I use a rewards credit card for my groceries, gas and recurring monthly bill payments.  I like earning a rebate on my everyday spending and freeing up cash-flow by deferring the payment for 30 days.

For years I used the PC MasterCard and earned 1 per cent back in PC Points, but recently I switched to the MBNA Smart Cash MasterCard using this promotion at Great Canadian Rebates offering a $60 rebate to sign up for the card.

The MBNA Smart Cash MasterCard is one of the top cash back credit cards in Canada, and in addition to this $60 rebate, the card also offers the following features:

  • No annual fee
  • 5% cash back on qualifying net retail gas and grocery purchases for the first 6 months
  • 2% cash back on qualifying net retail gas and grocery purchases thereafter
  • 1% cash back for all other qualifying net retail purchases

I’ve already received $160 in cash-back rewards in just three months with the aggressive sign-up offer and generous incentives for the first six-months of spending.

MBNA Canada: Marketing Masters

MBNA Canada quickly became the largest issuer of MasterCard’s in Canada by using affinity marketing techniques to secure the endorsement of over 5,000 organizations, including sports teams, charities, financial and educational institutions.  MBNA Canada markets its MasterCard’s aggressively through direct sales, telemarketing, Internet, and point-of-sale techniques.

Their aggressive marketing tactics don’t just stop when you sign-up for the card.  I have received seven phone calls from MBNA Canada at various times of the day over the past two months.  Sometimes there is no one on the other end, like they’re trying to determine the best time to call me.  Other times, a telemarketer is on the other end pitching one of the following products:

Credit Alert: Identity Theft Protection

The first pitch that MBNA Canada tried to sell me was for their Credit Alert monitoring service that helps protect against identity theft.  For $17.99 per month I can sign-up for this service, which offers:

  • Online access to your credit report and credit score from Equifax Canada.
  • Detect early signs of fraudulent activity before it ruins more than your bank account.
  • Proactively monitor, manage and protect your valuable credit and identity information.

What I found interesting was that the telemarketer used this line:

“Since you recently reported your card lost or stolen, you know the importance of protecting your personal credit information from those who might abuse it.”

I only had this card for a few months at that point and had not reported it lost or stolen.  And why should I pay for a service that the MBNA account agreement already provides, free of charge?

According to the agreement, if a fraudulent charge appears upon your statement, you won’t be held responsible for any unauthorized use of your card, PIN or account number.

Credit Wise: Balance Protection Insurance

The second call that I received from MBNA Canada was to promote their Credit Wise balance protection insurance.

For $0.99 per $100 of the average daily balance, cycle ending balance or balance subject to finance charges, whichever is higher, I can protect my good credit rating in case of unexpected job loss or disability and can ease the burden on my family in the event of my death.

Access Cheques

The phone calls weren’t working on me, so the next attempt from MBNA was a direct mail piece promoting their access cheques to arrange a balance transfer or deposit.  The letter suggested that I can use the attached access cheques for so many things, including:

  • Visiting friends and family – create some memories that will last a lifetime
  • Holiday shopping – the people you care about deserve the best
  • Planning a winter getaway – You work hard; treat yourself and your family to a holiday

Sounds intriguing, but a quick glance at the fine print suggested that this wasn’t such a good idea for me.

The annual interest rate for access cheque balances is 19.99 per cent, and the transaction fee for access cheques is 1 per cent of each transaction amount, with a minimum fee of $7.50.

A Lesson For Rewards Chasers

Credit card issuers are offering more rewards than ever before to try and secure your business.  But they’re not just going hand out juicy rewards without taking a cut for themselves.  With revenues close to $600 million, MBNA Canada makes a lot of money off high interest rates and programs like the ones listed above.  On December 1st, MBNA was sold to TD Bank Group for an undisclosed amount.  It will be interesting what kind of impact this has on MBNA customers.

When used responsibly, credit cards are a great financial tool that help people budget effectively, manage their cash-flow, and earn rewards.  Just make sure that you don’t fall into the credit trap.  Pay off your balance each month and don’t get sucked in by credit card companies and their aggressive marketing tactics.

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