Tag Archives: Tim Horton

Our Credit Rating & Tim’s Reward Card

Aren’t we on topic! Last week we talked about the federal government’s budget and deficits as far as the eye can see. The day after, last Thursday, Fitch (one of the major credit rating agencies) announced that our government debt is “close to incompatible with a AAA credit rating.” So we’ll not only pay a lot more interest because of the debt total, but with a drop in credit rating, we’ll also pay a higher interest rate to keep borrowing. Exactly what happens with us individuals: When our credit rating drops, rates get much more expensive because we’re a higher credit risk.

Tim’s now has a rewards card. If you don’t mind lugging around the card, every 7th coffee will be free. Not a bad deal to get a 13% price discount equivalent…until they change it to every 8th, then 9th, then 10th once they’ve trained and hooked enough customers. Mark my words! Why did they start the program? My guess is that the Esso stations now run by 7-11 will be kicking out their Tim’s coffee as soon as the contract is over. That’ll plummet Tim’s sales. Since we’re really loyal to loyalty programs, no matter how crappy they are, this is Tim’s pro-actively re-training us to visit Tim’s and not 7-11 when they switch back to their own coffee at a much bigger profit margin.

A New Tim Horton Visa Card

Affinity cards are regular Visa, MasterCard or American Express cards, but they’re issued in conjunction with a company or organization. You can get a University of Vancouver MasterCard, a Target Stores Visa, a Shoppers Drug Mart card, or even a Justin Bieber pre-paid credit card…with a ton of fees. The Kim Kardashian card was pulled off the market as lawsuits started with all the fee traps…but I digress…

As of last week, there is now a Tim Horton CIBC Visa card. With 3,500 locations, the marketing for this card is all over their stores – inside and out. If you’re one of the 5.3 million visits a day, you’ve probably already seen it. CIBC needs the business as they lost half a million cardholders to the TD last year, and Tim Horton will get a big kickback on every charge made.

Yes, I actually read the 12-page disclosure because you aren’t going to…you’re welcome. This is a normal Visa card with a 20% interest rate and no annual fee that you can use everywhere Visa is accepted. The perk, or reward, on this card is that 1% of your purchases can be redeemed at Tim Horton for coffee, or anything else. Since Tim Horton sells over 2 billion coffees a year, I’m sure they can afford some freebies.

After a year of work and research, it’s the first credit card with a blinking light. If that excites you – I’m not sure why. One light will blink if you’re using it as a regular credit card and a second light blinks if you’re using it at Tim’s to redeem your rewards.

Who should consider getting this card? That depends on whether you want to get free coffee, regular price coffee or pay around double the price for your coffee:

If you run a credit card balance: You need (not want) a low interest rate card. There are a half dozen in Canada, including the Scotia Value Visa. You’re way ahead of the game at a 12% rate versus 20%. If you don’t, your so-called free coffee reward will actually cost you double with the extra interest you pay.

If you charge a lot but always pay off your card, you want a reward card with 1.5% to 2% perks. You can get 50% to double the rewards with other cards if you shop around. A listener e mailed me last week. She runs $55,000 on her card a year and pays it off monthly. She shouldn’t chase $550 of free coffee when she can get $1100 of other rewards.

If you charge maybe $500 to $1000 or so a month, and pay off your card, you’re not likely to reach any huge rewards with another card. If you like Tim Horton, this card may be for you. At least you’re getting some return for your spending.

Two more quick things:

As with any credit card, you’re playing with fire and one day you will get burned – it’s just a matter of when, and not if.

One day, I want to issue a new Visa card. It’ll have audio with it, and not just a blinking light. When you use the card it’ll say: Your balance is already $3485.00 are you sure you want to make another charge that you won’t be able to pay off anytime soon?