In search of the perfect credit card

A few months ago, I started re-evaluating the credit cards I was using, and checking into the benefits they offer. I was planning a big trip and have never really paid attention too much to the benefits other than the basic rewards they offer (cash back or travel points in various programs etc.). I knew friends who had used some of the warranty extension kinds of benefits, but that’s about it. It seemed like most cards advertise the same stuff – extending the warranty on certain purchases, concierge services, car rental insurance coverage, some insurances on trip cancellations and things like that. It all sounded the same to me.

I decided to make some changes, cancelling a basic card I had and looking for something with better rewards. Who knew that months later I would have gone through 3 different “new” credit cards to find the “right” one for me? I realize now how many things I never took into consideration that can make or break your experience with a credit card. Here is my story and some lessons learned that may help you too.

Context

I’m Canadian and am working with Canadian financial institutions (FI for short, hereafter in this article). I can’t say for sure any of this is exactly the same in the US or elsewhere, but some things might translate well enough to other countries and credit card providers.

Credit Card #1 – website fail

The first card I applied for was the PC Financial World Elite Mastercard. On paper, it was an excellent value. It has no annual fees despite being one of the “premium” World Elite line of cards in the Mastercard world. I was looking forward to piling up the points (in this case the rewards program was PC Optimum points which I already use). The bonus points offered on the card tie in heavily to the stores I shop at regularly for all or most of my grocery and household purchases (Zehrs, Fortinos, Loblaws, Shoppers Drug Mart) plus some great points per purchase at Esso for gas. Win-win. It seemed like a slam dunk.

Initially the card was great, I was accumulating points quickly and all was good. Then, PC Financial redesigned their website and it went from good to crap (in my humble opinion). [Side note: I’m a Quicken user and have been for life. If an FI website doesn’t allow me to download my transactions to Quicken, I’m moving on to an FI that will.]

This website redesign took away the ability for users to download their info into Quicken, a feature that had existed and worked just fine for a few months before the change.

Note to software developers: NEVER remove a feature that customers use!

Their new website – to me – was borderline unusable. It might look pretty but if you can’t get at the most basic of info without going back to another screen, it’s poorly designed. I won’t waste my time getting into the details of things that frustrated me with it because it’s frankly too long of a list and that’s not what this post is about. I cancelled the card and moved on.

Credit Card #2 – getting closer

After the PC fiasco, the lesson learned was “make sure the transactions can be downloaded into Quicken”. I would never have thought it wouldn’t be possible before the experience above. Quicken has lists of which FI’s do support their product but as you’ll read, it’s not foolproof!

So, before looking for another card, I searched for “best credit cards in Canada” and found a good credit card comparison tool on Rate Hub. It appears to be an updated version of an old Money Sense magazine credit card comparison tool and allows you to input some basic spending habit info to show you what cards might fit your needs best, in terms of cost and rewards value.

When I tried it, one card immediately jumped out among the travel cash back cards that they suggested for me and that was with Meridian Credit Union. I am already a customer at that FI and already download my other banking transactions into Quicken, so once again, this seemed like a good option for me. (Narrator voice: this is foreshadowing…)

I chose the Meridian Visa Infinite Cash Back card and I was intrigued by the Visa Infinite benefits – which many other FI’s also offer on their own line of Visa Infinite cards. The annual fee was $99 which was less expensive than many other FI’s versions of the same level of card, so I was ok with that for the benefits. I think each “line” of credit cards have some common features, like Amex has “Front of the Line” for first crack at event tickets, the Visa Infinite line of cards has some neat features too.

I took advantage of one of their perks, the “Luxury Hotel Collection”, during a trip to the US in March, using that to book a night in downtown Seattle at a better hotel than I would have booked without it (but the price was still in range for what I was willing to pay). This booking included some bonuses – free breakfast for 2 (a $40-$50 USD value but I was travelling solo), a $25 USD food & beverage credit and a free room upgrade. The savings on the meals alone on that trip was close to $50 USD so paying $99/year CAD for the card would surely pay off – plus the first year the annual fee was waived. Sweet.

It was a short-lived experience. Right away I noticed I can’t download my transactions to Quicken but I’ve used some credit cards where you can’t download until the statement is created. So I didn’t panic yet. However, when I got my first credit card statement, their credit card provider doesn’t allow download to Quicken. (Meridian works with a 3rd party to offer the credit card so it’s not within their control per se). Doh. All my other Meridian accounts are downloadable so I just assumed the Visa would be too. “Assume” = yes, you know what that stands for, right?

On that trip, I found out another thing that was super weird about this card, which turned out to be a very good thing for me in the end. The card posted foreign currency exchange (FX) fees separately from the transactions themselves which gave you much better visibility into the fact they exist. From an “employee filing US expenses” perspective, it was horrible to have them listed separately though. Every single purchase I made on a business trip to the US was listed first with the traditional “payee plus USD amount * FX rate” to show the CAD equivalent of the purchase. Fine, that’s normal. However, at the bottom of my statement were a listing of “Foreign Currency Transaction Fees” and it was one line per USD purchase for the markup they charge on the FX rate. WTF. Reconciling and proving they were related to the original purchase for an expense report took a little explaining!

So, I decided that the lack of Quicken download and the FX fee handling were enough for me not to want to keep this card. There was no annual fee in year 1 so I didn’t lose anything on trying it out.

I was about to cancel it when I saw I had slightly more than $50 in cash back accumulated that I could redeem. Why waste that? The simplest thing to do seemed to be to transfer it as a statement credit instead of redeeming it for a gift card. Well, I redeemed this a month ago and it’s still not credited to my Visa! The fine print says it might take up to 45 days to do so! OMG. That’s just another sign that this isn’t the right card for me. “Cash back but you have to wait 6 weeks to get it” isn’t worth it. As soon as that credit hits my account, I’ll be cancelling this card!

