With COVID-19 stopping most travel in its tracks, few of us these days think about wonderful places that our travel rewards programs promise to take us. So what about all those points we’ve been collecting? What will they be worth when we start travelling again? How well will airlines, hotel chains, and other businesses tied to those programs fare?
Questions like these have caused many to wonder if they should continue with points programs as usual in hopes of better times, or extract whatever value is possible from them now. While there is no easy answer, consider some key factors before deciding.
Most of us look for ways to cut expenses in uncertain times. Over the past few years, the most effective way to earn travel rewards points has been with credit cards that offered attractive sign-up bonuses. Many of those cards come with a yearly fee. In normal times, paying a fee for a premium credit card may have made sense because the benefits could easily exceed the fee. But does paying the fee still make sense today with travel almost at a stand-still?
One option is to get rid of fee-based credit cards especially if money is tight, or switch to cash-back credit cards. However, before you cancel, check to see if you lose your points when you cancel the card. That is usually the case with rewards programs run by banks such as RBC’s Avion, CIBC’s Aventura, or Amex Membership Rewards. If you cancel the credit card associated with those programs, you have to use the points within a certain time (usually 60 days, although it can vary) or lose them.
Many programs offer an option to use points for merchandise although this is seldom the best value. Some banks allow you to use your points to pay your credit card balance. The conversion rate for doing this varies so check with your bank to determine if this option gives you sufficient value.
Some programs allow you to transfer your points to other programs not tied to credit cards. For example, Amex Membership Rewards can be converted to Aeroplan Miles, or RBC Avion points can be converted to Westjet Dollars.
See if your bank offers the alternative to switch to a no-fee card. This is what we did with CIBC’s Aventura program. We each applied for premium CIBC Aventura Visa cards when they offered attractive sign-up bonuses and no fee for the first year. But now that it seems unlikely that we’ll use the points for air travel in the near term, a $120 per year fee to keep the card seemed too steep. So we switched to no-fee Aventura credit cards, which allowed us to keep the points for future use. No-fee cards have less earning power than premium cards, but in this case our goal was to simply preserve the points we already had rather than earn more.
Programs such as Air Miles, Aeroplan, Westjet Rewards, and those associated with other airlines are not dependent on specific credit cards. Cancelling an Aeroplan-linked credit card, for example, doesn’t affect the Aeroplan miles already in your account.
Even though travel rewards are not centre of mind right now, it’s a good idea to check your accounts occasionally. Most important is watching that your points don’t expire because of inactivity. For example, you lose your Aeroplan miles if there is no activity for 12 consecutive months. You can keep the account active by making a small purchase at a retailer that gives Aeroplan points.
Some reward programs have been offering special redemption deals during the pandemic. While buying merchandise with points is generally poor value, there are occasional exceptions. Aeroplan recently offered a sale on using Aeroplan miles to buy Home Hardware gift cards. It provides a value of roughly $0.008 per Aeroplan mile, which is not great but not terrible either. For those who don’t want to wait around for an uncertain future, deals such as this provide a way to extract some value from the program now.
No one knows how this will all play out in the next while. What to do depends on factors such as your financial situation, and how long you’re prepared to wait until travel rebounds. The biggest bang for your travel points buck has always been to use the points for air travel. But if you don’t see that as being feasible or desirable anytime soon, it makes sense to look at other alternatives.
The rewards world is complex and constantly changing due to uncertain conditions. A good resource to keep abreast of what is happening is the Rewards Canada blog (blog.rewardscanada.ca) with almost daily news updates on rewards programs in Canada.
Arlene and Robin Karpan are well-travelled writers based in Saskatoon. Contact: firstname.lastname@example.org.