Bottom Line Up Front: – Depending on the specifics of how you spend your rate can be much lower than the commonly stated 1% cash back (in Canadian Tire ‘money’).  In my case the rate is closer to 0.86%.

The Details

One of our credit cards was recently automatically replaced with a new variant.  On looking at its reward level I decided I wanted to compare to my Canadian Tire Options MasterCard.  I recalled that the rate was 1%, but I wasn’t certain, so I opened up my most recent statement.  I was quite surprised when I did the math and found only 0.86%.  Given that we use only one credit card, and funnel most purchases through it, this is easily a $50/year difference in rewards.

When I first got the credit card, at least 10 years ago, I recall it being advertised at 1% (for purchases outside of Canadian Tire).  I can’t swear by it, but the 1% was sure stuck in my head.  Perhaps the rate had changed?  I went to the web site to check and see the following:

Well that’s less than helpful.  Interestingly, the other credit cards on offer from the same (Gas Advantage, Cash Advantage) site detail their rewards pretty well.  But there is a footnote – surely that will clear it up?

OK, not so much.  Neither does the legal text, which only talks about the generalities of reward programs.  But the footnote had a link to the Canadian Tire ‘Money’ Rewards Program Page.  Sadly, this doesn’t help either, and only starts making me a little angry:

So, they reserve the right to change the program at any time, without a requirement of informing the program members, and even if someone wants to learn how they earn rewards, they have to call to determine their benefits.

I now pick up the phone and speak to a very nice and eager-to-help man.  At first he tells me the rate of cash back, in general, on non-Canadian Tire purchases, is 1%.  When I explain my issue to him, he further clarifies that sometimes the exact amount can differ, as purchases are rounded both up and down to the nearest dollar, so the exact amount of cash back will not be equal to 1%, but should be close.  When I tell him the large difference I’ve encountered, he digs deeper by examining my specific purchases and we find:

• Purchases are always rounded down, never up.
• Purchases seem to be rounded down in different increments depending on amount of money being spent.

For example, we looked at the following purchases and payback:

• $1.84 resulted in 1 cent reward (rounded down to $1)
• $73.33 was rounded down to $70 for reward calculation.
• $244.61 resulted in a $2 reward (rounded down to $200)
• $278.25 resulted in a $2.5 reward (rounded down to $250)

In general, it looked to me like:

• in the <$10 range purchases were truncated to the nearest dollar
• from $10 to <$100 range purchases were truncated to the nearest ten dollars
• greater than $100 purchases were truncated to the nearest $50

I told him that I was pretty upset with this arrangement and that I would like someone from management to call me.  (I will just point out here that the guy helping me was great and spent a lot of time looking this info up with me).  I didn’t hear anything for a week, and just when I was getting ready to call back, a physical paper letter arrived in the mail (click either to enlarge).

The start of the letter explains how money is earned when shopping at Canadian Tire specifically (not really important in this comparison as I don’t spend enough money there to make a difference).  After telling me that the reward program on out-of-store purchases is “one of the most generous customer reward programs on the market” a set of examples follow.  While I’m not stating it the same way they do, in essence:

• $278.25 is rounded down to $250
• $244.61 is rounded down to $200

They then generically explain how purchases are handled:

• Outside merchant purchase <$1 —- 1% rounded down to nearest 0.10
• Outside merchant purchase >$1 —- 1% rounded down to nearest 0.50
• [The remaining 3 calculations are for Canadian Tire stores/services/fuel specifically]

The calculations are generally what I saw but don’t explain the $73.33 purchase.  They’re obviously missing something because a purchase of $49 would, from the math and ranges they provided, be multiplied by 1% and rounded down to the nearest 0.50 – which would be zero.  So some sort of bracket is missing in their explanation and is likely a rounding down to the nearest 0.10 for purchases greater than $1 but less than $100.  (This is even more likely given that they have roundings of 0.10 for in-Canadian-Tire purchases).  If this is correct it is quite astounding – from the point of view of making small purchases in the $50 to $200 range,  the more you spend, the less of a reward you get, as a percentage, in general!  No wonder they don’t list the details online…

The last part of the letter is in regards to the benefits we receive for being “elite” members which increases our rewards by 20% but doesn’t affect the base rate – by which I mean, my base rewards would be exactly the same no matter if I was an elite member or not.  With the elite rewards added in, we earn close to the original 1%.

Bottom Line

Canadian Tire Options MasterCard is not the deal it used to purport to be, not the deal people think they are getting, and not even the deal its customer support people understand it to be.  I am now investigating other rewards programs (almost all of which obfuscate the rate of rewards in one way or another but at least they give you the details online) and will likely move to a card that doesn’t have such a blatant unnecessary and confusing formula as to how rewards are generated.  Come on Options MasterCard – if you only want to pay out at 0.86% then just make that the rate.  Stop taking advantage of the laziness of your consumers!

Update: Now including a link to a web search I had forgotten to include in this write up, seems to me to be shilling for the card, wherein the rate is given as 1% without any nuance.  Number 5 on Google search results.  That is the only information I can find on the rate being paid out.

Update 2 (15 Dec 2011): this article has recently captured some attention; it’s nice to see there are some other folks out there willing to look at their monthly statement.  No, I haven’t switched cards yet – but only due to laziness.  I am keeping my eyes open for a new contender.