Credit Card #3 – we have a winner!

I guess the saying “the 3rd time is the charm” has some truth to it. Back to the drawing board, I was still interested in finding a better card. At this point I figured I am going to stick with “a” Visa Infinite card, I was impressed with the additional benefits this line of cards offered. I ended up back at the other FI I deal with which is Scotiabank. I already have one of their Amex cards, I know they support Quicken, and I’ve given up on trying something new!

When I went to look at the details on their version of this card, the first thing I noticed was “no foreign transaction fees”. Hmm. I didn’t even realize that was a thing.

That is the deal-maker as far as I’m concerned. This FI charges $139/year for the annual fee but like the Seattle hotel example above, if I use the perks of the card, I should benefit by more than that easily to make that fee well worth it. Here are 2 examples of ways I’m going to easily make up for the $139 annual fee:

Example 1: savings on FX fees

I looked at my March US trip spending and I spent just over $2,500 USD on that trip, partially from the travel and partially from booking another conference in that calendar month (coincidentally). Both credit cards I used on that trip – the Meridian Visa and an existing Amex I already had – both charge 2.5% in fees over and above the going FX rate on a given foreign currency transaction. And it gets worse! That’s not 2.5% on the USD amount, it’s 2.5% on the converted to CAD amount! Here’s a real charge on my card, paying for a conference registration fee:

  • The conference registration fee was $1,145 USD, which at the standard Visa rate was $1,539.30 CAD. That works out to an exchange rate of 1.3444 (to buy $1 USD) which was right in line with the going rates that day/week.
  • The FX fee was $38.48 on top of the $1,539.30. That is 2.5% of the Canadian dollar amount ($1,539.30) which effectively was an exchange rate of $1.378, $.0336 higher, not 2.5% higher!

On that March trip, with the $2,500-ish spending, I paid $76.29 in FX fees. With this new Scotia Visa Infinite card, I would have paid $0. I would have saved $76 in one trip. Any foreign currency purchase I make, travel or otherwise, I will be paying with this card to take full advantage of this. I typically go to 2-3 conferences a year, mostly in the US so I could quite easily save more in FX fees than I pay for as an annual fee on the card, and that’s even if I don’t use a single other benefit of the card.

Example 2 – taking advantage of the Visa Infinite program.

For a recent birthday, my better half and I booked a night in Toronto at the Royal York hotel as we had tickets for an event downtown. I booked it via the Visa Infinite luxury hotel collection site and once again, it was a tremendous deal: $100 CAD F&B credit (the “typical” $25 F&B credit plus a bonus $75 credit because the hotel is under renovation, an incentive to stay anyway), free breakfast for two (which the bill came to nearly $60 at the hotel!), free room upgrade and complimentary late checkout. The F&B savings alone just paid for my annual fee, with one stay. That’s crazy. I’m a fan…

What did I learn?

  1. I learned to shop around, and really pay attention to the details of the various credit card offerings. I’d never heard of “Visa Infinite” before but once I checked it out, it seemed like something I would (and now have) use. I also have an Amex and I do subscribe to the “Front of the Line” thing and have benefited from getting early access to some event tickets from time to time.
  2. I learned there are different offerings around FX fees. I think of all the USD purchases and travel I’ve done over the last decade and think, wow, I could have saved a boatload in that time had I known a no-FX-fee card existed. The standard FX rates still apply, this isn’t getting USD at par, but you’re not paying an extra 2.5% on top of it.
  3. Other perks. I’m reading through the fine print on some of the trip cancellation, rental car insurance and travel insurance things so I know what qualifies if I need to make a last-minute change on my upcoming summer trip or god forbid, need to make a claim. One card requires that 75% of the cost of my trip be charged to that card to be eligible for trip cancellation insurance – that’s important to know.
  4. Many perks need registration. The Visa Infinite luxury hotel collection thing is a Visa site, not a bank site so it needs registration. Easy to do, but if you don’t know, you might miss out on a perk. The specific card I have with my FI has free lounge access – and you need to register to get the card that gets you into the lounge (it’s not your Visa that gets you in!). I now get 6 free lounge passes a year for travel at airports across the world. Sweet!

Bottom line: if you’re going to go for a card that has some rewards or premium perks to it, take advantage of it, or go to a no-fee card where you’re not paying for something you won’t ever use.

Business impact

I think of all of what I’ve learned, I focus on the FX markup piece and how much that could save even an average business who does some foreign currency spending. There can be a non-trivial business impact of that kind of charge (or savings). My own business had regular charges in USD for things like website hosting year after year not to mention travel costs.

Many companies have corporate credit cards, is that a feature they look for? I don’t know the answer to that (having never had the responsibility of setting up a corporate credit card program) but if my employees were travelling a lot or buying a lot of USD services or products, I would be seriously evaluating what a no-FX-fee card could save me in a year. It would not be that minor, based on my own experience here.

The flip-side is if my employees travel a lot and use their own cards to pay and expense costs, at what point is it worth recommending to them that they look at a no-FX-fee card even if it’s a trade off for allowing them to expense their annual fee perhaps. In the consulting world, there is a TON of travel and likely a lot of it involves foreign currency spending.

The whole experience opened my eyes to the costs, benefits and opportunities that exist around credit cards. They aren’t all interchangeable, even when they all sound like the perks are pretty similar.

I don’t know if this helps anyone but I really wish I knew more about this a decade ago when I first started out in my own consulting business, that’s for sure!

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