CashBack – 2023 Recap and Looking Ahead

Another update to highlight my thoughts around CashBack. What started off as posting on Facebook to friends many years ago, has evolved in posting publicly. I appreciate all the comments and DM’s over the years. So here we go again on a 2023 update.

NOTE: data behind all of this is real using my own personal data. Opinions are just that, my opinions based on what works for me. I share only as a source of motivation or debate.

If you want to read a more detailed view of my optimization strategy, check out my post from 2022 – Cashback Credit Cards – My Optimization Strategy.

2023 Recap

2023 was another solid year in terms of cash back. With inflation, it was important to squeeze everything I could from the “preverbal lemon” as they say. I really focus now on cash back as a primary strategy over points, although I still earn both.

I have 2 primary reasons for the focus on cash back.

  1. Ability to Invest – cash back can be invested. For those that know me well. I invest. Below is my ongoing tracker in terms of what it would look like if one continued to invest their cash back into the S&P 500.
  2. Devaluation – connected to point 1. Points earned over time will devalue, like cash due to inflation. However, unlike points, a cash strategy focused on investment can give you a hedge. Also, point value can be manipulated by the provider to support their business objectives. However, points have a place and can be a value tool.

Using real data since 2009 (both cash back earned and cumulative earned) and hypothetically investing once per year (around the 21st of December) into the S&P 500 would have yielded a 60% return over the amount of cash back earned.

Not bad.

On the credit card front, 2023 distribution of spend by credit card looks like the following in order to optimize for the most cash back earned for each purchase throughout the year.

Some strategies shifted over the course of 2023. Here is a summary of a few highlights:

  • Groceries – minimum earn was 4%. Combination of BMO (earns 5% with a monthly limit) and AMEX (earns 4%).
  • Gas – minimum earn was 4% and most spend predominantly done at Shell. Combination of Neo (some great incentives – 4%) and AMEX (4%). Note for Shell, especially in Western Canada, Airmiles is back. The incentives with Airmiles in 2023 have been really good. Combined that with AMA to get 3 cents off per litre it’s a great stacking opportunity
  • Pharma – Neo is the go to card and played a large role here with some solid cash back at local pharmacies (7% is common). Short of spending at local pharmacies, for the big chains it came down to Tangerine (2%) and PC Financial.
  • International – Brim takes a spot here, not foreign exchange fees and I like the fact that my wife and I both get birthday bonuses. Plus, for some online purchases Brim rates are decent.
  • Amazon – MBNA took a spot back this year with 2.5% on Amazon purchases. Some mid year bonuses on certain categories where a nice surprise
  • Local – Neo Financial is the clear winner. It is still probably the only back app I open weekly and sometimes daily. Bakeries, eating out, furniture, liquor stores and online retailers to name a few categories generated between 7% – 12% cash back throughout the year. Also feels good to support local.
  • Everything Else – Roger’s won hand down. 2% over every purchase and with the late year surge on their new Roger’s Card with a combined 3% incentive when you redeem on Roger’s purchases (yes this included Shaw) – 3% is now the new baseline.

Looking back over the past 28-years, here is the evolution of spend by credit card. Note during this time I have had, in some cases, multiple cards by company, so the graph below lumps all the difference cards into the primary bank provider.

Looking Ahead to 2024

My strategy will continue in 2024. Optimize each and every purchase. Based on what I see right now and the categories above, here is how I think the year will shake out. Of course, this will all depend on new offers, competitors.

  • Groceries – likely to be dominated by BMO (5%) and AMEX (4%) with Neo (7%-10% for local)
  • Gas – likely to be dominated by AMEX (4%) and Neo (4% – based on offers). Shell will still likely be my primary station with the added incentives from Airmiles.
  • Pharma – Neo first for local pharmacies (7%) followed by Rogers (3% with Roger’s purchase redemption bonus).
  • International – Brim still likely gets this share
  • Amazon – Roger’s (3% with their redemption bonus)
  • Local – Neo (7%-12%)
  • Everything Else – Roger’s (3% with their redemption bonus)

Many probably won’t remember this, but in the 90’s Linda Evangelista Made Waking Up a Five-Figure Act – I don’t wake up for less than $10K/day.

In 2024, I don’t pull out my card for anything less than 3%.

Referral Bonus

If you want to try Neo Financial, use this link to get $25 when you sign-up. Yes, it pays me $25 as well.