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Thursday, March 19, 2020

Shifting your loyalty program strategy to help during these trying and tough financial times


What a world we live in right now! As my wife told our daughters, what is happening right now will be in their kids' text books and taught at schools in the future just as they learn about the Plague in the current curriculum. History is in the making right now and unfortunately it's not the best history. Countries including Canada are essentially shutting down and that means tough financial times for many. Even with the Government of Canada's announcement yesterday of financial help that will be available to many Canadians it will more than likely not be enough for some people. So what can Canadians do to help stretch their dollars during these trying times? One way is to shift your loyalty program strategy.

For many of us, especially the Rewards Canada community our loyalty program strategy revolves around travel. Travel is pretty much done for now - for some of us, even though we won't be travelling we can take this time to just boost our travel reward program balances in preparation for the re-opening of the world. However that's only a small portion of our population - for most we will have to think of how can we can save a dollar here and stretch a dollar there. We'll have to watch discretionary spending and tighten our budgets. This is where shifting your loyalty strategy can help. For the short term you may want to look at a shift from travel to cash, cash equivalents like gift cards or even merchandise - yes merchandise. I know, merchandise are some of the worst value redemptions out there but if your toaster at home breaks and you need to conserve cash then yes you should look at using points or miles to get yourself a new toaster.

I have always said that loyalty programs should be considered part of your financial portfolio and that has never been more true than now. Put travel on the back burner in your financial portfolio if you believe you are going to find yourself in financial hardship over the next few months. As I already mentioned, shift it to rewards that can help you out right now and provide miles & points liquidity.

First a warning about cash back credit cards

I am seeing people on forums and blogs talking about shifting to cash back credit cards, we even had credit card companies email us saying maybe the focus should shift onto cash back cards. That's all and good however if we talk about liquidity the truth is most cash back cards aren't as a liquid as you think. That's why we started this education in shifting your strategy earlier in the week with our post "In light of what's going on in the world should you shift to a cash back credit card instead of a travel card? Why not a card that has both?" In that post we looked at some of Canada's best travel rewards credit cards and how the aren't only beneficial for travel rewards but were very strong for cash back. And without going into all the details in that post the main reason why those cards are so good is because they have quick or almost instant access to cash. Don't be fooled by true cash back cards as most of them only allow you to cash out once per year: September for some, November for others, January and so on. That means you don't get to use that cash whenever you need it, whether it is tomorrow, next month or even possibly 6 months from now. There are some exceptions to that rule for cash back cards but there aren't very many. I recommend you read that article after this one!

Recommended reading: Rewards Canada's Guide to Credit Card Cash Back Liquidity

Using Loyalty Programs to help your finances

Now let's move into how you can use your loyalty program to help ease the financial burden that many of us will feel over the next few months:

Aeroplan

Aeroplan has an option to redeem miles for a lot of different gift cards from many vendors. Here are four that are the most useful and most 'cash equivalent':



As you can see you only need as little 7,000 miles to get an Amazon.ca gift card,11,500 miles for a $75 Visa prepaid card or 13,500 miles for a Costco Shop card. All very useful right now although I know points and miles maximizers are cringing right now with the mention of redeeming for gift cards as there is so much more value in Aeroplan miles when redeeming for travel. Times are different right now and it's good to know you are not stuck with Aeroplan miles. If you find yourself in need then do not hesitate to redeem for a gift card. If you are sitting on a decent balance of miles you can even ask yourself how many you'd be willing to use right now for gift cards and how many to save for future travel. For example, if you have 150,000 Aeroplan Miles in your account, you can budget yourself 50% of that balance to redeem right now for gift cards.

To redeem for gift cards or merchandise with Aeroplan simply go to Aeroplan.com, login to your account and click on 'Get Merchandise'

If you want or need to quickly boost your Aeroplan balance you could consider applying for the CIBC Aerogold Visa Infinite card as it provides you with 20,000 Aeroplan miles when you make your first purchase - and the first year annual fee is rebated. This means for as little as one dollar you can get those 20,000 Aeroplan miles to use towards some of these gift cards. Then it is up to you if choose to keep the card or cancel it before your one year is up.You can also look at the TD Aeroplan Visa Infinite Card - it has a bonus of up to 30,000 Aeroplan miles until May 31 and is not available to residents of Quebec (Quebec residents click here). 15,000 on first purchase and 15,000 more that is awarded as 5,000 miles per month when you spend $1,000 per month on the card for the first three months. And the first year annual fee is rebated on both the primary and first additional card.

AIR MILES

AIR MILES has several options that help make your Reward Miles more liquid and it really comes down to their Dream Miles and Cash Miles option.  Right now would be a good time to move the slider to 100% Cash Miles in the AIR MILES program to help you weather the storm.

The reason you will want to do this is that Cash Miles can be redeemed for right at the till when you are paying for groceries or other items at select AIR MILES sponsors.

