RBC Royal Bank launched two new credit cards this past week, the RBC ION Visa and RBC ION+ Visa cards. These two cards will replace the Rewards+ and Signature Visa cards and feature changes to earn rates, redemption rates and benefits. The naming of these cards falls inline with RBC’s move of rebranding their RBC Rewards program to Avion Rewards.
At first glance these look like very competitive earn rates by offering up to 3 points per dollar spent but one must look not only at how a card earns points but how you can redeem those points and that plays a significant part for these cards. Here are the earn rates:
RBC ION Visa
- 1.5X Avion points on Grocery, Rideshare, Daily Transit, Gas & EV Charging plus Streaming, Digital Gaming & Subscriptions
- Earn 1 Avion point for every $1 spent on all other qualifying purchases
RBC ION+ Visa
- Earn 3X Avion points on Grocery, Dining & Food Delivery, Rideshare, Daily Transit, Gas & EV Charging plus Streaming, Digital Gaming & Subscriptions
- Earn 1 Avion point for every $1 spent on all other qualifying purchases
Both cards are launching with limited time welcome bonus offers as follows:
RBC ION Visa
- Get 6,000 Avion points on approval with the RBC ION Visa. Apply by November 30, 2022 ^
RBC ION+ Visa
- Get 12,000 Avion points on approval with the RBC ION+ Visa. Apply by November 30, 2022 ^
The ION Visa is a no annual fee card while the ION+ moves to a monthly subscription model with a fee of $4 per month ($48 annually). There are no minimum income requirements for both of these cards.
The ION and ION+ cards fall into the base tier of Avion Rewards which means the points can be used towards travel, any purchases made on the cards (cash back), merchandise, gift cards and RBC Financial products. The most valuable and primary redemption for these cards are the gift card rewards.
For the travel side, you can book any travel with the Avion Rewards program however the cards do not have access to the set points travel redemption schedule that the Avion cards have. The points earned on the ION and ION+ can also be converted to WestJet Rewards but not the other airline partners that are available to Avion cards.There is however a way to move them over so that you can, keep on reading to find out…
As alluded to above in the Earning Points section you have to also look at the redemption side of things to truly see if the points earned are as valuable as they sound.
The actual target market for these cards is not travel oriented, it is For Rewards Canada readers the most sought after type of redemption remains travel and with both of these cards you can redeem the Avion Points earned at a rate of 172 points for $1 towards any travel that you book via Avion Rewards.
Simple conversion? When is a 172 to 1 redemption rate simple? I almost thought it was April Fools day when I saw this. I don’t know of many people who will be able to do math in their head of “hey I have 10,000 points, how much is that worth?” with this conversion ratio. 100 to 1 sure – I’ll do that in my head, that’s easy, but 172 to 1? Forget it. I don’t even want to try to figure it out. And that’s what RBC is banking on. People not figuring out what the points are really worth.
And this is where we go down to rabbit hole of the big picture of looking at the marketing of the earn rates and the actual value of those points when it comes to redemption.
RBC has now followed in BMO and TD’s footsteps in creating not so easy to follow earn and burn ratios. I do wonder if RBC will take on the questionable marketing tactics we’ve seen from the other banks. I state questionable as these banks really only show you the earn side of things in their marketing efforts as they know that most consumers think points are 1:1, you know 1 point equals 1 cent etc. so by seeing 3 points per dollar they think they are receiving the equivalent of a 3% earn rate. That’s not the case with BMO, TD and now here with RBC. With the new earn rates consumers may think they are getting a 3x points card with the RBC ION+ card when in reality they are getting a 1.74x points card since that 172:1 ratio makes each point only worth 0.58 cents. (or in the case of RBC Financial Products a 2.49x points card, see below)
If you have been reading Rewards Canada for at least a couple of years now you’ll know we have had a lot of coverage on this topic which all started with this post that is a must read: When earning 5x points isn’t the same as earning 5x points – a loyalty lesson
Now that my rant is out about this earn and burn methodology, the question that may come up is whether the new earn rates combined with the new redemption rate make these card better or worse than the ones they are replacing.
