Membership and other benefits like mobile device insurance, improved travel insurance, a NEXUS rebate, and 4 annual lounge passes.

5.    REWARDS PROGRAM BECOME SIMPLER

Rewards programs have become much simpler in recent times. Earlier, customers had to go through various hoops in order to get their points redeemed. But the new system has made it much easier for them to get what they deserve. This has definitely been appreciated by all customers and will certainly hold them in good stead in the future.

6.    AMEX MAKES A BIG IMPACT WITH SMALL CHANGES

Till now, most American Express users kept complaining that these cards were not used everywhere but the company has certainly tried to improve this shortcoming by trying to reach out to all kinds of businesses so that their customers so that they are not harassed.

7.    SCOTIABANK REDUCES THE SIGNUP BONUS

ScotiaBank has reduced the signup bonus in a number of their cards including the Scotiabank Gold American Express and the Scotiabank Scene Visa. However, they have given more offers like a $ 100 gift card that will help offer more lucrative deals to their customers through their promotions. This clearly shows that they are trying out new strategies for expanding their business in all directions.

8.    NOVEL SIGN UP OFFERS

There were some novel sign up offers last year. This includes the Scotiabank Momentum Visa Infinite Card that is giving 10 % cash back on the first time you spend $ 2000. TD also had an offer that was for a limited time period where cardholders would get 9 % cash back in the first 3 months although then it was reduced to 6 %. We can similarly expect more offers from other companies this year based on the performance of TD, BMO, and Scotia.

CONCLUSION

From the above, it is clear that many new trends have come about in Canadian credit cards. Learning about them will definitely help you manage your finances effectively in the long run and will surely hold you in good stead.

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This article was written by John Foster.