BMO. I have a black (coloured) air miles Mastercard. I use it for 90% of all purchases. I'm rolling in air miles and use them for 2 to 3 flights within Canada every year.
Stuff we didn't have to pay for because of Air Miles (2 credit cards, exclusive for all spending but mortgage):
-Fancypants kitchen stand mixer/meat grinder/food processor (all in one!)
-rotating composter
-a dozen Whistler ski tickets
-vacuum cleaner
-magazine subscriptions
-flight to Ottawa for two
-two way radios
But best of all, $600 of Investorline vouchers that now give a 2.9% dividend and tax free capital gains.
However, I refuse to pay a penny in fees or any interest to a credit card.
My points just brought an espresso machine. What you say is true it is a shame their isn't more financial literacy so that people know what the credit card companies are allowed to do.
Rewoga, heckler and clarkee - you're making me cry a little inside because of what you're leaving on the table. Please go burn your Air Miles cards. They are awful.
When it comes to rewards, you can either get cash back (e.g. MBNA world elite), flight rewards or goods (e.g. gift certificates and products).
Cash back is usually the best deal for people because it's simple and requires no math.
Flight rewards can be worth it if you know how to redeem them properly.
Let's go through some examples:
Flight Rewards
At best, you can fly YVR to YYZ for 4k airmiles and earn 1 mile/$10 spend (premium BMO card). This requires you to spend $40k. You can boost that slightly by keeping on top of Safeway specials.
Compare that to other programs:
Aeroplan
It can suck. Availability is not great, but it's still the best program in Canada overall. I generally redeem for business class seats because that's where the real value is at, but let's look at a typical economy redemption.
With an aeroplan visa and ideal spend (e.g. gas, groceries), you'd need 25k miles to fly YVR to YYZ. Best case scenario spend is 1.5miles/$1 = $16,666 spend.
With an Amex, best case scenario is 2pts/dollar for a $12.5k spend.
On top of this, you need to spend about $140 or so in taxes and fuel surcharges. Airmiles will charge taxes, but not fuel surcharges. You're still way better off even if Airmiles charged $0 to redeem.
Cashback
If you don't want to deal with that hassle, then use a straight up 2% cash back card.
* Assuming a ticket price of $700, your minimum spend is $35k.
Goods
Redeeming air miles (or any points) for products or gift certificates is 99.999% guaranteed to be a waste of points.
Gift Cards
Let's say you redeem for a gift card at 95 miles for a $10 gift card. To earn 95 miles with a free card, you need to spend $1900. Your return is $10/$1900 = 0.5%
If you earn 95 miles with a premium card, then you need to spend $950 to get a $10 gift card. Your effective return is 1.1%
Products
Here's a sample product:
This vacuum cleaner is 2,310 miles. To get that you need to spend between $23,100 and $46,200.
https://www.airmiles.ca/arrow/RewardsProductDetails?productId=prod2094495
It's valued at $299.99 + tax = $335
http://www.shop.ca/c/electrolux-access-t8-hepa-bagless-canister-vacuum-EL4071A-22518078
Your return is then between 0.73% and 1.45%.
Bonus: Annual fee or not to annual fee
Let's use a simple example. You can earn 1% cash back with no annual fee or 2% cash back with an $89 annual fee.
If you spend $8900 or less, go for the 1% cash back card.
If you spend $8901 or more, you are leaving money on the table by not getting the 2% cash back card.
At $8900, you will receive $89 at 1% or $178 AT 2% (minus $89 fee)= $89.
If you spend $20k, your return at 1% is $200. At 2% it's $311 ($400 - $89 fee).
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Life's tough, it's even tougher if you're stupid.
Guns kill people just like pens cause spelling mistakes, cars create drunk drivers and spoons create fat people.
PM me to learn how to use credit card bonuses to fly for free.
