When earning 5x points isn’t the same as earning 5x points – a loyalty lesson

BMO’s ad on Twitter

Taking a page right out of TD’s playbook we see BMO come out with an advertising campaign for their new BMO eclipse Visa Infinite* Card. The campaign that I saw on Twitter highlights the card’s 5x points earn rate and the card’s welcome bonus but nothing else. It is ads like these that irk me as they don’t tell the whole story. Technically speaking there is absolutely nothing wrong with them nor are they advertising anything falsely. In fact many banks and credit card issuers do it. For me it brings back memories of when I heard that radio ad for Canada’s first ever 100,000 point credit card welcome bonus on the ATB Gold My Rewards Travel Card back in 2013. The radio ad made it seem like or should I say implied those 100,000 points were huge and provided amazing value when in fact they were only worth $100. Other cards at that time were only offering 15,000 to 25,000 points but those were worth way more than that $100 but ATB’s hope was that people didn’t realize that.

TD did the same thing nearly a decade ago when they revamped their First Class Travel Visa Infinite Card to earn 3 points per dollar spent (we covered that in our Remember people it’s all about the EARN and the BURN post) They advertised the 3 points per dollar heavily but didn’t reveal that the cash equivalent of the points when redeemed for travel was half that as they also adjusted redemption rates (essentially a 1.5% return). And that’s what BMO is doing in this campaign – they aren’t telling you what those 5x points are worth. Anyone seeing the ad may think “hey BMO is offering 5x points – that’s better than other cards out there”. Or having some knowledge of cards in the market they may consider this card over the other three 5x points cards, namely the American Express Cobalt Card, MBNA Rewards World Elite® Mastercard®  and the Scotiabank Gold American Express Card since the BMO card and has better acceptance than American Express and MBNA is a relatively unknown.

And that’s where the problem lies. That’s where earning 5x points isn’t the same as earning 5x points. If you only look at the earn side, then yes – my statement isn’t true. However when you take the entire reward program into account – and you have to – then my statement does become true.

How so? Let’s look at these four cards in our market that offer 5x points on select categories of spending and what they get you for travel rewards.  There is also now a fifth 5x points card as of fall 2022, the National Bank of Canada World Elite Mastercard, but honestly, the 5x points earning on the NBC card is quite convoluted and confusing so I am not including it in this article. For simplicity as well I am only taking into account the option to redeem points for any travel at any time. I’m not taking into account Amex’s Fixed Points for Travel option nor their option to convert to airline and hotel programs as those  boost the Cobalt’s value beyond 5x.

What BMO doesn’t tell you is that when you redeem those points earned for any travel you have to redeem at a rate of 150 points for a $1 credit. That translates to a per point value of 0.667 cents.  Take the 5x points earn rate on the BMO eclipse Visa and multiply it by that 0.667 and you get a 3.34% return. Scotiabank offer redemption rates of 1,000 points for a $10 credit towards any travel, MBNA offers 100 points to $1 for travel and American Express offers 1,000 points for a $10 credit towards any purchase – not just travel. Or quite simply a per point value of 1 cent for all these other cards.  I think you can already see where this is going…. that means you get a 5% return towards anything with American Express and a 5% return for travel with MBNA or Scotia when you redeem those points that were earned at the 5x rate.

Recommended reading: American Express increases the value for Use Points for Purchases for non-travel purchases – 1,000 points = $10 and it’s permanent!

So with the Amex, Scotia and MBNA cards the math is easy.  5 points = 5%.  With BMO, 5 points = 3.34% which to us in the loyalty world and for those who love mathematics makes the BMO eclipse Visa Infinite* Card a 3.34 points card. So that’s where earning 5x points isn’t the same as earning 5x points.

Yes, the BMO card does offer a few more categories for 5x points earning than the other two cards so I’ll give that to them but it is still a 3.34 point card in said categories. In fact on gas and* transit the BMO card has the highest earn rate in our market. We could say the same thing about Aeroplan cards but in a reverse manner. Aeroplan credit cards typically only earn 1 to 3 Aeroplan points per dollar spent but we value them at no less than 1.5 cents each in our calculations. However in reality, on average they are actually worth around 2 cents each. That makes those Aeroplan cards 2 to 6 point earners.

* Update:  it is not the best for gas – that honour goes to the SimplyCash® Preferred Card from American Express

What it comes down to is that the world of loyalty programs can be and is a difficult one to understand if you don’t educate yourself and that’s really what this post is about – education. Is there a place for the BMO eclipse Visa Infinite* Card? Absolutely and there are people who are going to love it. You can actually read our review of the card here to see what is good and not so good about it.

However I want people to know that a lot of what you see with loyalty programs is sly marketing and here at Rewards Canada we’re all about educating Canada to look beyond that marketing and learning the most you can about them.  Ultimately we want to educate the Canadian public to not be swayed by ads like this. Do your research and I know our long time readers are probably sick of me saying this but you need to remember “It’s all about the earn and the burn. You have to look at both sides of the equation when it comes to loyalty programs”