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Why proprietary credit card reward programs
are the best option for most Canadians
Last Updated: December 9, 2015

 

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As much as Canadians love their reward programs there are two universal truths: a.) It takes too long to accumulate meaningful points and b.) There are never enough flights available when you want to travel.

While I’ve written and conducted numerous media interviews on the topic, the best advice I can offer is to understand your options.

At their core, true frequent flyer programs such as Aeroplan are all about rewarding your travel behavior. Sure you can earn miles through your credit card spend but the bulk of your earning power is still associated with travel.


Rewards Canada's Patrick Sojka discussing Aeroplan booking difficulties

The AIR MILES Reward Program funny enough is less about frequent travel and more of frequent shopping. You earn a bulk of your miles by shopping at partner retailers, taking advantage of bonus offers and double or triple dripping by using your associated credit card.

So are you a frequent flyer or a frequent shopper? Knowing this is the first step to understanding how you can earn more points faster.

Problem is it still doesn’t solve the reward redemption part of the equation. Sadly, flight inventory continues to plague both programs and unless you’re either super flexible on where you want to go or can plan months and months in advance, there are limited options.

Or are there???

A word on Proprietary Credit Card reward programs?

Proprietary credit card reward programs are loyalty programs run by credit card issuers themselves. They issue the points or miles and you redeem directly through them. They are not tied into other programs directly although some let you convert those points into another program (what we call Hybrid credit cards - our favourite since you get the best of both worlds) Some examples of proprietary credit card reward programs are American Express Membership Rewards, BMO Rewards, RBC Rewards and more.

How these programs work in a nutshell is that they will award you a set amount of points or miles for every dollar you spend on their credit card. You can then redeem those points for travel, merchandise or other rewards via the credit card's reward program.

Some programs are better than others, for example American Express' Membership Rewards and Capital One's Aspire Travel miles redemptions provide absolutely the most flexibility without losing point value while others like RBC Rewards and CIBC Aventura Rewards tend to be more restrictive but still provide more flexible and achievable rewards than traditional programs.

An example of where a proprietary credit card reward program works better than a traditional reward program

Lets look at an example of how these programs can be better suited for you. You are a family of 5 and want to reward yourself with flights to Disneyworld in Florida in a year. A program like Aeroplan requires at least 125,000 miles for that sort of redemption. AIR MILES requires between 15,000 and 20,000 miles. If you only spend $1,000 a month with a credit card like the TD Aeroplan Visa Infinite Card it will take you at least 5 years to earn enough miles for your family of 5. This takes into account a sign up bonus of 20,000 miles and spending that $1,000 a month at merchants where an Aeroplan card earns 1.5 miles. Seeing that you are hoping to be rewarded in a year, it isn't feasible that you can get all five tickets however in that year you could have earned as much 50,000 miles (20,000 sign up bonus + 1.5 miles for the $12,000 spent if only spent at bonus merchants). So you could technically get two of the five tickets through Aeroplan and purchase the other three. But now you have a dilemma, its taken you a year to get those miles and there is no availability as you want to travel within a month as you have had to wait for all those miles to post and you have to pay cash for all five flights and its a lot a cash since you've missed all the seat sales. Let's say it is $600 per person, so $3,000 in total.

Now if you choose to go with a proprietary credit card reward program you won't get all five flights either but you'll definitely be out a lot less cash and actually using your reward points. Same scenario as above, family of 5, going to Disneyworld in a year. You decide on the Capital One® Aspire Travel™ World Elite MasterCard®. In month one of having the card you met the minimum $1,000 in spend to earn your 40,000 miles sign-up bonus. You continue to spend your $1,000 per month on the card. 9 months in, you spot a seat sale with flights at $300 per person. You book them and charge $1,500 to your credit card. At this point you now have 58,000 miles with Capital One worth $580 in travel. If you wanted, you could choose to redeem those points right when those flights post to your credit card. (That's right, you booked the flights with the airline you wanted, with the dates and times you wanted during a seat sale!) Or, you could spend for another three months and earn 6,000 more miles (each $1 spent on the card earns two miles) bringing your mileage total to 64,000. Since Capital One gives you three months to redeem after the charge posts to your card, you could wait the three months and have a total $640 in miles to use towards your flights. (You can use whatever amount you want towards your flights with partial redemption!)

At the end of the day, you end up only spending $860 on flights for 5 people to Disneyworld!

5 Reasons why proprietary credit card reward programs are better for the majority of Canadians

Above is just one example, overall here are 5 Reasons why proprietary credit card reward programs are better for the majority of Canadians

  1. Save Money! While trips may not come 100% free (rarely do they with any reward program nowadays) these proprietary credit card reward programs provide instant rewards to help you save money on vacation or give you the ability to travel more luxuriously. For example you've budgeted $5,000 for your vacation and you have $1,500 worth of points from your credit card program. You can choose to save and make that vacation cost only $3,500 or you can still spend your $5,000 and boost your budget to $6,500 using the points. That $1,500 could get you the 5 star hotel with a private beach versus the 3 star one down the road with a shared beach. See how the Rewards Canada family has saved money with proprietary programs in our Redemption Stories section!
  2. Flexibility! Already shown in the example above, credit card rewards provide tons on flexibility. Some cards are more flexible than others so we recommend reading our feature showing that Not all Travel Points and Hybrid Credit Cards are created equal. That aside, most of the programs let you redeem points whether or not you have the full amount required to cover the entire price of travel, they let redeem for any airline, any hotel, cruises, all inclusives, you name it, you can redeem for any travel really. In fact you can keep collecting points and redeem after you travel with many of the programs as well, which means that impromptu train ride from Brussels to Amsterdam can be covered with points when you return home! And when you compare proprietary credit card travel rewards programs to cash back programs, you get access to your points all year round not once per year like most cash back cards.



