updates: petro-canada pivot visa, pointshoud booking bonuses, and expedia's best price guarantee

1) when i posted about the petro-canada pivot visa card, to do straight withdrawals, i factored in a $1.50 fee that the atm would charge. i was under the assumption that most atms would not a reader had pointed out that not all atms charged that fee. while in edmonton, i found a credit union atm that did not. i am very, very encouraged. sadly, that credit union is only in alberta ... but it makes me want to stick my prepaid visa into any machine i can find. so for every $250 cycle, it is possible to get a bonus $5 back.

2) i had an e-mail sitting in my inbox for about a week now from pointshound. until the end of the month, you can get an additional 500 bonus points (to the airline of your choice, it seems) for every new trip booking. a trip is defined in the fine print as only one booking in a city per 7 day period (i.e., booking two nights at different hotels in seattle does not count). i booked my seattle hotel using their double dip feature. normally, i would refund it all and then rebook for the bonus, except that the price of the actual hotel has increased ...

3) from hack my trip, i learned that you have to add another step to utilize expedia's best price guarantee. they changed the wording with their new expedia rewards program. you can only get the $50 travel voucher now if you are a member of the expedia rewards program. but really, it's free to join, and you get 1-2% return on your hotel purchases. it's just an extra one-time step.

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 ;)

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.

kiva and zidisha -- microfinance loans as a way to manufacture spend

edit feb 23/14: please see my update on zidisha.org here.

manufactured spending is the process of spending money on a credit card for the points or threshold bonuses while knowing that most, if not all of that expense, will be reimbursed at no cost for the user. this is extensively discussed online, and there is an entire flyertalk forum devoted to this.

manufactured spending is not just the basics, like buying things for work and having those expenses reimbursed by the company. manufactured spending goes beyond that. some things in the past that i've heard about include:

• buying vanilla reloadable credit cards at the pharmacy (with 5x mile multipliers with various cards), transferring it to an intermediary pre-paid card, and then cashing them out at ATMs for minimal cost
• buying thousands of dollars worth of 1$ presidential coins with free shipping on credit card, then cashing them out at a banks
• buying and selling to yourself (or trusted friend) using amazon payments (provided you have an american SSN)

these have netted substantial amounts of miles for its users south of the border. most of these techniques don't work for canadians as there generally are 2.5% surcharges on credit card purchases. this alone generally negate any of the rewards associated with these schemes. admittedly, i don't know the intricate details -- if it does not work for me in canada, i'm not one to research it too deeply. however, one mini-version of manufactured spending is through the world of microfinancing.

kiva.org -- microfinance 101

despite the currency conversion fees, something that may be worthwhile to some would be microfinancing or microlending. this is the act of providing loans to small businesses or entrepreneurs who lack traditional banking access to loans. a good example of this would be making loans to small businesses owners in developing countries, where for the ordinary citizen, the cost of the loan and the associated interest rates are quite prohibitive.

kiva.org is an organization which has local field partners who find small business owners in developing countries. kiva then posts their requests on their website, and kiva users (lenders) can lend small amounts (usually 25$) to these small business owners (borrowers). once a borrowers have enough lenders, the loan is supposedly disbursed. in my own experience though, the funds are disbursed beforehand, and kiva is just trying to find enough lenders to make up for the loan after the fact. borrowers then pay back through a pre-determined payment schedule. kiva users don't earn interest. there is a real risk of loan default (at the time of writing, there is a 98.99% repayment rate). there is also a chance of currency conversion losses. for the most part though, i have not run into any troubles.

my statistics compared to the average

in order to fund these loans, you can pay using your credit card via paypal. paypal's currency conversion fees/rates are not the best, so i would consider using your no forex fee card to pay the USD price. as the borrowers pay you back, you receive credit into your kiva account. you can either re-loan the money, or you can request that the money is cashed out into your paypal account. you can then convert this back to canadian currency. when your account balance reaches $150+, you can transfer this money back to your bank account for free (amounts less than $150 incur a $0.50 fee). paypal reportedly has waived its fees for kiva.

my strategy has been to go on a loan-buying spree when CAD is roughly $1.01 or $1.02 per USD. when the canadian dollar falls to $0.96 or $0.97 per USD, i cash out my loans and transfer back to my bank account. it's not a huge amount of money that we're talking about here, but i figure i might as well try to earn a bit of a reward while doing my part in helping these business owners out. i personally do $100 or so at a time, but i hear reports from people on flyertalk buying thousands of dollars at a time.

zidisha -- microfinance 201

zidisha.org is a less tested microfinance site. it certainly doesn't have the press that kiva has, however it's something that i've tried out as well. it works on the same principle as kiva.org, however the main difference is that lenders on the site can ask for interest. a prospective borrower will tell you how much they require and what interest rate they are willing to accept. lenders will then offer various amounts to loan (e.g., $25 of a $800 loan) and will offer various interest rates that they are willing to accept. at the end of the bidding process, all of the offers with the lowest interest rates are accepted in order to build the required loan amount, and the loan is dispersed. there is a 2-month grace period before repayments start.

loans can be funded with credit card via paypal, however there is a 3.5% fee associated with this. this fee was temporarily waived suspended in march on a trial basis. therefore, my rule is that i will always insist on an interest rate of at least 3.5% to cover this cost. repayments are made and are collected in the user's zidisha account. this money can be re-loaned again or withdrawn for free to paypal.

my statistics on zidisha -- i just started this in march

conclusion
both sites offer ways to purchase loans via credit card while helping small business owners in developing countries. as per wikipedia, these sites themselves aren't without their fair share of controversy. however, the potential good is enough to outweigh those criticisms. it's an almost free service while earning a few miles along the way.

have you tried kiva or zidisha? has it worked for you?