You only need 95 AIR MILES Reward Miles in your Cash Miles account to redeem and those 95 miles will give $10 off your purchase. You can redeem for up to $750 a day if you have enough miles to do so.
Here are just a select few of the sponsors you can redeem Cash Miles at right at the till:






To set your account to Cash Miles go to the airmiles.ca website and log in to your account. Once logged in simply click or hover over "Get Miles' and you'll see at the bottom of that menu item the option to "Set your preference"

Once there you'll have the slider option that we show further above.  Also within the Cash Miles option is the ability to redeem for eVouchers that you can use for places likes Starbucks and Pizza Pizza.

If you are just making the switch to Cash Miles chances are you have Dream Miles balance.  There aren't any real cash equivalent rewards in the Dream Miles catalogue of rewards but they do have merchandise. This is where we come back to that example of needing a new toaster - rather than affecting your cash flow by going out to buy one:

There is one caveat with merchandise rewards however and that is delivery time. When you redeem miles for merchandise it can take up to 4 weeks to receive the product.

If you want to boost your AIR MILES balance there are a couple of credit card options to look at with cards that have no annual fees. The BMO AIR MILES World Elite Mastercard is offering up to 3,000 AIR MILES and a first year annual fee waiver. The bonus is split however, 1,000 miles on first purchase and 2,000 more miles when spend $3,000 or more in the first three months. Those 3,000 AIR MILES are worth $315 as Cash Miles. The other option if you don't meet the income requirements for the World Elite Card or know you can't spend $3,000 is the BMO AIR MILES Mastercard. It offers up to 800 AIR MILES (400 upon first purchase and 400 if you spend $1,000 in the first three months) and those miles would be worth $80 in Cash Miles (well, technically $84 but you can't redeem for that amount).


BMO has other AIR MILES cards options like the Sobeys or IGA Mastercards with similar bonuses. You can find them all on our BMO page.

NOTE!! You have to make sure your AIR MILES account is set to Cash Miles otherwise the bonus earned from any new card will be deposited into your Dream Miles account!

Also be on the lookout for ways to earn even more AIR MILES. The program offers so many bonus miles opportunities such as for shopping online via airmilessshops.ca, weekly offers from Safeway, Sobeys, IGA, Rexall and more and take advantage of them to boost your balance so that you can redeem those Cash Miles even faster. Here are some examples of the offers I received this week:



American Express Membership Rewards

UPDATE:

Limited Time Offer: Increased value in American Express Use Points for Purchases (1,000 points = up to $20!)


Of all the currencies I would say American Express Membership Rewards are the most liquid. The reason why is that you only need 1,000 points to start redeeming for cash. I'm not going to go into huge detail here about the number one loyalty currency in Canada as we go into more detail in our post "In light of what's going on in the world should you shift to a cash back credit card instead of a travel card? Why not a card that has both?" but will just reiterate the key points. American Express Membership Rewards points can be redeemed at a rate of 1,000 points for $7 towards almost any eligible purchase made on your card. It can be gas, cable bills, groceries - you name it. Simply log in to your account and navigate your way to Use Points for Purchases and use the slider to pick the purchase you want to redeem points for. I haven't tried it but it does appear that you can even redeem less than 1,000 points based on the slider! This makes the points even more fluid!

Now, there aren't any American Express cards that have no annual fee or first year free waivers right now however if cash flow is a concern I would recommend the and only best card in Canada, the American Express Cobalt Card. It's annual fee is actually charged monthly - you pay $10 per month so you won't be hit with that $120 fee seen on many cards right off the bat. Add to that it earns 5x points on eats and drinks (grocery, dining, food delivery like Skip the Dishes, Instacart and more) which is the primary category people are spending at right now. Since the card's fee is charged monthly this also means the welcome bonus is awarded monthly for the first year. The card offers 2,500 points when you spend $500 or more on the card each month for the first 12 months.

BMO Rewards

BMO has a nice and easy Pay with Points option. You simply redeem 15,000 points for a $50 statement credit. This works with any card that earns BMO Rewards points.


They also have a gift card redemption option, many of which provide more value than the above Pay with Points option. Here are some examples:


As you can see you only have to spend 10,500 points for a $50 Sobeys card - compare this to the 15,000 for a $50 statement credit. And it gets even slightly better when redeeming for $100 gift card options at 20,300 points.

For BMO there are two card options to consider right now. The BMO World Elite Mastercard is offering 35,000 points and the $150 annual fee waived in the first year however to get the points you have to spend $3,000 within the first three months but then as you can see from above you can get $250 in gift card value and have some points leftover. The other option is the BMO Rewards Mastercard which has no annual fee and offers 20,000 bonus points - 10,000 on first purchase and 10,000 when you spend $1,000 in the first three months. Since you have to meet that spending you can easily get to the 20,300 points required for a $100 gift card.

