If you’ve ever looked at your grocery bill and wondered if that really was where all your money went, you’re not alone. Fortunately, there is a way to recoup some of those funds without going hungry. You can use the CIBC Dividend Visa to earn a generous cash back rate on your grocery purchases. This slightly complex card will take some extra finesse to use well, but it has great potential to lighten the burden of everyday purchases on the average person.
What You Should Know
The main thing that makes the CIBC Dividend Visa special is the exceptional reward rate it will get you when you buy your groceries with it. You would have a hard time finding free cards (as this one is) that offer 2% cash back on anything, let alone on such a common expense item as groceries. Since everyone needs to eat, trips to the grocery store are almost inevitable, so it would be very hard for anyone to miss out on the bonus rate unless they were juggling multiple credit cards or forgetting to use this one while they were out.
You’ll only earn that rate for a limited amount of purchases – the first $500 of groceries that you buy in each month, to be exact. Everything below that mark gets the bonus rate, but after that $500 cap is reached each month, all other grocery spending will only get you 1% cash back instead. That’s still a relatively high rate that is in line with what other cards would give you, though, so this is still not a bad deal even if it isn’t preferable. The cap amount also happens to sit right around where the average grocery spending per month for two people also sits, so many people will find it extremely easy to contain their spending inside that boundary. It’s just something for people to be aware of when they are thinking about how their budgets will be laid out.
The trade-off for this great boosted reward rate makes itself clear when you look at the rates on all other purchases, though. This type of spending is also tiered, but it works in the opposite direction; you start out at just 0.5% cash back on everything you buy. That’s a steep drop that is none too appealing at first, but not to worry – it won’t be a problem for you for very long. After just $6,000 in spending, your reward rate will go back up to the standard 1% rate that you will see on most free cards. If you average out these three different rates, it becomes clear that this card’s total yield is just slightly superior to that of your average card; the early drop-off will hurt you, but only temporarily as long as you exceed that $6,000 tier by a wide margin. Do your best to make sure that happens and you won’t have to worry about the reduced early rate.
A Stellar Welcome Bonus
All of those reward tiers described above will add up to a fair amount of fast cash, but that’s not even all you stand to get. The welcome bonus on the CIBC Dividend Visa is quite good, and all new cardholders are eligible to potentially get it if they perform certain actions. The offer will boost your usual earnings rate to 5% cash back for 4 months following the one where you obtained this card. This bonus will be active the whole 4 months or until you reach up to $2,000 in spending; satisfying either condition will cause the offer to end. All in all, you can get up to $100 extra if you spend up to the limit, a generous amount for a welcome bonus. It’s also nice that you can earn the extra cash by spending on anything you want, not just groceries – it makes it much easier to combine many different expenses together in order to have a chance at hitting the higher numbers even with a very small grocery budget.
There is one more thing to keep in mind before you can start working on raking in the money, though. You’ll need to add at least one recurring bill payment to your account in order to qualify. That should be a trivial requirement to meet for most people. Even if you don’t have something like utility bills or a credit card bill to pay (which is unlikely), subscription services like Blue Apron and Netflix have never been more popular, and those would count as well. Signing those bills up to be auto-paid by credit card will not only make you eligible for this offer, but it will also take that bill off your plate so you no longer have to worry about paying it on time. Just remember to do this as fast as possible so that you don’t miss out on any of that 4-month window of time if you can help it. Considering that this is a free card that you probably wouldn’t choose if you had massive amounts of money at your disposal, it’s quite possible that you’ll need all of those 4 months to spend enough to max out the offer and get as much extra cash as you can out of it.
Getting the Most Out of This Tricky Card
The CIBC Dividend Visa has a more complicated reward scheme than most; it’s perfect for those with low spending, but can be detrimental to those who spend moderately instead due to where that 0.5% tier is located in terms of spending demanded. Assuming you’re maxing out your allotted grocery portion of $6,000 yearly (almost everyone will do this without any trouble), you’ll need to be charging at least $12,000 a year to your card in order to get over the 0.5% earnings speedbump and back into the more reasonable 1% cash back territory. While not an incredibly large sum of money compared to what many elite cards expect you to spend, this is still more than many people would normally charge to their card. Those folks would still profit nicely off of the grocery part of this breakdown, but they would lose enough in other aspects to offset that gain. This means that it’s those who intend to spend little more than their modest grocery budget who will benefit the most from this way of allocating rewards. High spenders will also do fairly well.
If you do happen to be a high spender, though, there are still other considerations to make. As we noted previously, you won’t really be losing anything by using this card in the long run, but that doesn’t mean that there aren’t alternate options that would serve you better. If you know you will regularly be spending more than $500 a month on groceries and even more on other expenses, another card might be a better choice for you. If you’re really committed to using this one, though, you still can do that without losing out on anything if you switch to using another card after you hit that $500 mark. This is a particularly good strategy if you use a cash back card for this purpose, since you won’t be hindered by having smaller amounts of rewards points spread across two different reward systems that way. All of your earned goodies will be dispensed in cash and can easily be added together as if they were earned with the same card to begin with.
If you really want to maximize your potential rewards income, you’ll want to pair this card with another card that can supplement it in a complementary fashion. You only get the best rewards from this card for that first $500 in grocery spending in one month, so if you can use another card for everything else after that, you’ll usually manage to scrape together more rewards. Find one that offers a bonus on categories besides groceries (even if it’s not as high as the one you’ll get here) and you’ll be able to capitalize on even more of your spending without having to suffer through that greatly reduced earnings period. It is perfectly safe to do this as long as you can keep track of all of the different credit card bills you’ll have coming in, so if you feel up to the challenge, there’s nothing to stop you from doing it.
Is the Time Right For You To Get Your CIBC Dividend Visa?
The CIBC Dividend Visa is a hard card to recommend to everyone – while it is a great card in theory, some will feel cheated by its topsy-turvy rewards structure, while others will find it too hard to follow to really get optimal use out of it. There is no question that it is ideally suited for low-income people with a very tight budget, though. That also makes it a decent choice for credit beginners, since they usually fall into this demographic as well. What it really comes down to is how you feel about everything you’ve heard about this card so far. If you feel drawn to it and like you might enjoy having it, you probably will and you should go ahead and get one.