Credit Card Rewards: Our Beginner’s Guide

Define your goal before switching or applying for a credit card to earn points. That is the starting point. How do I want to use the points I earned?

• An all-inclusive trip or a trip to Disney World?
• A road trip in Europe with multiple hotels or Airbnb rentals?
• Savings on foreign currency purchases?
• Saving money with cashback?

Where to start:

1- Define your goals

2- Implement your strategy. Choose the relevant reward programs for your plan. We recommend focusing on one or two programs at most at the beginning.

3- Compare credit cards to each other to set up your earning strategy. To find those adapted to your profile and your projects. You’ll find almost 200 cards presentation on our comparator! Milesopedia guarantees you a simple, reliable and efficient credit card comparator.

You can read multiple testimonials: all those who have shared their successes with points & miles started with a specific objective!

There are three major networks on the market:

• American Express
• Mastercard
• Visa

Each network will offer banks different types of products :

• credit or charge cards
• Mastercard, World or World Elite cards
• and Visa Classic/Gold/Platinum, Infinite and Infinite Preferred.

These products have different features:

• Minimum personal/household annual income required These prerequisites are not required by the banks but by the Mastercard and Visa networks.
• Benefits
• Insurance packages

It is then up to the banks to improve the products they wish to offer their clients:

• welcome offers
• benefits for card holders
• additional insurance warranties

These benefits make their credit cards more attractive than their competitors.

The debit card is attached to your checking or current account and is offered by a bank when you open a new account. Your current account is immediately debited when you make an ATM withdrawal or purchase with a debit card.

The debit card will generally not offer points benefits. Mastercard and Visa distribute debit cards.

There are credit cards for:

• individuals
• professionals, self-employed individuals, small businesses
• corporations/big companies

The credit card is not linked to your checking account. The great benefit allows you to own credit cards from institutions other than your current bank/credit union.

The credit card has a limit that the issuer pre-sets, and it allows you to defer payment at the time of purchase.

However, a credit card balance carried over from month to month means paying a very high-interest rate.

Some institutions, such as American Express, will issue you charge cards.

The payment card is not linked to your checking account. It has no pre-established limit known to the customer (only the issuer knows it) and allows you to defer payment with your purchase.

However, the balance on a payment card MUST be paid on each statement and cannot be carried forward for interest.

The three networks offer prepaid cards: you will load the amount you want and use it the same way you would a debit card.

These cards may be helpful but unattractive to those who accumulate points. They do not generate any. They will be used, for example, to load money in foreign currency for a trip.

Example of prepaid cards: KOHO Mastercard Prepaid Card

There are almost 200 credit cards in Canada, as you can see in our credit card comparator! In addition, Milesopedia has also established a ranking of the best credit card offers!

In this classification, there are several types of cards. We have categorized them in a side menu on the right. Here is an overview.

• no-fee credit cards
• credit cards for students
• or with rewards (the ones we are most interested in)
• credit cards for balance transfers
• and for companies

Annual fees are an integral part of the reward earning process. We could divide the types of annual credit card fees into 4:

The most interesting cards will often be the standard/premium/high-end cards.

Although you have to pay an annual fee, the overall credit card benefits and the first-year sign-up bonus make up for the fees paid!

But it is not uncommon for no-annual-fee cards to also have a nice bonus like the HSBC Travel Rewards Mastercard^®.

Here, we will discuss the fees applied by your institution in different cases, such as :

• cash advances,
• purchases made abroad/in foreign currency,
• exceeding the credit limit.

These fees are usually avoidable by managing your credit cards well or using the right cards wisely, such as a credit card with no foreign currency conversion fees.

Points and miles collectors are generally not known to have credit card interest charges! They pay their entire balance each month.

If you have outstanding balances on your credit cards, there’s no point in starting to earn rewards points: the interest charges paid will negate the benefit gained by the credit cards. The hobby is not for you. At least not yet!

Three examples:

• Extended warranty: Double/triple the original manufacturer’s or dealer’s private label warranty for one year.
• Price Protection: If you find the same new item at a lower price within 60/90 days of a purchase made with your Eligible Card, you may be reimbursed for the price difference.
• Purchase Protection: Get coverage for most items you purchase with your eligible card if your item is damaged or stolen within 90/120 days of the purchase date.

Two examples:

• Concierge Services: Get exclusive, personal assistance with dinner reservations, activity tickets, locating hard-to-find items, purchasing and delivering gifts, or obtaining services for your company.
• Helpdesk: Get assistance with any questions about your card anytime, anywhere.

Two examples:

• Zero Liability: Pay only for purchase charges authorized on your card account. You are not responsible for unauthorized purchases, such as lost or stolen cards.
• The chargeback procedure: it is possible to obtain a refund for a service/product not received and paid by credit card. For example, think of the cancellation of flights by the airline due to unusual circumstances.

