How to invest with credit cards points? | Milesopedia
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How to invest with credit cards points?

To the point Credit cards rewards points have a fixed monetary value. If you can't travel, use them to invest!

Travel is still uncertain for many with the ongoing pandemic and health measures in place.

As a result, reward points balances can be very high.

Did you know that it is possible to use credit card points to invest?

Investing with our credit cards points

Saving with points

Investing is a great way to take advantage of reward points when there is no travel goal in sight.

Although the redemption rate is still higher when used for travel expenses, remember that points can also be seen as “sleeping money”.

Reward points for financial products

Consider the rate example for National Bank of Canada.

With 60,000 points, they can be redeemed for a $500 contribution to a TFSA account to invest.

When compared to the “best rate” of 55,000 points versus $500 travel discount, at first glance, the points are not optimized. In fact, you “lose” 5,000 points, or a value of ~$45.

However, if there’s no trip on the horizon, it may be better to put that $500 to work or pay off debts (mortgage, line of credit, etc.) than to leave it as points.

According to Goldman Sachs Bank, the average annual return of the S&P 500 has been about 9.2% for the past 140 years.

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Redemption rates for investing

To access financial products, you will need to open an account and become a customer of the bank.

Here is the number of points required by each financial institution to invest or reduce your debt.

Program Financial products offered Exchange rate for financial products Travel Discount Redemption Rates (Comparative)
NBC À la carte
  • invest in an RRSP
  • invest in a TFSA
  • mortgage repayment
  • bank fees
  • direct contribution to invest in your RRSP/TFSA portfolio on the National Bank direct brokerage platform
12,000 points = $100

12,000 points = $100

or

11,000 points = $100 when redeeming over 55,000 points

RBC Rewards
  • invest in an RRSP
  • invest in a TFSA
  • mortgage repayment
  • line of credit reimbursement
12,000 points = $100

15,000 points = $150

or

15,000 points = up to $350 for an airline ticket

CIBC Aventura
  • invest in an RRSP
  • invest in a TFSA
  • invest in the CIBC Investor’s Edge Portfolio
  • mortgage repayment
  • line of credit reimbursement
12,000 points = $100

10,000 points = $100

or

10,000 points = up to $400 for an airline ticket

BMO Rewards
  • BMO Premium Rate Savings Account
  • BMO Bonus Savings Account
  • direct contribution to invest in your portfolio on the BMO InvestorLine platform

 

15,000 points = $100 15,000 points = $100
BONIDOLLARS Desjardins
  • invest in an RRSP
  • invest in an RESP
  • invest in a TFSA
  • invest in a non-registered account
  • Service Fees
  • Insurance products
  • personal loan repayment
  • mortgage repayment
  • Savings products

 

1 BONIDOLLARS = $1 1 BONIDOLLARS = $1
HSBC Rewards
  • mortgage repayment
  • savings account deposit

 

25,000 points = $100 (mortgage account

25,000 points = $75 (savings account)

25,000 points = $125

As can be seen, some of the exchange rates are close to what you can redeem against credit to the account on travel expenses.

At the beginning of the pandemic, I liquidated the majority of my reward points in order to increase my savings contributions and invest.

During an 18-month period when I was grounded, my investments grew over 20%.

Since we didn’t know when we could travel again, I found another way to make those points worthwhile despite a slightly disadvantageous exchange rate in the first place.

Augmenter son crédit artificiellemen

Indirect methods for investing with points

However, when there’s a trip on the horizon, it’s really best to redeem reward points for travel discounts. Then, invest the amount saved.

Having the right mindset

It’s just a matter of perception, but there are two ways to look at it:

  • our trip costs less, so we have more money available for other purchases
  • our trip costs less, so we have more money available to invest or save

The basic rule of travel hacking, let’s remember, is not to create needs.

So, to maximize your points and your budget, you need to use your points and cash back on expenses you would have made anyway.

Money is money

During my trip to Turkey, I had booked a tour package with G Adventures. With them, there are several ranges of service for the same journey.

I carefully chose the one that suited me and then applied my National Bank rewards points to the fees.

Again, I selected the tour that satisfied me and not a more luxurious tour just because I had a “big discount”.

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Secondly, would I have gone on the trip even if I didn’t have so many points? In my case, the answer is yes.

So by using my points to reduce the cost of my tour, I saved a $1,000 that I was going to put towards this trip anyway. So I deposited that same amount into one of my investment accounts.

This thinking applies to all reward point programs, but also to cash back. Credit cards allow me to save money while pursuing my dream trips.

Unlike direct methods, this allows me to invest my savings anywhere : Wealthsimple, Questrade, my bank’s brokerage platform, etc.

The best credit cards offers for "investing"

Conclusion

More cash thansk to credit cards points? This means mor money to invest in order to eventually reach financial independence.

Come to discuss that topic in our Facebook Group!

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