Whether you’re new to the whole travel rewards or loyalty program world or have been playing the points-chasing game for years, when it comes to getting a card that has a loyalty program attached to it, there are some fundamental steps you should follow. After reading through these four steps, be sure to consult our “Guide to choosing a travel rewards credit card” for tables and tools to further help the selection process.
What are your spending habits?
Do you currently or do you plan to spend very little on cards or do you put every possible purchase on your card? Do you run a business and put tens of thousands of dollars on your card each month? Do you eat out a lot? Do you have high grocery, drug store and gasoline purchases? These and other questions will help determine which card to choose. A low spender will want to look at a card typically with a lower or no annual fee, while mid to high level spenders will want to look at a card with an annual fee as they could earn many more points than what the annual fee costs (not including the benefits that come with those higher end cards) A low spender may go for an annual fee card but one where you don’t need a lot of points to start redeeming, some programs like American Express’ TripFlex rewards feature of the Membership Rewards program only requires 1,000 points or as little as $500 in spending* to be able to redeem. Also look at category bonuses that come with cards. A select few of them include 1.5 or 2x the points when shopping for groceries, at drug stores or putting gas in your car. I personally put all my gas, grocery & drug store purchases on my American Express Gold Rewards Card since it offers 2 points per $1 on eligible purchases at these locations...not to mention on Travel too!
* - based on 2 points per $1 category spending
How do you want to be rewarded?
Knowing how you want to be rewarded can make or break a program for you. Are you looking for that dream trip by flying in First Class to Asia or are you looking for economy class tickets for a family of five to Disney World in Orlando? Do you want to be able to use your points as you wish towards any travel at anytime? Do you want a card that can tie into another loyalty program you participate in? Do you want merchandise or cash back rewards? These are questions you should ask yourself and answer before you choose a rewards card program.
At a minimum you have to look at these first two steps together. Not all programs are created equally. You need to look at how many points or miles you can earn with your spend combined with how many points or miles it will take to redeem for rewards. With card spending it is quite easy to figure out your rate of return. In terms of travel in economy class, you should be able to get a 1 to 2.5% return on your spending. While business class you could see returns in the 4 to 10% range (but this also requires a lot of spending on your card(s))
Related: Remember People, It’s all about the Earn and the Burn
Are you looking for additional benefits?
Do you rent cars when you travel? Do you need out of province medical insurance? Trip cancellation on your mind? Again, just some of the questions you need to ask yourself when picking a card. Most rewards cards that have an annual fee offer decent benefits like Car Rental CDW Insurance, and Purchase Protection & Extended Warranty while remaining benefits like Travel Medical Insurance, Trip Interruption, Flight and Baggage Delay Insurance (and numerous others) are offered on a handful of cards. To see all of the current travel rewards cards in Canada and the benefits they provide see our Credit Comparison Chart.
Do you want the option of being able to convert points?
When you play the loyalty game, the trend nowadays is not to put all your eggs in one basket but participate in several programs. Why would you do this? The old school thinking, which in some ways still counts today, is to focus on one primary program because if you spread yourself too thin amongst many programs you will earn points here and some miles there, but not enough of either to redeem. That’s where cards with their own proprietary programs shine. You can put all your spend on the one card to rack up tons of points or miles then decide whether it’s best to redeem them via the card’s reward program or convert them to an airline or hotel loyalty program. This is one of the key features I love about my American Express Gold Rewards Card; I can, have and will convert those Membership Rewards points to Aeroplan and to British Airways Executive Club.
You can read more about the American Express Gold Rewards Card here.
I will always keep some of my points in Membership Rewards for the TripFlex rewards feature, which can be used to redeem for the charges that come along with the Aeroplan or Executive Club award tickets!
Related: Which cards can be used to cover award ticket fees
When you combine these steps along with many of the features on the Rewards Canada site, you should be able to make the right travel rewards card decision for you. If you still need help, have more questions or can’t make that final decision don’t hesitate to ask us! You can do so with a comment below or via our contact form if you don’t want it in the public domain.
Disclosure:This post was sponsored by Amex Bank of Canada. The views and opinions expressed in this blog, however, are purely my own.