Flying on points: What should I be collecting?

Cash is king? Not so much anymore.

Whether you’re looking at offsetting the cost of your next plane ticket, or redeeming points for a vacation package, picking the right credit card for the job can be challenging. Questions such as, “Which program is the best?” or “What should I redeem for the most value?” come to mind. Like most, I spent many years with the same no-fee credit card only to realize a return of less than 1%. By doing a bit of research, qualified individuals can take advantage of offers from almost any credit card issuer.

For avid card churners, one thing is for sure; 90% of your points will come from bonuses, and the other 10% from spend.

This will always be the case, unless of course you’ve gotten your feet wet in manufactured spending, which I will be going over on another day. No matter how high an earn rate is, collecting bonuses associated with cards will always earn you more points.

For this post, I want to go over a few major rewards programs:

• Bank reward points (BMO, RBC, Scotiabank, etc)
• American Express Membership Rewards (MR)
• Aeroplan Miles
• SPG Starpoints & Marriott Rewards

Simply put, the value of these programs can range drastically based on how the points are being used.

1. Bank Reward Points – The cheapest of the lot, bank points are generally for those who want to quickly offset a portion of their future travel plans. Depending on the bank, points may be used as a credit towards a monthly statement. There are a few bank point systems that are transferable; For example, RBC’s Avion points can be transferred to British Airlines Avios. Some banks are less flexible and will only allow travelers to redeem on an in-house rewards site (Which may not have the best value!). The Scotiabank American Express Gold and the BMO World Elite are examples of cards that accumulate bank reward points.
2. American Express Membership Rewards (MR) – In my opinion, the Amex MR is one of the most flexible points system in the market. MR is awarded through spend bonuses and card usage from a variety of American Express cards such as the Gold, Platinum and Cobalt cards. The points can be converted into different programs, including both Aeroplan and SPG. Personally, I would not use these points as MR, as the points are usually more valuable in either Aeroplan or Starpoint form. However, when required, American Express cardholders can also redeem MR for a travel credit at 1 cent per MR (NOT RECOMMENDED!).
3. Aeroplan Miles – The value of Aeroplan Miles have been debated over frequently in the last few years. Some claim that there are too many inconveniences with bookings and blackout dates whereas others capitalize on values of over 10 cents per mile. In my opinion, Aeroplan Miles are still valuable despite their upcoming separation from Air Canada and Star Alliance in 2020. Aeroplan has a fixed point flight plan that provides great value for those who use it. There are also a variety of cards that provide Aeroplan Mile bonuses. These include: The TD Aeroplan Cards, CIBC Aerogold and the American Express Aeroplan Cards just to name a few. Some of these cards will occasionally go on promotion, waiving their annual fees and increasing the welcome bonuses; Wait for these periods before you apply to maximize point gains. One can easily amass upwards of 100,000 in Aeroplan miles just by cycling through the cards that I’ve mentioned. We can only hope that Aimia will sign with a new flight partner before 2020.
4. SPG Starpoints & Marriott Rewards– Yes, they are hotel rewards programs. Though more illusive than the other rewards programs, these two systems shine when redeemed for one of the many flight and hotel packages offered either through Marriott. Alternatively, Starpoints can also be directly transferred onto airline partners in order to redeem for flights. Credit cards such as the American Express SPG Personal and SPG Business cards will help kick-start your Starpoints balance. Thankfully, American Express MR is also transferable to SPG Starpoints at a ratio of 1MR : 1.2 SPG, meaning that your bonuses from the collection of MR cards may be used towards your SPG/Marriott redemption.

In my opinion, cards that offer bank rewards points are often a quick and cheap way to knock off a few hundred dollars off your next flight. The spend requirements are low, and most cards come at little or no fee. The value of these points are generally quite flat, and there are no large valuable packages up for grabs. On the other hand, collecting Amex MR, Aeroplan and Starpoints require a bit of patience, but is usually well worth the effort. The fixed fee flights, especially in business or first class are significantly more valuable, as well as the hotel & flight packages offered from these programs.

Okay, I understand there are differences between different reward systems, but which one should I start collecting?

To be quite honest, I collect all of them. It all depends on your income, credit and spending habits, and how well you can manage going through different cards. Some cards do have a minimum income requirement, though I’ve heard of people being accepted for cards where their incomes do not meet the stated threshold. Let’s assume everyone has sufficient income (>$60,000) and good credit and create a guideline by monthly spending:

• $200–$300/month: Unfortunately at this spend level, most minimum spend bonuses will not be met. You will likely have to stick with cards that provide a $0 spend welcome bonus or has a very low spend requirement; The Scotiabank American Express Gold Card would be an excellent choice.
• $500–$750/month: You will likely be able to get a new card every 3–4 months in order to meet the minimum spend. At this spend rate, you should be thinking of applying to cards with a $1,000-$1,500 minimum spend requirement if their bonuses are valuable.
• $1,000–$1,500/month: At this spend rate, you can meet most minimum spend criteria almost every month. Looking into the American Express Business Platinum should be a priority if you can use $5,000 on it in 3 months.
• $2,000+/month: There should be little to no issues regardless of which card you get.

For students looking into a new credit card, it might be an idea to have your parents apply for a card and to provide you with a supplementary card. Aside from a few American Express cards, most travel cards have minimum income requirements and many students will not be eligible. Assuming your parents have good credit, you can begin collecting points early for a luxurious graduation trip. Things such as tuition or rent fees can be paid for using a credit card with third party applications such as PayTM or Plastiq, allowing you to quickly meet minimum spend thresholds when needed.

I will be posting a quick credit card portfolio recommendation based on travelling needs, so stay tuned!

At the end of the day, here’s what you need to know:

• Bank point bonuses generally have lower value but easy to obtain and are flexible when redeemed against a travel purchase on your statement.
• American Express Membership Rewards points are super flexible and can be transferred a variety of different programs like Aeroplan Miles or SPG Starpoints.
• Aeroplan has many credit card partners that earn Aeroplan Miles and a solid fixed fee flight program. Value can be even greater when redeeming for multi destination flights on a higher class.
• SPG Starpoints & Marriott Rewards are amazing on redemption for a hotel & flight package or converted to an airline partner. American Express MR can be transferred to Starpoints at a 1:1.2 ratio.
• Obtain cards only if you have good credit and can meet spending thresholds. If you forfeit the bonus, getting a new card is almost meaningless.
• If you’re a student, get your parents to apply for a credit card and have you as a supplementary user. That way you can earn points with your everyday spending in school.
• Look into third party applications such as Plastiq or PayTM in order to pay for things like tuition that don’t traditionally accept credit cards.