Return on shopping investment

I saw a column online in the Toronto Star that I had to pass along.
Often, people will shop at a certain location to receive points (HBC or Hoppers Rug Art) or instant coupons. For as long as I remember, I had gathered quite a stack of Canadian Tire bills in my car's ashtray. I could redeem the paper for the salt I needed for my water softener or driveway in winter, or would purchase grass seed for my lawn. You get the idea. Today, however, you have to spend significant dollars at that retailer to receive a modest dividend of paper money.
When my brother ran a business a few years ago, he would (quietly) accept this coupon currency, because like everyone it was almost like real money.
It was a good lure to visit that store.
Anyway, here's the Toronto Star story, which is both a history of the CTire money and reasoning about its reduction in return.
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Ellen Roseman column: What's happened to Canadian Tire money?By Ellen Roseman | Sun Jun 5 2011
TORONTO - When I received only 50 cents in Canadian Tire money on a $110 purchase (before tax), I was shocked to see how little of it I got.
Canadian Tire money was introduced in 1958 to lure customers into the company’s first gas bar in Toronto. It spread to the stores in 1961.
The first paper bills were very generous, giving customers a discount of up to 5 per cent on future purchases. This fell to 3 per cent in the mid-1990s, when Canadian Tire coupons were offered to all their stores in the country.
Today, customers who have a Canadian Tire credit card get a better deal than those who pay with cash or debit cards.
"Canadian Tire Money on our Options MasterCard is realizing increased growth and redemption," says spokeswoman Liz Hamilton.
"Combined, the Canadian Tire Money program (paper and plastic) handed out more than $100 million to customers in the past year, with a 95+ per cent redemption rate. We don’t break out the numbers."
Credit cards are a big money maker for retail chains. Cash is out of style for a number of reasons.
Retailers want to track your purchases, which they can do with credit cards. They know you’re more impulsive and less price-conscious when using credit cards than when using cash.
Also, they can give incentives for higher spending with tiered credit cards, whose rebates depend on your annual purchases.
Canadian Tire’s Cash Advantage MasterCard, for example, offers a rebate of 0.25 per cent on the first $1,500 of eligible purchases, reaching 1.5 per cent on spending above $24,000 a year.
You can double the rate — up to 3 per cent cash back — if you use the card at Canadian Tire stores, gas bars and Mark’s Work Wearhouse stores.
Most Canadian retailers have introduced Visa or MasterCards in addition to, or instead of, their house-brand credit cards.
They promote these new cards heavily, often using salespeople in the stores to encourage customers to sign up.
"We get a lot of phone calls about credit card accounts opened by a marketing representative at our stores," says a person who works for Canadian Tire Financial Services.
"These marketing reps promise all kinds of things, such as gift certificates. They even go so far as to say they’re only doing a survey and the unsuspecting people won’t receive a card.
"They’re deceiving customers and management doesn’t care. Management says they bring a lot of new cardholders to Canadian Tire."
I heard a similar complaint from a Shoppers Drug Mart customer, who had been accosted at her local store.
"I was approached by a young woman who asked me if I had one of their Optimum reward cards. When I said yes, she asked if I’d like to have my points doubled every time I used the card.
"As her questions grew more personal and intrusive, I asked if this was a MasterCard application. She said no. But the store manager confirmed that it was a Master Card application."
Lisa Gibson, a Shoppers Drug Mart spokeswoman, apologized and sent a $50 gift card as a goodwill gesture.
"The representative that approached you is employed with one of our vendor partners," she told the customer. "We are selective about who we allow in our stores and have policies and guidelines in place that they must follow.
"We contacted the vendor and they responded immediately. They have a zero tolerance policy for this type of behaviour."
The sales representative was fired afterward. She called the customer and then called me, insisting she had followed the rules.
Gibson apologized to both of us: "The vendor has called the sales rep and she has agreed to stop any further activity."
My advice: Resist the pressure to sign up for Visa and MasterCard products while shopping at chain stores.
You can’t ask questions and read the fine print on credit applications when ambushed by an outside marketing representative. Just say no.
Ellen Rosemaneroseman@thestar.ca. writes about personal finance and consumer issues. You can reach her at