Early in February we brought you the news
that BMO would be revamping their BMO CashBack® World Elite®* MasterCard®* in addition to changes coming to some of their other cards. In comparison to those other card changes the changes for the CashBack World Mastercard were the only bright spot as for most people this change was truly an enhancement.
 |
| Image via BMO |
Those
changes to the card affect the earn rates and interest rates. Most of you will be
concerned about the earn rates as the card has been an easy one in that
category – a nice simple 1.5% on all purchases. BMO even advertised that
fact that it is easy to understand your earn rates with no confusing
category bonuses or spending caps. Well BMO has gone down the rabbit
hole as the card now offers category bonuses with spending caps. Don’t let this sway way away from the card as in fact these changes are
for the better for most people. Let’s take a look at new earn rates
and what it could mean for you:
– 5% cash back on grocery purchases – up to $500 per statement cycle then 1% after (effectively capped at $6,000 per year)
– 4% on ground transportation –
including ride sharing, taxis and public transit up to $300 per
statement cycle then 1% after (effectively capped at $3,600 per year)– 3% on gas and electric vehicle charging – up to $300 per statement cycle then 1% after (effectively capped at $3,600 per year)
– 2% on recurring bill payments
like your monthly phone bill or gym membership – up to $500 per
statement cycle then 1% after (effectively capped at $6,000 per year)– 1% unlimited cashback on all other purchases with no limit on how much cash back you can earn
If
you add up the categories you have $19,200 in annual spending that can
be bonused. This is comparable to the $20,000 with CIBC, however quite a
bit less than Scotia’s $50,000 (on similar categories) and TD’s
$45,000. If you are a really big spender those caps might a breaking
point for you but for most people it shouldn’t really play a big part.
Let’s
take a look and see if these new earn rates actually make the card
better or worse than it is now. We’ll take our spending assumptions from
our Top Cash Back Credit Card rankings as the benchmark.
Here is what the card currently earns per year not including any welcome bonuses:
$10,000 spend nets $150 cash back
$30,000 spend nets $450 cash back
$50,000 spend nets $750 cash back
And the same annual spend with the category bonuses:
$10,000 spend nets $254 cash back
$30,000 spend nets $660 cash back
$50,000 spend nets $912 cash back
Calculation breakdown used in the spend amounts above:
– 30% Groceries
– 5% Dining
– 10% Gas
– 10% Travel
– 5% recurring bills
– 5% transit
– 35% other
Right
away you can see the new earn rates are much better, in fact on the low
$10,000 end of annual spend this card is actually the highest earner of
the cards we compare by about $10 (based on the split above of course,
it will differ for everyone) However once you start moving up in spend
at the $30,000 level it is the fourth best earner and then up at $50,000
it really starts to fall behind where its direct competitors are
earning nearly $200 more per year. That’s where you’ll have to do the
math. Take a look at your spending habits to see where you sit and
compare the cards. Chances are if you are only spending $10,000 to
$20,000 a year this card will be the one for you. Above that you’ll have
to get out the calculator and work out your spend levels and bonuses to
the best cash back option for you.
Remember that BMO does let you
cash out at lowest possible amount of $1 so you never have to worry
about hitting a certain level of rewards or waiting until the end of the
year to cash out.
Recommended reading: Rewards Canada’s Guide to Credit Card Cash Back Liquidity
No matter what these
changes are we see this as a net positive for this card as it will earn more cash back now
than its current 1.5% flat earn rate. The only people these changes will
be a negative for are those who got this card for that non-category
spending (like Costco) as most cards only offer 1% this card’s additional .5% was a
nice to have. So if the category bonuses don’t mean much to you as you
spend your money outside of those this will no longer be the ideal card
for you. In reality these changes make a lot sense
given the current state of conditions. More and more people are moving
to cash back cards over travel cards due to the pandemic – they don’t
want their rewards to be stuck in place where they can’t be used or used
for a long time and are willing to take a slight hit in value so they
can have that easy access to cash to use for anything they want and BMO
wants a bigger piece of the cash back market hence these changes.
In
the end BMO has made this card much more competitive and I’ll have
reevaluate our Top Cash Back Card rankings to see if it will crack the
top 5 or not. A quick glance right now tells me it will be just shy of
doing so but if it does I’ll definitely let you all know. One final
thought as well, you may want to apply for the card now as it has a 10%
cash back bonus on all spending up to $2,000 in the first three months
and an annual fee waiver in the first year.