Recently, my son has been complaining about how much it costs to fill the car and has been frustrated with the recent increase in the carbon tax at the pumps. On Monday of this week, the federal carbon tax went up to 17.6 cents per litre of gasoline – up 3.3 cents. This equates to about 10% of what you pay for a current liter of gas.
Given his concern, I asked how many litres it takes to fill the car and his answer was 60. So this means that for every tank of gas, you are paying about $10.56 towards the carbon tax, out of a total cost of about $99 (60 litres x $1.65), with a good part of that also going to other taxes. Over the year, he will spend approximately $2,400 filling the car up, with $240 going to the carbon tax.
As a precursor to the balance of this commentary, only use credit cards, knowing that you will have enough to pay them off when the statement comes in. Failing to do this and carrying balances with high-interest rates will negate the benefits of what we’re about to discuss.
While reading the Globe and Mail this week, I came across an article that offered a potential solution to the increased level of taxation. Obviously, if you can find cheaper gas, this is likely the better alternative. However, the article suggests not wasting time hunting for cheap gas but beating rising prices by stacking loyalty rewards at the pump. The first stack they mentioned was Petro Canada Points (PCP) and Triangle Rewards. Coincidentally, I use the Triangle Master Card (TMC) and have certainly been happy with the benefits I’ve received. For every fill-up at a Petro Canada, you earn 5 cents a litre in Canadian Tire money from the Triangle Rewards. In my son’s case, this could mean about $3.00 per fill-up. If we multiply this by his number of fill-ups, he could potentially save about $72 a year. So, while he’s still paying $240 to the carbon tax, he’s also earning $72 that he can spend at Canadian Tire, Sport Check, or Mark’s Work Warehouse. This could be a significant relief for him.
If he were to earn PCPs, he’d receive 10 points for every liter of gasoline, plus a 20% bump for using the Triangle card. The 60-litre tank will provide 600 points plus another 120-point bonus for a total of 720 points. For the year, this adds up to 17,280 points. Converting this into dollars, it’s worth $17.28 of cash for gas or other items at the Petro station.
For the year, a 60-litre tank filled up 24 times a year could return approximately $90. By taking advantage of various rewards programs, my son could effectively reduce the impact of the carbon tax by about 37.5% ($90/$240) or effectively drop the 17.6 cent tax to around 11 cents. This potential for savings should motivate any car owner to consider using these loyalty rewards programs.Â
So far we have only discussed the benefits of the TCM and PCP by buying gas to calculate the above. If you use the cards to purchase other retail items, additional points and value will accrue, thereby reducing the impacts of the carbon tax on your overall disposable income, especially when they offer promotions that multiply the points available… every dollar helps!
As is often said in our office, there are no problems; there are only challenges for which we must find solutions. By doing a little homework and using the loyalty programs available, the value created will typically add up to hundreds and often thousands of dollars, making the percentages and ultimate tax reduction worthwhile.
Saving at the pumps is only one way to benefit from loyalty points. Grocery stores, Pharmacies, Airlines, and many others provide creative ways to save and add additional value. In a time when everything is becoming more expensive, becoming loyal to a handful of stores or brands can create a meaningful way to save our hard-earned dollars. Take a little time to make them work!
Here is a link to the Globe and Mail article and Forbes list of the best credit cards that provide incentives for gas and other purchases.
Don’t Drive Around Looking For Cheap Gas
Talking about ways to save with our kids creates a great opportunity to engage in meaningful dialogue and impart lessons on making our hard-earned dollars go a little further!
Regardless of income or net worth, taking advantage of the associated benefits of loyalty programs can be significant. There isn’t anyone who couldn’t ultimately benefit, so please share these thoughts and links with anyone you know who is trying to navigate through their day-to-day cash flow planning.
Have a great weekend!
ERIC, ROB, CHRIS, & SHIV