CIBC Rewards

CIBC lets you use your CIBC Rewards points with their Shop with Points or Payment with Points options.  The latter lets you redeem a minimum 4,000 points for a $25 statement credit.

CIBC Rewards also has a lot of gift options as rewards. Card amounts vary but you can redeem as little as 3,500 points for $25 Tim Horton's card, 7,000 points for $50 card from Walmart and President's Choice to a $500 Costco card for 70,000 points.

To redeem simply log in to your account on cibcrewards.com and select the appropriate option. Right now CIBC are running several first annual fee rebates on their Aventura cards which are the primary cards for earning CIBC Rewards points. You can find all the current offers on our CIBC page.

Marriott Bonvoy

You have a couple of options with Marriott Bonvoy points. You can convert them to Aeroplan miles at a rate of 3 points to 1 mile and if you convert 60,000 points at one time they'll throw in additional 5,000 miles and then you can choose to use those for gift cards if you like. However you can use your Marriott Bonvoy points to redeem for gift cards directly through the program. Here are just some examples of what you can get with your Marriott points:

Simply log in to your Marriott Bonvoy account, hover over Use Points / Certificates and click on shopping. Then click on Shop Now button as shown below:
You'll now be on Marriott's shopping with points site. Chances are it will default to the U.S. site so simply click on Change Shipping Country on the top and search for Canada.

More Rewards

More Rewards allows you to redeem points for select items when you shop at their grocery stores, namely Save-On Foods, PriceSmart or Urban Fare. You can even redeem points for online orders for delivery or pick up from those stores. Here's an example of an offer:
You can also redeem More Rewards points for gift cards but they don't have too many options for stores or merchants that fit the category of 'need' rather than 'want'. Perhaps Panago Pizza might be of interest:



PC Optimum

We here at Rewards Canada have knocked PC Optimum in the past - sure it is a great program but it has a lot of limitations in our mind but with the current situation in Canada it jumps up the ranks to be one of the better options out there. PC Optimum is essentially a cash back program for Loblaws family of stores and Shoppers Drug Mart. They have lots of earning opportunities and when it comes to redeem it isn't any simpler than redeeming in 10,000 point increments and you get $10 off your purchase at any of their stores for each of those 10,000 points. They have lots of 20x points offers at Shoppers to keep an eye out for and when shopping at Loblaws store make sure you have your account set to receive offers as that's how you earn points at their groceries:



Their PC Financial credit cards are easy to use and while they don't have any welcome bonus offers on them at the moment that are all with no annual fees so you could grab one right now to start building those PC Optimum points to redeem for groceries and other necessary items from their stores. These are the card options and their earn rates:

RBC Rewards

Much like BMO and CIBC, RBC offers a method to pay down your balance with RBC Rewards Points. Called Pay Credit Card with Points it allows cardholders to redeem 4,300 points for a $25 statement credit, 8,600 for $50 and so on.

You can also redeem your RBC Rewards points for gift cards. I don't have access to log in and check out what they offer in terms of merchants but if I recall correctly the redemption rates vary but you are looking around 12,000 to 14,000 points for a $100 gift card.

And RBC is running a great offer on their RBC Visa Infinite Avion card until the end of March. You can get 35,000 points upon approval with the card - absolutely no purchase necessary but you do have to pay the $120 annual fee. However the 35,000 points could get you around $300 worth of gift cards so you would come out $180 ahead and about $80 ahead if you use the option to pay down your balance.

Scotia Rewards

Scotia Rewards also got a lot of focus in our post "In light of what's going on in the world should you shift to a cash back credit card instead of a travel card? Why not a card that has both?" so I will just reiterate the key points. You can redeem Scotia Rewards points to for a statement credit as follows. You'll notice two different amounts as unfortunately Scotia is raising some of their higher end points requirements on May 4. UPDATE: Scotia has now announced that they will delay these changes.
 Same things goes for their gift card options:



So if you are planning to use Scotia Rewards points to help bridge the gap in your finances I would recommend doing so before May 4, at least for the rates that are changing so that you can get the best value out of them.

Conclusion

There you have it! That's our look at how you can shift your loyalty strategy from travel to cash to help you in these unprecedented times. There are even more programs out there that provide with the option of cash back or cash back equivalents like Desjardin, Triangle, Vancity, various credit unions and more. However this post is already longer than I expected so hopefully you can take away the gist of it - you can shift your loyalty program strategy to help you out financially if you need. That's key - if you don't need it right now, sit and wait until you may need the option except in the case of Scotia Rewards. I would also stick with my recommendation of moving AIR MILES to Cash Miles right now whether or not you need to just so you can build that balance up. The rest of the programs you can just hold on to them if you aren't in a position where you need the help financially.

Recommended reading:  Rewards Canada's COVID-19 Resources

Title image courtesy of stevepb/pixabay

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