Monday, July 19, 2021

Loyalty Lesson: Why hybrid rewards credit cards are the best bet for most Canadians


Whether you are a frequent flyer, a points & miles junkie or just someone who wants to have the utmost in flexibility with your travel rewards then there is one type of credit card that is the best for most of you and in reality for most Canadians. That type of card is the Hybrid Card. Hybrid cards are the moniker for these cards that Rewards Canada instituted many moons ago. Also known as Flexible Points card, Hybrid cards give the cardholder the best of all worlds when it comes to being rewarded from their credit card spending and welcome bonuses.

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You may be asking the question - What are hybrid cards? Let us tell you.

First we like to use the term Hybrid instead of flexible points as seen in the market as some card issuers call their points "Flexible Points" in that you can use to them to book any travel at anytime however they don’t have conversion options like some of other true flexible points cards in the market. Hence the reason why we like to use Hybrid as it avoids that confusion. Hybrid cards tend to provide the utmost in flexibility due to having more redemption options - they are the perfect card or cards for those who aren’t 100% sure as to what they want to use their rewards for. That is, Hybrid cards have access to the card issuers proprietary rewards program - these are typically your book any airline any time type rewards or hotels or car rentals and so on but then Hybrid Cards also provide the option to convert those proprietary program points into other travel rewards currencies from various frequent flyer and frequent guest programs. These are the critical reasons making hybrid cards the best bet for all Canadians. You essentially have all your bases covered. You can get the extreme flexibility of the proprietary reward program - booking travel on your own terms - the dates you want, the places you want, how you want to travel and so on - all for a known redemption rate. Whether the program has a set award chart or a set amount of points redeemed per dollar spent or both.  Proprietary credit card programs are flexible and easy to use with a known valuation - typically 1 to 2% on your card spend. But then you have that option to convert to airline and hotel programs. That’s where you get the outsized value but the trade off is less flexibility. Converting to airline and hotel programs can mean returns of 2, 5, 10 or even 20% on your spending but you are locked into that particular airline or hotel program and its rules and availability. You can only choose from that program’s partners, you may not get the dates of travel you really want, and so on. All the typically pain points of your traditional loyalty programs that we have become accustomed to over the past four decades. But when you do get those flights in business or first class or those hotel stays in an over water villa and are paying with points instead of doling out thousands of dollars of cash - it is worth it in the end. And that is why Hybrid cards are a favourite of Rewards Canada, why they are the best option for most Canadians and why you should have at least one in your wallet. I mean why wouldn’t you want the ability to have the option for all sorts of redemption avenues and not be stuck with just one? Yes there are cases where some people won’t need the frequent flyer or frequent guest redemptions so maybe a hybrid card isn’t on the top of the list - but here’s the thing, most of Canada’s hybrid cards have amazing proprietary rewards so they should be considered front runners anyways!

So now that you know what a Hybrid card is, let’s take a look at the hybrid card offerings that are available here in Canada.

There just over a dozen hybrid cards in Canada and a good portion of those are from American Express. While the only hybrid visa cards are issued by RBC and the only available hybrid Mastercards come from HSBC. I say 'available' as we do have the Diners Club Club Rewards Mastercard from BMO which is a hybrid card but it is not available to the public for new applications.


First off are the cards from American Express. All cards that earn Membership Rewards are hybrid cards. These are the Cobalt, Choice (soon to be Green Card), Gold Rewards (temporarily unavailable), Platinum and Centurion cards. These are some of the most flexible cards in the market due to sheer size of redemption options afforded to card members and they are:

With American Express Membership Rewards you have the any travel any time option where you redeem 1000 points for $10. This allows you to book any travel you want with whomever you want and once the charge shows up on your account you can redeem points against that charge. Depending on which Amex card you have these means a 1 to 5% return on your spending not taking into account any bonus offers on spending.

Then American Express has their fixed points for travel where you can get up to 2 cents per point redeemed which translates up to  a 10% return if you have the Cobalt Card. This is Amex's traditional award chart style redemption.

And then you have the conversion options. You can convert points American Express Membership Rewards to Aeroplan and British Airways at a 1:1 ratio. to Alitalia, Cathay Pacific, Delta and Etihad at 1: 0.75 ratio and then you can convert Marriott Bonvoy a 1:1.2 ratio and Hilton Honors at 1:1. (Note the Cobalt and Choice cards only have the hotel options at the time of publishing this article. As of August 16, 2021 they will gain the airline partners)

As you can see you American Express has some of if not the most popular conversion partner options in Canada - Aeroplan is by far the big one but then you have British Airways and Marriott as well. These programs provide some great redemption avenues for Canadians and provide a lot of potential value that is outsized - and by outsized I mean greater than 2%. We have lots of great articles on the Rewards Canada that show the amazing value from these cards. Here a just a few:

Don't forget that American Express recently updated their redemption rate for Use Points for Purchases which is their cash back option and that matches the anywhere travel of 1000 points for $10 - so you have extra high powered hybrid cards here by having that one additional redemption option with great value.

