Double dipping: buy your gift cards from Petro Canada!

Back when Safeway would offer Airmiles on gift cards, I would make sure that I would buy all of my gift cards from Safeway. Unfortunately, they've since corrected their computer glitch such that you can no longer earn miles. You used to be able to insist that the cashier swipe your points card "just for fun" and voila! -- one mile per 20$ in gift cards. No reward = no incentive.

I recently applied for, and started using, the Scotia Bank Gold American Express. It's a card that gives me a 4% rebate on gas, grocery, dining, and entertainment spend for use for future travel. So my strategy was to just purchase gift cards from Safeway to earn the 4% rebate instead of 2% with my MBNA World Points Mastercard. Such gift cards would include: Subway, A&W, iTunes, Banana Republic, HBC, and Best Buy. Doing so would serve two purposes: 1) allow me to use my Amex for purchases at non-Amex retailers (e.g., A&W), and 2) allow me to earn a 4% rebate across more types of purchases that wouldn't normally qualify for that extra rebate (e.g., that new shirt at Banana Republic).

I was at Petro-Canada looking at investing in the Pivot Visa (a topic for a future post), when I suddenly remembered something unique with Petro-Canada: they still offer points for your gift card purchases. In fact, you get 20 points per dollar spent. And with the Scotia Bank Amex, because Petro-Canada is a gas retailer, you still get 4% back!

Remember from my previous post: Petro-Points are very versatile. Note the conversion ratio assumes getting 20 Petro-Points per dollar spent on gift cards. Sometimes, there are promotions which would allow you to earn even more:

• 10,000 Petro-Points = 1,000 Cathay Pacific Asia miles. So you get 2 points/$1 spent
• 10,000 Petro-Points = $10 worth of travel at itravel2000.com. Rate of return: 2%
• 12,000 Petro-Points = 1,000 Sears points = $10 in Sears purchases. Rate of return: 1.67%
• 12,000 Petro-Points = $10 fuel savings card (5c off for 200L). Rate of return: 1.67%
• 80,000 Petro-Points = $50 Petro-Canada gift card. Rate of return: 1.25% 

Another unique value proposition is purchasing their prepaid Visa cards: $250 for an activation fee of $6.95. To save on the taxes on the activation fee, I'd consider buying these solely in Alberta. This brings the price to $257.30.

• You would receive $10.29 back in rebates from your Amex (4%)
• You would receive either $4.29 in Sears gift cards, or 515 Asia miles (note that Asia miles are worth at least 1c/mile, or $5.15 in this case.)
• You could use this card on all of your non-Amex, non-bonused spending (e.g., Superstore)
• If you had just spent the regular $250 on your 2% Mastercard, you would have gotten $5 in rewards. (Note: they no longer offer this product. The best you can do is really 1.5%, but I use 2% to make it fit my own scenario)
• Using this system, I would have spent $7.30 extra for the gift card, but would have received $14.58 in rewards, a net reward of $7.28 per $250 spent. $7.28 > $5.00, so this strategy wins. (Remember that Asia miles can often be worth much more, and so this net reward is on the conservative side.)

Petro-Canada is now my stop for gift cards. If I lived right beside one, I'd probably go there on a weekly basis. I'm not yet fully convinced that I'd buy the Visa pre-paid gift cards -- we will have to see.