As you delve deeper into the game of managing credit card rewards, you will encounter a few common types of credit cards:
- Travel Rewards – Airline Partners
- Travel Rewards – Hotel Partners
- Reward Points – Transferable Partners
- Travel Rewards – Fixed Pricing
- Reward Points – Fixed Pricing
It is important to note that some credit card rewards can fall under multiple categories
Travel Rewards – Airline Partners
Most travel blogs emphasize the focus on leveraging Airline Partner rewards. These rewards both provide the opportunity to redeem for rewards that would otherwise be unaffordable to most Canadians, but also provide easiest way to get rewards that provide some of the lowest cost of returns.
Aeroplan (Air Canada), Asia Miles (Cathay Pacific) are excellent examples of these type of rewards. We recommend leveraging airline partner awards to travel in Business and First Class exclusively, Despite that, most consumers choose to redeem those miles on award tickets, hotels, or even gift cards that would make them incredibly unattractive.
A quick example is shown below:
One way flight in First Class between Washington and UAE (Abu Dhabi)
The total number of miles is 120,000 + $47.80.
This same ticket would cost over $20,000 if you were paying cash.
Or you could spend a similar amount of miles for 5 nights at the Holiday Inn North Vancouver hotel:
How consumers leverage the airline partner rewards is critical to ensure you obtain the maximum return on the points. Now, let’s be honest, if you are reading it (myself included), we would never pay $20,000 for a First Class ticket to Maldives. But if someone asked, would you pay $1,400 for a trip to Maldives (the cost of 5 nights in North Vancouver) which actually only cost you $500 because of all the annual fee rebates, then I’d definitely be a buyer.
Travel Rewards – Hotel Partners
Similar to Airline Partners, most Hotel Partners provide a great way to generate outsized value from your points. In the case of Hotel Partners, we find them more limited to Hotel only redemptions, but even those can be confusing for the average consumer.
85,000 Marriott Bonvoy Points can be redeemed for any of these hotels in Dubai:
You will notice, the St Regis Downtown is only $337 per night, but the Ritz Carlton Ras Al Kahimah is more than 4x that amount. Once again, knowing how to gain outsized value from your hotel rewards is critical if you are going to focus on traveling to places where you otherwise wouldn’t be able to afford.
Reward Points – Transferable Partners
These are great rewards because they accumulate points that can be used to convert to different partner airlines or hotels. For example, American Express Membership Reward Points can be used to convert to Aeroplan (Air Canada), Asia Miles (Cathay Pacific), Delta, Marriott or Hilton reward points.
We love these points because of the dynamic nature of leveraging these points. If my focus is to stay at a special hotel and I’m not too bothered about how I get there, or my focus is on a particular flight, these points can be leveraged to achieve both goals.
What’s even more beautiful about these rewards is that you can convert them to partner hotel or airlines and potentially use them for travel rewards with fixed pricing, as described below.
Travel Rewards – Fixed Pricing
American Express Membership Rewards are some of the most dynamic rewards out there, you can convert them to Airline Miles or Hotel Points, or even leverage them for a fixed price.
American Express Membership Reward points can also be used to redeem for all purchases at 1c per point, or alternatively, they would have a flight reward chart, that might provide options for rewards greater than 1c per point without limiting yourself to a particular airline or hotel group.
These are also great rewards because if you want to travel from Vancouver to Calgary, and you know flights are only $50 one way, then you can redeem just 10,000 points for your travels. Alternatively, if you know the same Calgary flights are over $300, rather than redeeming 30,000 Membership Reward Points, you can instead use the fixed pricing award chart and use just 15,000 points instead.
Reward Points – Fixed Pricing
Once again, many of the points you can earn in Canada fall under multiple categories, but Reward Points – Fixed Pricing are very similar to Travel Rewards – Fixed Pricing.
Scotiabank allows you to earn scene points, and most redemptions will be close to 1c per point valuation. What’s great about these rewards are that they allow you to focus on any reward, not necessarily related to travel.
However, I have one big issue with this, if all I’m earning is things I could have purchased with cash, why not instead earn regular casbhack?
These are the simplest rewards out there; for every dollar you spend, you earn a particular cashback amount. Most reward points typically earn between 1 and 2c per dollar spent, however, there will be some credit cards that have bonus reward multipliers. For example, the CIBC Dividend Visa Infinite allows up to 4 cents cashback per dollar spent on groceries and petrol.
In Canada, there are no shortage of the different type of credit rewards you can accumulate. Instead, the focus should be on holding a mix of these credit cards, so when you reach your credit card goals, you have the ability to dynamically choose the best reward options that align with your goals.