 

The only Mastercard cards in the market that are hybrids (well outside of the aforementioned Diners Club) are those issued by HSBC. These are:

Most of the focus is on the World Elite Mastercard as that card is open to all Canadians - the other options tend to only be for HSBC banking clients. It has it’s propriety rewards program called HSBC Rewards which allows you to book any travel you want with whomever you want and once the charge shows up on your account you can redeem your points - partial or full  - against that charge. The card earns 3 points per dollar on all spending except for travel which earns 6 points per dollar. Each point is worth 50 cents so you are receiving a value of 1.5% to 3% when you choose the any travel any time redemption option.

On the conversion side -  HSBC Rewards has three airline partners you can convert points to. They are British Airways Executive Club, Cathay Pacific Asia Miles and Singapore Airlines KrisFlyer. The redemption rate is 25,000 HSBC Rewards points for 10,000 British Airways Avios, 9,000 KrisFlyer Miles or 8,000 Asia Miles. This means the card earns 0.96 to 1.92 Asia Miles per dollar spent, 1.08 to 2.16 KrisFlyer Miles per dollar spent and 1.2 to 2.4 Avios per dollar spent - these are all really decent redemption rates, especially for BA. In fact this card is the best non American Express card for earning British Airways Executive Club Avios. Then you can throw in the fact HSBC typically has a transfer bonus to BA at least once per year that is in the neighbourhood of 30 to 40% (Right now it is 40% until July 31, 21)  so your earn can be as high as 1.68 to 3.36 Avios per dollar! HSBC is also the only bank that has a direct conversion to Singapore Airlines KrisFlyer. The only other option for SQ are Marriott Bonvoy points which you can be earned with American Express and then converted. 

 
Much like Mastercard the only hybrid Visa card options in Canada come from one bank and they are the Avion suite of cards from RBC. These are the cards in the Avion family:

It is the hybrid part of the Avion cards that has kept the RBC Avion Visa Infinite card in the top 10 cards in Canada for travel rewards - you may know that we really think the Avion cards are due for an overhaul but on that’s on their proprietary rewards - their transfer partners on the other hand are amazing and that’s what helps keep these cards ranking high. 

You can convert RBC Rewards points earned on Avion cards to programs like British Airways Executive Club, WestJet Rewards, American AAdvantage and Cathay Paciifc Asia Miles. The most famous of these is British Airways since it is a great 1:1 redemption option and RBC often runs promotions where you get a bonus when converting to Avios - that bonus has been as high as 50% in the past. We also tend to see bonuses for converting to WestJet Rewards - 100 RBC Rewards points equates to 1 WestJet dollar and the bonus when it happens is typically 10% although we did higher rates many years ago.

On the proprietary rewards side - the Avion cards were famous for being the one of the early trendsetters in the any airline any seat any time redemption option. The program runs similar to your traditional frequent flyer program in that you redeem a set amount of points for flights within a region or from one region to another. For example it is 15,000 points for short haul flight within a province or to a neighbouring province or state with a maximum ticket value of $350. This program proved to be extremely popular over the years especially early on before more card issuers began providing any airline any time options. The only issue with RBC is that they haven’t changed the program since its debut over a decade ago and many competitors have done so to become even more flexible and valuable. We can only hope that RBC follows suit! But don’t let that dissuade you thanks to having these multiple options for redemption.

And those are your options for hybrid cards in Canada! Now you can see why Rewards Canada’s favourite type of payment cards are Hybrid cards. They provide the utmost in flexibility and value - you aren’t stuck with just one type of reward or program. Yes the points are all earned into the hybrid credit card’s proprietary program but at least they give you that option to convert to other programs! In fact you should always keep the points in the proprietary program until you know you need to convert them for an award flight or hotel stay via one of the transfer partners. The only time you would convert points without a specific award in mind is when they do offer those transfer bonuses. Again you’ll still want to be sure you know you’ll use the end program’s points. For example we converted our Membership Rewards points from the Cobalt Card to Marriott during the latest 30% transfer bonus in June 2021 to take advantage of the bonus without any planned stays in the near future. However Marriott Bonvoy is our family’s main hotel program and we know we’ll use the points - had this not been the case we probably wouldn’t have transferred the points regardless of that bonus being the best one ever. In the end you do need to figure out what works best for you!

If you are interested in one or more of these cards be sure to check out some of the limited time offers on several of them. The Platinum Card® from American Express is offering a welcome bonus of up to 150,000 points until August 3! That’s $1,500 in any time any where travel, up to $3,000 in value for their fixed points for travel program and that’s up to150,000 Aeroplan miles or British Airways Avios or 180,000 Marriott Bonvoy points all of which can easily provide value well above $5,000! The HSBC World Elite® Mastercard® has it’s 70,000 point bonus which is worth up to $350 in travel or 28,000 Avios while the RBC Avion Visa Infinite card is at 35,000 point bonus right now for new applications until July 26, 2021. That’s $750 in value for their Avion award chart if you redeem at the maximum ticket level for travel in Canada or to the U.S. or it’s 35,000 Avios or 350 WestJet Dollars. So a lot of great offers to be had right now for some of the best hybrid cards in Canada!

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