The old Rewards+ card earn 1 point per dollar for gas, grocery and drug stores and 1 point for $2 on everything else. At that time points were redeemed for travel at a 100:1 ratio the return was 1% on gas, groceries and drug stores and then 0.5% on everything else. The ION card that is replacing it earns 1.5 Avion points on Grocery, Rideshares, Daily Transit, Gas & EV Charging plus Streaming, Digital Gaming & Subscriptions and then 1 point on everything else. Thus the accelerated categories have a true return of 0.87 cents for travel and all other spending is 0.58 cents. In this case you are seeing a devaluation on gas, groceries and drug stores while earning a better return on all other spending. Thus depending on your spending habits you could end up better or worse with the new ION card.
The old Signature card earned 1 point per dollar on all purchases. At that time points
were redeemed at a 100:1 ratio so the return was 1% return on all spending. The ION+ card that is
replacing it earns 3 Avion points on Grocery, Dining, Food Delivery, Rideshares, Daily Transit, Gas & EV
Charging plus Streaming, Digital Gaming & Subscriptions and then 1 point
on everything else. Thus the accelerated categories have a true return
of 1.74 cents and all other spending is 0.58 cents. In this case you are
seeing a nice boost in value in all the accelerated earn rate categories but then also a significant drop in value for all other spending. Again this is based on travel redemptions. Thus depending on your spending
habits you could end up better or worse with the new ION+ card.
The best redemption option for these cards
The above examples primarily looks at travel redemptions however the primary reward with these aren’t travel rewards but it is nice for them to have that option. The best redemption option and primary goal for holders of the ION and ION+ Cards are low value redemptions for gift cards. RBC provides over 100 options for gift card rewards and cardholders can redeem at a rate of 140 points towards $1. That provides a 0.71 cents per point value and if we multiply that by the earn rates you are looking at rates of return as high as 1.07% for the ION card and 2.13% for the ION+ card.
Converting to WestJet is a good option with these cards
The points earned on these cards can be converted to WestJet Rewards dollars and they convert at a 100:1 ratio just like the Avion cards. This makes the ION+ card one of the best WestJet dollar earning cards in the market as you’d be earning as much as a 3% WestJet dollar return. Combine this card with the actual WestJet RBC World Elite Mastercard in your wallet and you’ll rack up WestJet dollars super fast.
Other redemption options
Another popular option is to redeem points for RBC Financial
Products at a rate of 172 points to $1 for RRSP contributions, TFSA
contributions or other financial options. That rate works out 0.58 cents per point, which is the same as the travel redemption rate above.
You can also choose to pay
your credit card with points (this is basically a cash back option)
which requires 17,200 points for a $100 statement credit. This is actually the same redemption ratio as you see for travel. This means you don’t actually have to book your travel with RBC Rewards as they state. You can have more flexible options by booking with any travel provider and then use this cash back option to pay for that travel. This option allows you to redeem points up to 90 days after the charge posts to your account.
You can also redeem points for merchandise via RBC
Rewards’ merchandise catalog as well as with Apple or Best Buy or you
can redeem for over 100 different gift card options.
The key to maximizing value out of the ION cards
The best redemption options on these new cards are for gift cards however if that’s not your cup of tea, there is another option to getting better value out of your points than the 172:1 ratio. If you choose to upgrade or product switch to an Avion card from one of the ION cards your points will transfer over at a 1:1 ratio. In this case you have
yourself a true 3x points card in the ION+ and a true 1.5x points card
in the ION Visa card.
I do potentially see points and miles maximizers grabbing these cards to earn more points on their everyday spending than they would with an Avion card and then upgrading or holding on to an Avion card as well so they can get the 100:1 travel redemption ratio, convert to British Airways and other airlines or use the Avion Air Travel Redemption Grid.
Wrapping it up
Is there much difference in these cards over those they are replacing? Not really, I would think over the long run most will earn close to the same amount of points, rather I should say value of points, as cardholders will be earning more in certain categories of spending and less in others. It will come down to each individual taking a look at their spending habits to see where they will end up and making the decision which card to have.
The fact that the cards do have a great redemption rate to WestJet and are able to have their points ‘upgraded’ to the Avion Elite level if you have an Avion credit card will be very intriguing for our readership. In fact I feel they will become quite popular with the Rewards Canada community for that reason!