MasterCard posts

With more and more Canadians experiencing higher levels of personal and family debt, many of us are setting tighter budgets. But we still have to live. Cutting back is no fun and there comes a point when one can cut no more.

One way to incorporate more savings into your budget without sacrificing essentials is by taking full advantage of the rewards cards offered by the same companies where you're already spending thousands of dollars. The trick is to spend money on rewards that mean the most to you and your family.

Most point schemes reward you with discounted travel (after fees and taxes it's hard to argue that your flight to Orlando was free). Here's the thing though: these days many people find themselves scaling back their vacations, staying closer to home or foregoing travel altogether in an attempt to keep the checkbook balanced.

Having enough points to fly to Tahiti is great but is that the best destination this year? Can you afford the luxury beach hut? The car rental? Restaurants? Maybe, maybe not. This doesn't mean that rewards cards aren't worth it though, you just have to make sure that the rewards are meaningful to you and can be incorporated into the family budget.

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What's in your wallet?

Credit cards with excessive transaction fees, according to the Canadian Federation of Independent Business.

CFIB has identified numerous credit cards that hurt consumers and small businesses alike. MasterCard, which uses the above question as a marketing slogan, is among the worst offenders, along with card issuers CIBC and Bank of Montreal.

Dan Kelly, CFIB's senior vice-president of legislative affairs, says many consumers and businesses are not aware of the fee structures, which range from one per cent 1.5 per cent to three per cent of a purchase price. The high costs are contributing $5 billion annually to Canadian banks' revenues.

The new kids on the "plastic" block - let me introduce you to the world of prepaid credit cards, travel and gift cards.

All these cards can create confusion as to their use, value and costs. But search no further - I have the answers for you! Well, most of them, anyway.

RBC's Visa gift card. You can choose the value you wish to buy and use as you wish. If they're registered, you're protected against theft and generally used as if it were a regular credit card (in person or for purchases over the phone or via the Internet). There's no fee to use your card, however, if you don't within six months, you'll be charged a $1.50 a month fee until the balance runs out.

There are two main players on the market for your pre-paid gift giving pleasure (or for your own personal use). RBC's VISA Gift Card and somewhat newer on the market, BMO's prepaid MasterCard.

BMO's card is interesting and specifically targeted to traveling, replacing those pesky travelers cheques (do people still use those?) In any event, as a frequent road warrior myself, I do know the trepidation of having one's credit card shut down or suspended (by no fault of your own) just when checking in or out of a hotel, or when paying for a large party's tab. As the credit card companies have become ultra-sensitive to any unusual purchases on credit card holders accounts, they`re also quicker to shut down cards, issue news ones (leaving you without a credit card), or place a restrictive hold until you give them a call and tell them yes, it was you trying to make 'that' purchase. Because we're 100% protected from fraud with both VISA and MasterCard, they`re making using their own cards challenging at times.

It's looks like a credit card, but it's not. It's the CIBC Advantage Visa Debit Card -- a completely new type of product, for Canada at least. About 160 countries already use Visa and Mastercard debit products, which give consumers greater control of their finances by allowing them to ditch the credit card and make online, phone or overseas purchases using their debit card.

This type of debit product was first introduced in the United Kingdom 23 years ago, and while Canada has been slow to jump on the bandwagon, elsewhere, the popularity of the cards continues to grow. Visa says the number of purchases made around the world using Visa Debit cards jumped 18% in the 12-months up until the end of June.

No, I'm not talking about those plastic payment methods everyone is intimately familiar with. I'm focused on those ones dreamed up by inventors who set out to change the economic landscape, only to fade into relative obscurity.

Remember, Dexit? Don't worry, I won't blame you if you don't. It's a Toronto-based cash alternative designed to replace change for small purchases like coffee and snacks. It comes in the form of a small plastic tag that can be attached to a lanyard. After pre-loading it with money from their bank account (up to $100 per day) users can scan it against a docking station at participating merchants and the money is instantly spent with no cash exchanged. The only fee is $1.50 every time the user loads the card.

Dexit rolled out its tags at Ryerson University in 2004 with a host of participating retailers and plans for national expansion. (I bought one back then). However, this cash alternative never caught on in any widespread fashion. It can now only be used in seven locations in Toronto and at one retailer in Ottawa. Two cities is hardly a phenomenon and yet, Dexit may be an early precursor to a potentially global and more permanent cashless payment method.