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To diversify or not to diversify - that is the question
Last Updated: March 9, 2016


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A question that has been asked by our readers and the media quite often is whether or not it is wise idea to diversify your loyalty program portfolio. The primary reason behind diversifying your loyalty program portfolio is just like diversifying any financial portfolio, to minimize risk. Too often we see loyalty programs make changes to their earning or redeeming rates which amount to the program being devalued. In an ideal world the answer to question is yes, you should make the most of any and all programs that you can. But in the real world this isn't always the case or possible.

If you are a frequent traveller, a big time credit card spender or happen to travel on your parents dime and use their credit rating to obtain the best credit cards then yes you most definitely should. You are in a place where diversification can benefit you and help you avoid devaluations seen from your traditional airline and hotel reward programs, and sometimes, though rare, from proprietary credit card reward programs.

But what about the typical Canadian? You know someone who has a family with two or three kids, mortgage payments, car payments, kid's activity obligations and so on with a household income between $40,000 and $150,000? Can you diversify? Should you diversify? The answer is still yes but with many more limitations.

If you fall into this bracket like most of us do, then read on. Even if you don't fall into this bracket, read on as there are still some tips you can probably make use of.

Back in 2004 when we first released our "Maximize Your Miles" article we stated you should focus on one program but ultimately have one airline, one hotel and one shopping program in your arsenal. Things have changed in 12 years and now for the typical Canadian this is a little different, you should still try to focus on one or two programs but be willing to entertain more. No matter what you should have some diversification but the depth and breadth will really depend on your financial, familial, travel patterns and other situations. Taking the typical Canadian example above, the amount of diversification won't be as vast as the true frequent traveller or high credit card spender (think $30,000 a month in credit card spending) who belong to multiple airline and hotel programs and/or carry a glut of credit and charge cards. Luckily, for the typical Canadian we are lucky to have several programs that make earning miles or points easy that also provide diversification without actually diversifying.

How you can diversify without truly diversifying? By utilizing Hybrid Credit Cards and then tying in any other loyalty programs you like. Rewards Canada's favourite and most coveted category of credit cards are Hybrid Cards (yes, we coined that term well over 10 years ago) or as some like to call them, flexible points cards. There aren't many in Canada, only American Express Membership Rewards, RBC Rewards (primarily for Avion cardholders), Diners Club Club Rewards and HSBC Premier. The latter two are either not available or limited to most Canadian's so the options are limited. That being said, the first two are great programs that should meet the needs of the greater Canadian populace.

What are Hybrid Cards?

These cards allow you to funnel all your spending to one account, that of the proprietary credit card program but then you have the option to transfer or convert those points to airline, hotel and other loyalty programs. For example if you have the American Express Gold Rewards Card you'll collect Membership Rewards (MR) points on the card but those points can also be converted to Aeroplan. So right there you have two programs to work with as you can swipe your Amex card for everyday spend to earn Membership Rewards Points and then swipe your Aeroplan card if that merchant happens to be an Aeroplan partner

Essentially you're banking more points in MR and in the future you can decide if your redeem them via Amex's TripFlex Feature or convert them to Aeroplan (or MR's other airline/hotel partners) to top off the miles you've already earned for a redemption. All the hybrid cards above let you use the proprietary points for booking travel how you want.

Related: Why proprietary credit card reward programs are the best option for most Canadians

So there is your first step in diversification. Get yourself a hybrid card and make it your primary program and your primary credit card. The second step is that you can and should still carry loyalty cards from Aeroplan, AIR MILES and any other programs you may frequent such as Cineplex's SCENE, Shoppers Optimum, etc. As you will be earning your points for purchases on your hybrid card but there are so many partners out there for these other programs that you should be earning with them as well. You may never get to a flight award with AIR MILES but you may get yourself enough miles to redeem via the AIR MILES cash feature to save you some money or maybe have enough for a free night at a hotel. Once again you are focusing on putting all your spend on your hybrid card and then collecting points and miles wherever else you can. A totally different step in diversification is to say screw it to travel rewards and go with a cash back credit card so that you can just use that cash back reward to anything you want. The only thing to be aware of is that you'll potentially have a lower rate of return on your spending than on travel rewards cards (the gap is closing between the types however) and most cards only give you the cashback once per year whereas the travel rewards cards allow you to use your points whenever.

