Yes, you can achieve a return of 20% or higher on your credit card spending

When we talk about returns on credit card spending it is usually in the fashion of a percent return for each dollar you have spent on a card. Percent returns help us gauge and compare cards against each other as they are so many variables in how cards in the Canadian market earn points and how those points can be redeemed. This means you can’t really compare a point earned on this card with a point earned on that card without looking at the big picture. For example, our second most popular article of 2021 to this date compares earning 5x points on the American Express Cobalt Card versus earning 5x points on the BMO Eclipse Visa Infinite Card and how they don’t equal each other despite having the same earn rate. 

So that brings us to what makes a good return on credit card spending? Here the phrase ‘good return’ can have different meaning for different people. If you are just starting out in the credit card world (ie a student) you may only be able to get cards that provide a 0.5% to 1% return so that would be good for you however in general we look at a good return averaging between 1% and 2%. This goes for both travel and cash back rewards credit cards. And we say averaging as most of the best credit cards in the market have various earn rates where you can earn more than 2% on some spend categories and only 1% on categories that aren’t accelerated. 2% is a great benchmark against traditional reward programs, think frequent flyer programs, as that is where you ideally want to redeem miles or points at for economy class flights. The big picture for economy class travel or cash back sees 2% as great, 1.5% as good and 1% being average. And that brings us to this article – can you get bigger and better returns than those benchmarks? And the answer is yes, absolutely! If you have followed Rewards Canada for a good amount of time you’ll have seen many articles where we provide examples of point redemption options at 3%, 5%, 7%, 10% and higher. In fact, most recently when we reviewed the Marriott Bonvoy American Express Card and the Marriott Bonvoy Business American Express Cards we provided an example where the return on those cards reached a 17.14% level. Yes 17.14%! It is from that example that we can even find a higher return on card spend. So let’s dive right into that.

How do you get a 20%+ return on credit card spending?

In those Marriott Bonvoy card reviews the example that provided a 17.14% return looked at redeeming Marriott Bonvoy points for a stay at the The St. Regis Maldives Vommuli Resort. This took into account 5x points earning for stays at Marriott Hotels and also took into account that when you redeem for five nights with the Marriott Bonvoy program you get that 5th night free – in reality you are redeeming four nights worth of points. Using that example however with another American Express card – one that earn 5x points and then converts to Marriott we can achieve an even higher return! That card is the already mentioned American Express Cobalt Card. It earns 5 points per dollar on eats and drinks and then those points convert to Marriott at a rate of 1 to 1.2, thus giving you 6 Marriott Bonvoy Points per dollar spent. Given the current climate with very little travel going on for many Canadians it is the Cobalt Card that makes awesome sense to have in your wallet since the big time 5x points earn is on the categories we are all spending the most money on right now – groceries, grocery delivery, restaurants, take-out and food delivery services.

Here we bring in the example from our Marriott Bonvoy card reviews but we’ll look at the numbers based off of the Cobalt Card. Here is what a five night stay at The St. Regis Maldives Vommuli Resort costs with points for an upgraded room and the same room with
cash rates:

Note: Yes this is June for the Maldives which is rainy season but we did a few other random searches in fall of 2021 and the point amounts are the same with cash amounts falling within $100 of our example.

The upgraded room – an Overwater
Villa, 1 Bedroom Villa, 1 King, Sofa bed, Private pool for five nights
costs an extra 5,000 points per night at this Category 8 hotel. That
means every night is 90,000 points instead of 85,000 but wait – you
might be asking why is it only 365,000 points and not 450,000? That
brings us the one of the best features of the Marriott Bonvoy program –
when you book 5 awards nights you get one free – the one that costs the
least of course (for example if you have a mix of off-peak and standard
rates, one of the off-peak nights would be free). It also doesn’t cover
the upgrade fee in points. Any ways back to our example – you are
redeeming 365,000 points for the equivalent of US$9839.98. That works
out to 2.7 cents per point in USD or 3.4 cents per point Canadian. So if we look at the 5 points per dollar spent on the Cobalt Card that actually work out to 6 Marriott Bonvoy points per dollar, you are achieving an amazing 20.4% return! The crazy thing here is that it is not that hard to get there with the American Express Cobalt card. If you applied for the card right now (which you would want to do since it has its best ever welcome bonus right now) you would earn enough points for this stay that most people only dream about in less than two years:

  • 45,000 points from the welcome bonus (54,000 Bonvoy Points)
  • Spend $30,000 in the first year on eats & drinks for 150,000 points (180,000 Bonvoy Points)
  • Spend $21,833 in the next year on eats & drinks for 109,167 points (131,000 Bonvoy Points)
  • Total Bonvoy points = 365,000 

If you already have the card you would to spend $30,000 each year for two years to get to 360,000 Bonvoy Points and chances are you would already have some other points banked (or maybe spent on other categories)  to cover that additional 5,000 points for the above example.

That’s just one
example from thousands that we could provide! Ultimately your rate of
return will be different as hotel prices are constantly changing and a
big portion of that amazing return counts on getting that 5th night
free. If you are only redeeming for three nights it drops. For the
example above it moves down to US$ 2.2 cents per points – still an
awesome return but as you can see that free night makes a huge

You can actually get an even higher return

There is a route to an even higher return – wait? what? Yes you can go even higher than 20.4% if you time your redemption of converting the American Express Membership Rewards Select points from the Cobalt Card to Marriott Bonvoy. We say time it right as typically once per year American Express will provide a bonus when you convert points to Marriott. The last time this happened was in September 2020 (read about it here) and the bonus was 25%. This meant for every 1 Membership Reward point converted you received 1.5 Marriott Bonvoy points. Let’s re-do our math above now – 5 points per dollar spent on eats and drinks times 1.5 equals 7.5 Marriott Bonvoy points. With a redemption rate of 3.4 cents per point that works out to a 25.5% return and that’s how you get the even higher return.

Recommended reading: Why the American Express Cobalt Card is the best card to get for your future travel plans

Wrapping it up

Need I say more? I don’t think there is a need here for a big drawn out conclusion as the numbers speak for themselves. There is a reason why the American Express Cobalt Card is the best travel rewards credit card in Canada hands down. It has ranked #1 in our rankings each and every since the card launched late in 2017 and this article shows just one piece of the pie as to why it is the best credit card.

Learn more about and/or apply for the American Express Cobalt Card here


All images via Marriott Hotels


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