BP #54 – Scotiabank Gold American Express Card Arbitrage


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Scotiabank Gold American Express Card Arbitrage

Before we discuss arbitrage strategies related to the Scotiabank Gold American Express Card, remember to enter the TimelessFinance First Anniversary Giveaway. There are hundreds of dollars in prizes available in the random draw — with no purchase necessary — so don’t miss out.

If you hadn’t heard, you can get a FREE $100 Gift Card from RateSupermarket.ca with a Scotia Momentum VISA Infinite, Scotiabank Gold American Express, or Scotiabank Value VISA card. I like gift cards, particularly in denominations of $100. Or larger. From the gift card options being offered in this promotion, I would pick the Bon Appetit card since it’ll get me 10 quarter chicken dinners (take-out with no drink). My workplace has a Swiss Chalet accessible underground and that would make my return a little more awesome.

Initially I considered getting the Scotiabank Value VISA. The annual fee is $29. For a $100 gift card, I think this is “do-able” but not impressive. The margin on the gift card is significant — let’s discount it by 30% because it’s not cash and you’re hostage to a single retailer. That makes the spread only about $30. If I were still in University, I might have said “holy cow, thirty bucks for free??” But now I realize that my time is worth more than that.

I gave a second thought to the Scotiabank Value VISA, however, because of its potential for real credit card arbitrage — i.e. borrowing lower interest money from a credit card, putting it in a savings account, writing off the interest and enjoying the phat l00ts a.k.a. interest spread. Its promo rate is only 0.99%, but this is for a mere six months. If they gave me a credit limit of $50,000 then it might be worth my time to earn $500+ in profit. But I doubt I’d get a credit limit large enough to make the payout worthwhile. Given the risk of falling savings account rates, several weeks of interest-bearing time lost to bank transfers back and forth, potential hassles from the CRA for trying to deduct credit card interest, and the amount of work required during the six month period, I’m going to decline the potential profit margin. But if you’re currently paying a high interest rate on a balance somewhere, get this card for 6 months and stop throwing after-tax dollars into the garbage. The $100 gift card justifies the $29 fee. Then watch for better deals and move your money before the introductory interest rate expires.

After balking at the Value option, I reviewed Scotiabank’s other two offers. I plan on getting the Scotia Momentum eventually, but I’m still earning 5% cash-back on gas and groceries from my MBNA Smart Cash MasterCard since I upgraded it (for free). That left the Scotiabank Gold American Express card.

The Scotiabank Gold American Express card has a $99 annual fee. Spending $99 to get a $100 gift card is not my kind of deal. But Scotiabank Gold American Express card also comes with 20,000 bonus points. That’s $200 in travel. Since travel is a high-margin good, however, I looked at what else I could redeem points for.

I was delighted to see this:

Scotiabank Gold American Express card arbitrage

My initial thought (see the first red line) was “AW YEAH, I can use 12,500 points to pay the $99 annual fee and then redeem my remaining 7500 points for something else, like a $50 gas gift card.”

scotiabank gold american express card arbitrage - bonus reward

But then I read the second red-underlined item: “Minimum order of two $100 Credit Dollars”. I won’t have 25,000 points to spend to get two credits, so that plan is debt.

My new plan is not as epic, but justifies the deal. I’m going to spend 13,500 points to get a $100 gas card. Then I think I’ve figured out a way to gain an extra 500 points quite easily (to be discussed if I get the card and pull off my scheme) which will allow me to get another $50 gift card. In all, that’d be $150 in gas cards and a $100 Swiss Chalet card at the cost of a $99 fee. As a result, I may be getting an AMEX Gold Card for the second time.



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6 Comments… Share your views

  1. I just need to say that I adore the title of this post. I’ve been studying arbitrage in my two finance classes for about a month now and it makes me happy to see other people se real finance lingo!

  2. Can’t type should say some* not se lol. Also, CAT IS ADORABLE! (incase you didn’t know this)

    • lol if I’d forgotten, every cashier / random lady-in-the-parking lot / etc. reminds me hahah. But it’s so funny when people gush over her — she eats it up but, at first, doesn’t smile. Then when their interest starts to wane, she flashes a toothy grin just to hook them back in.

  3. I doubt very much that credit card issuers like you. Good work! Keep it up!

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