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.

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