petro-canada's pivot visa: a primer for getting a little bit more value out of your credit card purchases

petro-canada has really been promoting its pivot visa card lately. it's a reloadable card that you can buy at the retail gas stations. the start-up cost is roughly $10 to purchase the card. you can use it anywhere visa is used, including online.

in general, i don't believe in pre-paid cards.
there are two kinds of pre-paid cards: the reloadable kind and the non-reloadable kind.

• non reloadable cards usually charge an activation fee. the most favorable ratio is generally with the highest value card (e.g., $6.95 for 200$ vs. $3.95 for a 25$ vanilla non-reloadable mastercard).
• reloadable cards generally charge a fee for the card and then another charge a fee for each transaction or a monthly fee. furthermore, they usually don't let you re-load using a credit card.

i'd like to think that if you can get a regular credit card, then there is no need for either of these cards -- you shouldn't have to pay money to use a pre-paid card. but yet, i'm finding myself with a reloadable card in my wallet these days.

when the petro-canada pivot visa card came out, i did my own calculations, and i took the plunge to become a reloadable pre-paid card holder. i'll explain the bad stuff first (the fees) before the good stuff (the rewards).

the details: fees
i have the pay & go version. the whole fee structure is in the pictures below, but the most pertinent details are as such:

• price of card: $10 -- one time fee (the card itself expires in 3 years, like a regular credit card)
• cost of reloading a card via voucher: $2 regardless of denomination. you buy these vouchers at petro-canada stations. i've seen $25, $50, $100, and $250. it makes absolutely no sense to refill only $25 ... that's almost a 10% fee right there!
• when you reload it online, the $2 fee is taken out right away. in other words, when i enter a $250 card, my account is only credited $248. no taxes!
• you can reload a maximum of $500 a day, and $2000 a month
• cost of making a purchase = $0.49 each. this is on top of your regular purchases (e.g., on your $100 purchase, your account gets debited $100 and $0.49). making multiple small purchases is a bad use of the card.
• cost of withdrawing cash from an atm = $3 + whatever the atm operator charges (e.g., cibc / rbc = $2.00, td = $1.50)
• you can withdraw a maximum of $250 a day
• there is a spending cap of $2,500 a day
  

*note: purchasing these vouchers do not give you petro-points.

the details: i only use this card in conjunction with the scotia bank amex card
a few months ago, i successfully applied for the scotiabank american express card. this is a card with a $99 annual fee. the selling point of this card is that you get 4% in travel cash back in gas, grocery, dining, and entertainment, and 1% everywhere else. i repeat: purchases made at petro-canada give you a 4% return. in comparison to my 2% cash back mastercard, i get an additional 2% bonus using this amex. 

scenario 1: making actual purchases. i would only use this technique if a) there are no readily available gift cards for that store that you can purchase at grocery/gas stations, b) if the grocery store that you regularly use does not accept amex (like superstore), or c) if these are very large online non-bonused charges, like airline tickets.

• i buy large gift certificates at superstore. in order to buy a $500 superstore gift card, i need to buy 2.016 reloadable cards (because each $250 card will only credit $248 to my account) with a fee of $2 each. i will also be charged one purchase fee of $0.49. overall cost = (2.016 cards * $2/card) + $0.49 = $4.52
• if i were to spend 500$ on my regular 2% cash back card, i'd receive $10 in rewards. spending $504.52 on my amex card will give me $20.18 in rewards. so using my amex will get me an additional $10.18 in rewards. subtracting the $4.52 extra re-loadable card fees means that i get a net of $5.66 extra that i wouldn't have normally gotten from my 2% card. that's like an extra 1.13% in rewards that i wouldn't normally have.
• i would only use this method if i know that i can burn through this gift card reasonably quickly. with superstore, i know i can.

scenario 2: straight withdrawing from an ATM. it's possible but not recommended because the value to time ratio is so, so, so small.

• reload, deposit your pin online, and then withdraw $240 from the atm. for every $250 cycle, you pay $2 in reload fees, $3 in atm withdrawal fees, $1.50 in atm-provider fees. this is a total of $6.50 in fees.
• using the amex card, you will get 4% back on your 250$ purchase, or $10. this is a net profit of $3.50.
• buy 8 reload voucher at a time (to save time), but you can only load $500 a day.
• there is the risk of loss if a) you lose any of your unused vouchers, or b) if you misplace your $240 that you pull from the atm.

i've done both scenarios, and it works.

would this be worthwhile for any other kind of credit card?
this technique doesn't work very well with other cards in canada, unfortunately. this technique has been widely used in the states, in a process known as "manufactured spending". it only works if there is a significant bonus specifically for gas stations. another card which does this would be the cibc aerogold/adventura card which give an additional 50% miles for gas/grocery stores. that means that for every $1 in spending at a gas station, you get a bonus 0.5 aeroplan point.

using scenario 1 above, spending $500 on the aerogold card to buy 500$ in pivot visa vouchers to spend on $500 worth of travel would net you an additioanl 250 aeroplan points. this is at a cost of $4.52. therefore, you are buying each additional aeroplan point for 1.8c/mile. using scenario 2 above, you will receive 375 aeroplan points to buy the voucher, and pay $6.50, which is about equal to 1.73c/mile. given my previous analysis of the value of an aeroplan mile, it seems a bit steep. (link: cash back credit card comparison)

one last benefit: fuel savings!
when you buy the card, they provide you with an fuel savings card that's linked to your account online. for every dollar you reload onto your card, you get 5c off of one liter of gas to a max of 250 liters at any given time. so for every $250 load, you'll top up your fuel savings card to 250L. i'll probably give this to my parents and brother to use since they burn through gas faster than i do (i tend to fill up south of the border). at 5c a liter, and using maybe 300L a month, that's an additional reward of $15 a month.

final thoughts:
i'm really hoping for a better card product in canada that would provide a better bonus for spending at gas stations. if there is such a product, i'm sure i'd be maxing out this this pivot visa every single month. for now, it's just a game of convenience -- i'd only do this if i were already at a petro-canada station for some other reason. i would never go out of my way to do this -- the few extra dollars i get from this aren't worth the extra gas money ;)