In this research, we analyzed the advantages and disadvantages of savings programs associated with debit cards and "cash back" rewards programs associated with credit cards.
Apart from the fact that debit card savings programs enable consumers to save small amounts, which is a good thing in itself, these programs come with a number of drawbacks. For example, increased use of the card may incur fees; the interest rates offered on the sums saved are not necessarily competitive; the amounts saved are difficult to plan, etc. For these reasons, Option consommateurs recommends that consumers check whether a systematic savings program might not be a more advantageous option for saving even small amounts on a regular basis.
As for "cash back" programs associated with credit cards, these can be advantageous if the consumers who join them: pay off the balance on the credit card account in full and before the due date, don't take advantage of their card to spend more than they normally would, and respect the conditions set out in their contract to obtain this reward. Many consumers in focus groups and those surveyed by another consumer association say they appreciate credit card rewards programs.
However, the terms used to promote credit card rewards programs could be misleading. Indeed, some financial institutions use the terms "cash back", "cash dollars" and "cash back" to name and describe these programs. However, the reward received by members is neither a cheque nor cash, but a credit deposited once a year to their credit card balance. For this reason, we are asking the Competition Bureau to examine whether the indications used to promote these products comply with the laws it administers.