  3. Value Retention! Credit Card reward program points tend to retain value longer than traditional reward programs. We've all seen it, when programs choose to raise the amount of miles needed for awards, Aeroplan, AIR MILES, SCENE and many others adjust their redemption rates with regular frequency. This is especially the case with those of you hoping to save up enough miles to redeem in those programs. We've only had one case of a credit card program adjusting their points value this year and this was the first case in at least a half dozen years. So credit cards aren't immune to it but if history is any indicator they are more likely to retain their value longer than other reward programs.
  4. Double Dip! As mentioned above, you don't need to ditch your traditional reward programs. In fact we encourage you to collect them hand in hand with your credit card reward program. That's the beauty of a credit card reward program when you redeem the points for travel, you still earn the frequent flyer miles on the flights or frequent guest points on hotel stays since you are technically buying revenue tickets, hotel stays etc. The airline, hotels etc. do not know that you are redeeming points for it. Related: Which credit cards can be used to cover award ticket taxes, fees and surcharges?
  5. No Need to Hoard! This ties in with point #3 dealing with value retention. To reach some higher end rewards with traditional programs requires years of earning miles or points leaving you open to point devaluation. With the majority of the proprietary credit card programs offering partial redemptions you can redeem your miles or points at any time for almost any value. Think about it, even if you only have $200 in points per year you can use those every year to save $200 per vacation. It's the same as holding on to them for three years and then saving $600. In fact using them sooner and keeping that $200 in a high interest savings account just gives you an even better return!


Major Proprietary Credit Card Reward Programs in Canada:

Many Canadian banks, credit unions and trust companies have proprietary programs for the credit cards they issue. The big 8 are as follows:

  American Express Membership Rewards BMO Rewards Capital One® Miles CIBC Aventura Rewards mbna Rewards RBC Rewards Scotia Rewards TD Rewards
Primary Card for Earning American Express Gold Rewards Card
American Express Gold Rewards Card
BMO
BMO World Elite MasterCard

Capital One® Aspire Travel™ World Elite MasterCard®
CIBC Aventura
CIBC Aventura Visa Infinite Card

mbna rewards World Elite MasterCard
RBC Infinite Avion
RBC Visa Infinite Avion
20,000 Scotia Rewards bonus points with first purchase
Scotiabank Gold American Express Card
TD Infinite First Class Visa
  TD First Class Travel Visa Infinite Card
Proprietary Program Point Value (Percent Return on each $ spent) 1 to 2% 2% 2% up to 2.29% 2% 1 to 2.33% 1 to 4% 1.2 to 4.5%
Take note! A hybrid card that allows you to convert points to other programs Travel must be booked via BMO Rewards Newly updated, this card is back in the front runners for Canadians Travel must be booked via CIBC Aventura Rewards Lower annual fee and less benefits for those who don't need all the insurance coverage provided on other cards A hybrid card that allows you to convert points to other programs The 4% is the return on spending in specific bonus categories The high return is only available on travel purchases and redemptions made via Expedia for TD


Some others to look at are from smaller banks like ATB, Choice Rewards, My Visa Rewards, National Bank of Canada etc. You can find all of the cards that are available on our Travel Points Credit Card comparison chart.

Final thoughts on proprietary credit card reward programs:

What is Rewards Canada's favourite? Easy, it's American Express Membership rewards as we collect points from two cards The Platinum Card and the Gold Rewards Card. The reason why we like this one the most is that it is a hybrid program meaning you redeem points via Membership Reward for Travel (their TripFlex feature) which is their proprietary program but they also give you the option of converting those points to Aeroplan, British Airways Executive Club, Hilton HHonors and more! It provides the best of both worlds!

Related: Canada's Top 5 Travel Rewards Currencies

If you don't need the option to convert to programs like seen from American Express then your best overall bets are cards like the Capital One® Aspire Travel™ World Elite MasterCard®, mbna Rewards World Elite MasterCard and Scotiabank Gold American Express Card. The BMO World Elite is also highly recommended however note that you have to book travel via their rewards center as you can't book travel through any provider.

With airline, hotel and other programs likes AIR MILES continually changing their redemption rates for the worse, those of you who don't travel frequently and/or can't spend a lot on your credit cards should really consider making a proprietary credit card program as your program of choice. You get the flexibility of any travel booking, you get the option of using your miles/points when you like and you can still collect miles and points in other programs! Ultimately everyone should have a proprietary credit card program like those listed above in their portfolio, even if you are frequent traveller or high spender as you can use those points for any travel purchase. If you Aeroplan is your major program, you still have to pay for the taxes and fees on an award ticket. Guess what? You can use many of the programs above to pay for those taxes and fees as long they are charged to that particular card. This is the only true way to get an Aeroplan (or any other Frequent Flyer Program) award ticket for free.


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“The interest rates, fees, rewards details, benefits and other details of the Capital One product(s) described in the article may have changed since the time of publication. Please consult the product information pages on the Capital One website for accurate product details. In the event of any conflict between the product details in this article and the Capital One website, the details on the Capital One website shall prevail.”

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