Hybrid Card Details

  American Express
Membership Rewards
RBC Rewards Diners Club
Club Rewards
HSBC Premier
Primary Card for Earning American Express Gold Rewards Card
American Express Gold Rewards Card
RBC Infinite Avion
RBC Visa Infinite Avion

Diners Club Club Rewards Mastercard
RBC Infinite Avion
HSBC Premier World
Proprietary Program Point Value (Percent Return on each $ spent) 1 to 2% 1 to 2.33% 1.7% 1 to 2%
Programs you can convert points to Aeroplan
Alitalia MilleMiglia
British Airways Executive Club
Cathay Pacific Asia Miles
Delta SkyMiles
Etihad Guest
Hilton HHonors
Marriott Bonvoy
American AAdvantage
British Airways Executive Club
Cathay Pacific Asia Miles
Esso Extra
Shoppers Optimum
WestJet Rewards
19 Airline & Hotel Programs British Airways Executive Club
Cathay Pacific Asia Miles
Singapore Airlines KrisFlyer

The risks of diversifying

When you diversify you aren't putting all your egg in one basket. Just as any financial planner will tell you, this is what you need to do with your financial portfolio and as we have always spoke to, loyalty programs should be part of your financial portfolio. That being said too much diversification will bite you in the behind. It's like putting $100 into this mutual fund and $100 into that one and so on and so forth. Those minor amounts, even with growth, won't amount to much. You need to be careful when you diversify your loyalty programs. If you stay at hotels 4 or 5 times per year you are better off staying at one brand rather than a different brand for each stay so that you can build up those hotel points in one program. One stay a year across multiple hotel loyalty programs won't get you anything. Or better yet if you are that typical Canadian above funnel the hotel stays into your Aeroplan or AIR MILES account and pay for it with your hybrid card. Getting gas one week from Esso to earn Aeroplan miles and then one week from Shell to get AIR MILES won't amount to much either. Try to pick one and stick to it. Ultimately you risk earning only a few miles and points in a lot of programs that won't amount to much and you'll just have a bunch of orphaned miles and points.

As you can see you need to look at how you spend your money, where you spend your money, where you travel and how you want to be rewarded from your loyalty program(s) to determine your level of diversity. Honestly, loyalty programs follow the saying the rich get richer as the more money you can spend on your credit cards, the more you travel etc. the easier it is to diversify and remain loyalty program rich. Unfortunately for many of us we just can't afford to live a lifestyle like that. Pick a credit card, stick to it. Use both Aeroplan and AIR MILES but focus on one more than the other and throw in other programs for places you may frequent often. That's about as far as you should diversify.

Other diversification options

Another option is to look into and utilize hotel loyalty programs. These won't diversify your portfolio as much as those hybrid cards listed above as you are limited to strictly redeeming points for that hotel chain and its program's airline partners. Of course tying in a hotel credit card helps, although there are only two in Canada. The Marriott Bonvoy American Express Card (Personal and Business) and the mbna Best Western Mastercard. Diversifying by using hotel programs is more suited to those who know they will be redeeming points for hotel stays within that program's hotels or converting to an airline program like Aeroplan. Want to redeem for a cruise or know you don't want to use miles to redeem for business class flights then a hotel program is not the right way to go.

What if you don't use credit cards?

If you don't use credit cards and are strictly a cash and debit user your diversification strategy is tougher. As with almost any situation for a Canadian your portfolio should still include Aeroplan and/or AIR MILES plus any others of places you may frequently shop at like Shoppers Drug Mart. The problem is your earning potential is lessened greatly and if you use too many programs you'll spread yourself too thin as the miles and points earned without a credit card on shopping purchases are quite minimal. You could always grab the Scotiabank SCENE debit card to reward yourself with free movies for your debit card spending or grab an AIR MILES account with BMO to earn miles on debit purchases although we find that account to be quite expensive (they don't have a minimum balance waiver) and not worth the AIR MILES you earn with it.

I'm a frequent traveller, should I diversify my elite status options?

You fly. You fly a lot. Enough that you earn status with your airline of choice early in the year. What do you do for the rest of the year? If that airline doesn't grant you the status benefits early, you could shift your travels to another airline to earn status with that other airline. Ultimately it would be ideal if each airline was from a different alliance (SkyTeam, Star or oneworld) so you could enjoy benefits across the dozen's of airlines in these alliances. However, if your original airline does grant you early status recognition you need to decide what is more valuable to you. Using those benefits right away for your travels for the remainder of the year and of course for the next elite year, or not enjoying the benefits so that you can fly with another airline to earn status with them so that in the following year you can enjoy benefits across multiple airlines and multiple alliances.

The same principles apply to hotel frequent guest programs. Enjoy the benefits early or go for the gusto and earn status across multiple programs.

Of course, you may not have to diversify your loyalty to actually get status across multiple programs as many airline and hotel programs will match your status from a competitor! Find out about many current status match and/or challenge offers on Rewards Canada's Elite Status Offers page.

So what is your final answer?

Yes you should diversify your loyalty programs but to what extent will depend on your personal situation. You should always have one focus program if you aren't a frequent traveller or high spender coupled with some secondary programs to ensure your aren't bitten by the devaluation bug but also aren't spreading yourself to thin with too many programs.

Talk to us!

What do you find works best for you for in terms of diversification? Do you use lots of programs or just focus on one or two? Have any other tips or questions? Tell us in the comments section below or join the conversation on Facebook and Twitter!

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