According to Ipsos-Reid, 58 per cent of Canadians own credit cards offering some type of reward. The marketing researcher’s May 2010 survey also showed Canadian cardholder participation percentages for spending on:

• Travel expenses (88 per cent).
• Retail purchases (53 per cent).
• Meals, entertainment or gas purchases (50 percent).
• Drug store purchases (34 percent).

Compared to travel spending, which is already credit card-intensive, high-volume and routine spending items present strong opportunities for card issuers.

What types of reward programs can entice shoppers to use their credit cards more often? Among Ipsos-Reid survey respondents:

• 33 per cent wanted cash-back incentives.
• 27 per cent opted for merchandise rewards.
• 23 per cent preferred travel rewards.

Based on survey findings, Royal Bank of Canada introduced a cash-back card that targets everyday purchases. The reward is one percent cash back; consumers charging $1,200 per year earn $12 in cash credits.

Are groceries a more compelling reward?
RBC also included a limited-time bonus equal to five per cent for grocery store purchases. Shoppers spending over $416 on monthly groceries would qualify for a maximum $250 in annual cash-back credits.

Why focus on groceries? The Ipsos-Reid poll shows that grocery shopping is a fertile area for increased credit card spending. Currently, Canadian families spend an average $628 monthly on groceries paid with:

• Debit cards (53 per cent).
• Credit cards (26 per cent).
• Cash (21 per cent).

Another credit card issuer, PC Financial, goes one step further than RBC by offering free groceries as actual rewards. If you charge $1,000 per month on your PC Financial cash-back card, you earn 120,000 reward points worth $120 towards your grocery bill.

For consumers, groceries can be more convenient than cash. It’s easier to redeem your points at checkout rather than applying for cash rebates with card companies. At your local grocery store this spring, don’t be surprised to see more credit card promotions.