Two examples:

• International Help Desk: Get help virtually anytime, anywhere, in the language of your choice. Use your credit card services to report lost or stolen cards, get emergency card replacement or emergency cash advances, find out where an ATM is or if you have questions about your account.
• Access to VIP airport lounges Depending on the type of credit card, you may have free / paid access to airport lounges

There are many types insurance coverage:

• Collision/Loss Damage Insurance for vehicle rentals. This insurance covers the cost of damage to or theft of your rental vehicle if you use your credit card eligible for this coverage to reserve and pay in full for the rental car.
• in case of accident and medical emergency. This insurance protects you and your family in the event of accidental death and dismemberment if you purchase your public transportation tickets using your eligible credit card. For added peace of mind while traveling, your credit card provides emergency medical coverage anywhere in the world for you, your spouse or dependent children traveling with either parent.
• trip cancellation. This insurance protects you and your family against lost, non-refundable or unused payments and deposits in the event of trip interruption or cancellation if you purchased your public transportation tickets using your eligible credit card.
• baggage delay. This insurance reimburses you for purchasing personal or business essentials if your checked baggage is delayed on a common carrier and you have paid for your transportation tickets with an eligible credit card.
• damage or loss of luggage. This insurance reimburses you for the repair or replacement of your checked luggage or carry-on bags that have been damaged or lost by your common carrier, and you have paid the total cost of your transportation tickets with your eligible credit card.
• burglary at the hotel or motel. This insurance provides reimbursement for the loss of your personal belongings due to a burglary in your hotel or motel room. Your stay at the hotel must have been paid in full by the means of an eligible credit card.

Some cards will offer experiences and offers.

Their holders will be able to take advantage of exciting offers from retailers, hotels and airlines.

When applying for a credit card, the card issuer will check your credit report and review your credit score, representing your current financial situation.

Two institutions will provide this information: Equifax and Transunion.

Credit history will compile various information such as:

• outstanding credits (house, car, etc.)
• employment history
• debts (late payments, NSF checks, accounts transferred to a collection agency, judgments, bankruptcies, etc.)

It is essential to know that a credit card application will only count for 10% of your credit score.

80% of your credit score is based on:

• payment habits (35%)
• credit utilization ratio (30%)
• credit history (15%)

The information may be retained for six years in your file.

To improve your score, we suggest that you pay off your balances as soon as possible rather than waiting until the end of your card cycle!

In conclusion, credit card issuers want to know:

• whether you are a good or bad payer,
• what your debts are,
• and have you been granted credit by other institutions?

The choice will depend on YOUR income and YOUR goal.

Thus, each point optimization strategy can be customized. We have prepared some for you in the last section

The companies you deal with every day, whether in the travel industry (airlines, hotels), banking, or everyday life, have created rewards programs to build loyalty.

There are 4 types:

• Airline Rewards programs
• Hotel loyalty programs
• Bank rewards programs
• Cash back Rewards programs

If you prefer the video course, here it is! If not, continue reading.

These are rewards programs that are closely or remotely related to an airline. In Canada, the best known of all is Aeroplan, Air Canada’s rewards program.

These programs offer miles you can use for:

• flights
• hotel nights
• car rentals
• merchandise/gift cards

However, keep in mind that you’ll get the best return on investment when using these miles for flights.

Finally, it is typically advisable to be a member of 3 to 4 airline reward programs to cover the possibilities offered by the three major airline alliances:

• Star Alliance (Air Canada, United, etc.)
• Oneworld (British Airways, American, etc.)
• Skyteam (Air France – KLM, Delta Airlines, etc.)

There are several major hotel groups worldwide, and each of them has rewards programs.

The best known of all is Marriott Bonvoy, for example, which provides access to over 8,000 hotels worldwide.

These rewards programs issue loyalty points that you can redeem for :

• hotel nights
• flights
• car rentals
• merchandise/gift cards

However, you will get the best return on investment when using these points for hotel nights.

We recommend you be a member of all hotel rewards programs to cover all eventualities for your stays. Registration is free.

The best (and only with its “corporate” version) credit card for earning quick hotel points is the Marriott BonvoyTM American Express^MD Card.

Most financial institutions have their own reward programs.

We’ll talk about Bonusdollars at Desjardins, BMO Rewards at BMO, or Membership Rewards at American Express.

Obviously, each of these programs has strengths and weaknesses you need to know about.

They generally deliver points that can be redeemed – for some – for :

• purchases of accommodation such as airbnb
• a credit to the credit card account
• products / gift cards
• transfers to another rewards program (usually air or hotel)

Cash back Rewards Programs are mainly for those who don’t want to use the three previous types of programs.

AIR MILES CASH Rewards are part of this type of program. Many offers exist in Canada for AIR MILES credit cards!

These programs issue rewards dollars that are usually charged to your credit card account or that can be used to reduce your bill at the pharmacy, the SAQ or your gas station.

Now you know the main rewards programs.

Are you ready for “Earn and Burn“?

If you prefer the video course, here it is! If not, read on!

Signing up for rewards programs is free.

And today, there are many technical ways to replace the plastic card or memorize your identifiers so as not to clutter up your wallet and memory! We’ll discuss those below.

