Important update from June 15, 2017: A lot has changed since we last reviewed Canadian Tire’s MasterCard, and we have actually had the pleasure of experiencing first-hand their improved rewards program embodied in the Options® MasterCard. We invite you all to read about it here: http://www.greedyrates.ca/blog/the-canadian-tire-options-mastercard/
If you have a Canadian Tire Mastercard, chances are you could be doing a lot better. We evaluated each Canadian Tire Mastercard – the Options, Gas Advantage and Cash Advantage Mastercards – and our opinion is there are alternatives in the marketplace that offer better value.
Canadian Tire Mastercard
1. Poor Rewards Rate: While the Canadian Tire Options Mastercard advertises a rewards rate of 1%, our analysis shows is doesn’t quite turn out that way for most redemptions.
Canadian Tire rounds down your purchase to the nearest ten dollars for purchases over $10 , and pays you 1% on the rounded down amount. So if you bought an item for $49, they round your purchase down to $40 and pay you 1% on $40, which is $.40, equaling an .81% earn rate. We find that less than transparent, allowing Canadian Tire to claim they offer a 1% reward rate, when in fact it’s much less on many transactions, because of the practice of rounding down your purchases.
Perhaps worst of all, it’s difficult to find information related to the rounding down practice BEFORE applying, making it difficult for applicants to have transparency into what they are getting before they commit to the card.
The Canadian Tire Cash Advantage Mastercard advertises a rewards rate of up to 1.5% cash back per dollar spent, but again, our calculations show that it’s difficult to get anywhere close. The Cash Advantage card offers an earn rate of 0.25% on the first $1,500 in purchases, 0.5% on purchases above $1,500 and up to $3,000, a full 1% on purchases above $3,000 and 1.5% on purchases above $24,000. You earn double that rate within Canadian Tire stores.
The bottom line: If you spend $6,000 a year on your credit card, ($1,000 in store and $5,000 elsewhere) you’re really getting around .6% cash back for every dollar spent – nowhere near the 1.5%! Our suggestion? Get a no-annual fee credit card that offers much better value. You will be sure to find at least one credit card that can do better than the Canadian Tire Mastercard will do for you. Our favourite no-fee credit card in Canada right now, offering great value, simplicity and transparency is the new American Express SimplyCash credit card. It offers a flat 1.25% cashback on ALL purchases, with no limits. In addition, during the first 6 months, it offers 5% cash back on gas, grocery and restaurant purchases, all with no annual fee.
2. Poor Interest Rate: Each Canadian Tire Mastercard has a purchase interest rate of 19.99% to 25.99%. That is a very high interest rate if you’re not paying down your credit card balance every month. We estimate the average Canadian Tire Mastercard balance to be around $2,300, which means cardholders are keeping a balance on Canadian Tire credit cards. Put another way, for every $1 spent on a Canadian Tire Mastercard, $.38 is not paid off at the end of the month. As a result, Canadian Tire Mastercard users have a big incentive to lower their credit card interest rates. In our opinion, what anyone who has a Canadian Tire Mastercard should do, is transfer their credit card debt, through a 0% balance transfer offer, to a lower rate credit card. Lowering rates from 19.99% or 24.99% to 0% for 12 months can save $100’s in interest costs, and give cardholders a chance to pay down their principle.
3. Uncertain Interest Rates: While Canadian Tire Mastercard advertises 19.99% purchase interest rates, when you read the fine print, you’ll notice that it says “if you are not approved for a card at these rates, Canadian Tire Bank may still issue you a card at an annual interest rate of — 25.99% for all charges.” We think it’s too costly for cardholders to potentially pay a 25.99% interest rate, without having ever missed a payment on their account. Each Canadian Tire cardholder should check their credit card statements to ensure their not paying 25.99% interest rates. If you are, transfer your balance to another card or pay down your Canadian Tire credit card right away and start using a different credit card with a lower rate.
The Bottom Line
From our analysis, we think there are far better Canadian credit cards in the marketplace to choose from than those from Canadian Tire, offering much better rewards rates, interest rates and transparency.