Cash Back – A Special Annual Dividends

scotiamomentumI never thought I would look at a cash back credit card this way, but I am essentially earning cash from my spending and it is by no mean a small amount. In fact, if I compared the cash back from my Scotia VISA Momentum card, I earn more than twice what my highest dividend stock is paying me (see table below). When I look at dividends, I focus on the income my assets are generating. How is that different from a cash back credit card? I get paid once per year like a special annual dividend.

I have had this card for 2 years now and I love it. It’s funny how getting cash back feels different from rewards. The ability to have cash back really changes how it’s valued. Pretty much everything goes through this card for us. I am one of those customers who will use it for a small amount of money without abusing small shops. Obviously, the cash back is relative to how much you spend. We are a family of four and expenses add up over the year. We don’t spend frivolously but it adds up and now I can get some of it back.

How To Use Your Cash Back

You may be inclined to use cash back as a bonus gift to spend. In fact, you may have already spent it in your mind… Why? Look at it as an investment opportunity! You already spent the money and paid the bills.

Just like you should reinvest your RRSP tax refund for maximum results, you should just invest your cash back. Especially if you treat it like dividends. If you plan your budget and don’t include your RRSP tax refund and cash back in your spending, then you have all this money to re-invest.

Related: How To Maximize Your RRSP

Scotia Momentum VISA Infinite

scotiamomentumI grew tired of the rewards and travel cards. For once, airline websites are really convenient to shop and research. Having to call a company and going through that process over the phone was not as convenient. Since I have to travel long distance, the airline point cards took a really long time to accumulate. As for the rewards points, I always found the rewards a ripoff. The only rewards I would get were movies or cash cards. See a pattern here with the cash cards?

When I saw I could get 4% on my gas and grocery purchases with the Scotia Momentum VISA Infinite card, I was hooked! You saw above how much I earn in the 4% category. Both fuel and grocery account for a large amount. Not only am I free to fill up anywhere, I can also use another reward points card at some gas station. I use Air Miles at Shell whenever possible since I can use it as cash as well.

Benefits of Scotia Momentum VISA Cash Back:

  • A full 4% cash back on all eligible gas station and grocery store purchases
  • A full 2% cash back on eligible drug store purchases and recurring bill payments
  • A full 1% cash back on all other eligible purchases

Cost of the card is $99 for the primary card and $30 for the secondary card. You remove that from your total cash back and you don’t see it 🙂 If you are fee averse, you need to do the math.

Best Cash Back Credit Card

Have a look at the table below. I have quite a significant amount of money invested and I still manage to earn a large amount from this exceptional cash back credit card. All I have to do is simply use my Scotia Momentum VISA everywhere I go.

VISA Cash Back$905.11

It’s all a matter of perspective. If you treat cash back like a dividend, you’ll put that money to work for you. Think about it, how many sources of income do you have to invest?

  • Your regular pay with regular contributions
  • Your tax refund (it should really be re-invested. Pick the TFSA or RRSP)
  • Your cash back from credit cards
  • Other passive income can be added to the list

Related: How To Start Investing With Little Money

Readers: Are you ready to treat cash back like a special annual dividend?

12 Responses to "Cash Back – A Special Annual Dividends"

  1. Intriguing, though with PC we get free grocery money without having to pay a yearly fee.

    As for getting my money back. When making large purchases I always provide the seller the option, cash,debit card or credit card. Make me a deal. No deal then it goes on the credit card, which is paid off in full each month.

    As an aside I noticed back in 2004 a person purchasing groceries on their credit card. Something you could never do in the past. Anyone know when this change occurred? To me it was a bad sign, people truly living off of debit.

    1. @David

      The PC chain (President Choice) started a couple of years back. All other chains have done it for a long time from what I know in my area.

      What I am finding interesting with the card is that you can still combined other reward points if they have it. Obviously, PC tries to keep everything together and it’s better for them since the money always stay within the company.

      With online shopping, credit cards are just going to be more prevalent. Even PayPal is showing up on many online store as well as yet another way to pay. It doesn’t matter to me because I pay it in full. I am bad business for the credit card companies 🙂

      I can rarely find a place where I get a discount for cash …

  2. Hi PIE,
    I like your way of saving money.
    As for the vcredit card,i am looking for one with no strings attached:
    -Have a minimum gross monthly income of $1,000
    -Annual Fee: $39
    How many months or years( in spending)did it take to reach $905.11?

    Thanks again for sharing.

  3. Love this idea thanks for the article. I have been meaning for some time to investigate a better rewards program than I have currently, and this sounds like a great way to further accelerate investing.

  4. I using a Mastercard cashback, since December 2012, and will never go back. $0 fees, and of course no interest since I reimbourse regularly.

    Your view is perfect, the cash back is effectively a dividend on lost money (groceries and so on).


  5. I agree that the Scotia Momentum Visa is definitely the best cash back credit card in Canada right now. It’s a no-brainer for anyone looking to earn cash back as their reward choice.

    However, I disagree with your assessment of travel rewards credit cards. They can be a little bit of a hassle to use, but if you know what you’re doing you can easily do better than the Scotia Momentum Visa especially if you take sign up bonuses and often the first year’s annual fee 100% rebated.

    I’ve earned over 125,000 American Express membership rewards this year alone which can be transferred 1:1 to Aeroplan making an equivalent of 125,000 Aeroplan miles. That equates to 5 plane tickets anywhere in North America. Since I live in a smaller city, airfare is very expensive. That’s roughly $3500 in rewards right there and I didn’t have to spend a penny other than my regular spending because annual fees were rebated.

    There are those that will always choose cash though. Personally, I choose the highest valued thing that I would spend money on anyway. That’s my barometer.

    1. @Stephen

      The bonuses can be really good. I think it’s worth for families to manage the credit cards in case there is a need for the rewards.

      I have not looked at the rewards card for travel in a while to be honest. I was mostly with VISA for the longest time. Since I got the Costco Amex, I have been impressed with the Amex cards in general. Have you seen or done a comparison on rewards vs cash back? I found airmiles points aren’t really worth it. Takes a long time to earn. I use the cash value at Shell and that’s about it. I used to have Aeroplan 10 years ago and disliked them with all their restrictions. It’s funny that it takes a REALLy long time to get a customer again once they are not satisfied.

      The best is when you can have a corporate card in your name 🙂

      1. Yes, I have done the comparison a while back on my best credit cards in Canada page:

        However, that page is several years old now and is sorely in need of updating. I’m planning to update it soon.

        Air Miles are only worth it if you can find a way to get a lot of bonus miles. Buying gas at Shell when they run their bonuses and shopping at Safeway with their insane bonuses are two of the best ways to do that. Flights probably represent slightly better value with Air Miles than redeeming for gas but since they introduced Air Miles cash there hasn’t really been one reward that provides an insanely good value. They are trying to make it more consistent across the board I think.

        Aeroplan can suck to deal with sometimes but it is highly lucrative. The Amex cards do give the best bonuses for sure and they have a great referral program as well so you can earn even more points.

        The amount of spending I had to do was pretty minimal to get all those points I mentioned. The came from my wife and I both getting Amex Gold Rewards cards, using someone else’s referal link to get an increased bonus for the first card, referring my wife myself so she got a higher sign up bonus and I got the referral bonus myself for referring her, a little bit of spending, and some bonuses for referring 2 or 3 other people. Did it all in about 3 months.


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