Here are the links to the registration pages for the different reward programs useful for Canadians (excluding bank programs that depend on your credit cards).

Every day you can earn rewards through your purchases or credit card application. And the opportunities are numerous!

• Use the right credit card at the right place and take advantage of gift cards in grocery and convenience stores!
• Shop through a loyalty program portal such as the Aeroplan eStore
• Use Rakuten to buy gift cards with your credit card (for your groceries, for example)
• Pay for your taxes (or any other supplier who only accepts cheques) with your credit card, via Plastiq.

Credit card bonuses can range from a few dollars to tens of thousands of reward points. We compile a monthly ranking of the best current offers.

For AIR MILES, check out the best credit card offers!

Various pages are devoted to each rewards program, and practice will make you an expert in rewards programs.

Examples.

• Short term: we want to to accumulate Marriott Bonvoy points to fulfill our need for 2-3 free nights on a trip that will be made in 3-6 months.

• Medium-term: we would like to collect many AIR MILES Reward Miles for theme park admissions and/or short-haul flight tickets for a trip to the Maritimes or the Northeastern U.S. planned in 6-9 months.

• Long-term: we want to to collect Aeroplan points for travel for trips we will take within the next 9-12 months.

In Canada, there are some great loyalty programs:

• Aeroplan
• AIR MILES
• Marriott Bonvoy
• American Express Membership Rewards

And other programs that will save you a lot of money. Let’s take a look at their strengths and weaknesses.

The highlights of AIR MILES CASH Rewards

• Straightforward
• 85-95 miles = $10 rebate

With the past and future departures of major AIR MILES partners (IGA, Réno/Rona, Jean Coutu, Bureau en Gros…), it will be much more challenging to collect miles. The future of the program is uncertain.

Is your goal a short-haul flight (to a nearby province or U.S. state)?

AIR MILES highlights for short-haul airfare

• For destinations that are often expensive in money (Maritime…)
• You can book with many airlines (Delta Airlines, Porter, Air Canada, etc.)

AIR MILES’ weakness for short-haul flight rewards:

• it is necessary to take several months in advance to have a ticket with requested miles which are at “reasonable” prices

Using your AIR MILES is not worth it for medium-haul and international flights. Fees and surcharges completely erase the savings. To be avoided.

Great use of AIR MILES miles can be made for car rentals.

It is possible to redeem your DREAM miles for other rewards:

• Theme park tickets
• Hotels
• Rental cars

Check out our ultimate AIR MILES guide to find out how.

The highlights of the Marriott Bonvoy program:

• Credit cards available
• You can transfer Membership Rewards points to Marriott Bonvoy
• You can transfer Marriott Bonvoy points to airline programs
• Hotels available for as little as 5,000 points
• Stay for 5, pay for 4 when you pay with points
• A global footprint in more than 100 countries
• Status Benefits (room upgrade, complimentary breakfasts, etc.)

Strengths of American Express Membership Rewards

• Considerable points transfer partners
• Ability to use points for an account credit for any travel purchase
• Ability to use points for an account credit for any purchase
• A fixed fare schedule for certain flights that doubles the value of points

The strength of the American Express Membership Rewards program is its great flexibility! This is especially handy if you decide to change your strategy along the way!

A welcome bonus of 50,000 Membership Rewards points offered by the American Express^® Gold Rewards Card can be used in a variety of ways:

• 50,000 Aeroplan / British Airways points
• 60,000 Marriott Bonvoy points
• $500 account credit for any purchase

We highly recommend American Express Membership Rewards to people who would like to travel, or even those who prefer cash back!

Credit card issuers offer many other rewards programs. Each of them will have their pros and cons.

We suggest you choose a program offering greater flexibility to use points:

• HSBC Rewards
• American Express Membership Rewards
• Scene+

With most of these programs, you will save a few hundred dollars here and there: it can make a clear difference in a “travel budget.”

We decerned it as the best credit card in Canada! All the cardholders are happy to have this card and let it be known on our Facebook group!

During the first year of ownership of the American Express Cobalt^® Card in the first year of ownership, a minimum of 60,000 points, or $600 in account credit, can be earned on any purchase:

• You can earn 2,500 Membership Rewards points for each monthly billing period in which you spend $500 in purchases on your Card.
• And if you spend those $500 at a 5X multiplier store (groceries, restaurants, bars, convenience stores – don’t forget about gift cards), you can get 2,500 extra points ($500 x 5).

Mastering rewards and credit card programs require knowing the basic rules:

The community often asks us to establish customized credit card rewards points strategies.

It is a delicate exercise because everyone has:

• different desires (economy class vs. business, hotels vs. Airbnb, nature vs. urban, etc.)
• different lives (single vs. couple, couple vs. family, etc.)
• different flexibilities (relaxation vs. retirement, salaried vs. self-employed, etc.)
• different means (students vs. high income, etc.)
• different expenses (large grocery stores vs. market, daycare costs, etc.)

In short, one size does not fit all when it comes to credit card rewards strategies!