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By Alyssa Furtado, RateHub.ca
Special to the Financial Independence Hub
Active and casual travelers have long known that one of the best ways to save on their vacations is by using travel rewards credit cards. It’s pretty simple: Sign up for a travel rewards program, collect points, and redeem them when you have enough saved.
What makes travel rewards credit cards so appealing is the fact that many offer huge sign-up bonuses. Usually there’s a minimum spend required within a set amount of time, but that seems pretty minor when you’re getting a few hundred dollars in return.
In addition, many travel credit cards offer additional benefits that help you save on your travel. For instance, many include travel emergency medical and car rental collision/loss damage waiver insurance. That’s easily worth a few hundred dollars a year.
The downside to travel rewards programs is that they can be difficult to understand for some. Here’s a look at three popular programs to help you decide the one that’s best for you.
BMO Rewards
With BMO Rewards, points can be used for flights, hotels, and more. They’re only redeemable on the BMO Rewards website or by calling the BMO Rewards Centre (a $29.95 booking fee applies), but there’s still some decent flexibility here. There are no blackout dates, you can book with any airline or hotel, and you can use your points to pay for taxes and fees. You receive $1 credit for every 100 points you redeem. That values each BMO Rewards point at $0.01 apiece.
Recommended card: BMO World Elite MasterCard
Once approved for the BMO World Elite MasterCard, you currently get a welcome bonus of 20,000 points (valued at $200). You’ll earn two points for every $1 spent, which effectively gives you a 2% return on your spending. In addition, you’ll receive a standard Priority Pass membership (worth US$99), which gives you VIP airport lounge access. The membership includes four complimentary passes annually (worth US$27 each).
MBNA Rewards
If you’re looking for flexibility, the MBNA Rewards program is for you. Simply book your travel with whomever you want, and once the transaction is posted to your account, you can redeem your points. The only downside is that there’s a 10,000-point minimum when redeeming points for travel. Alternatively, you can redeem 5,000 points for a $50 cheque. Also, note that you don’t need to redeem your points right away. You get up to nine months after a transaction is made to your card to make a claim so you can wait until you accumulate more points. Every 10,000 points are worth $100, which values each MBNA Rewards point at $0.01 per point.
Recommended card: MBNA Rewards World Elite MasterCard
When you’re approved for the MBNA Rewards World Elite MasterCard, there is currently an offer for 10,000 points after your first purchase, which can be instantly redeemed for $100 in travel. You’ll also earn two MBNA Rewards points for every $1 in spending, which equals a 2% return.
Aeroplan
Aeroplan is one of the best-known rewards programs in Canada. When you redeem points, you get charged a fixed amount of miles based on where you’re flying to. Generally speaking, you’ll get the most value by redeeming points for Australia, New Zealand, and the South Pacific region but that requires at least 90,000 points. Most people prefer to use their points for long-haul flights in Canada and the continental United States (excluding Alaska and Hawaii) since it only requires a minimum of 25,000 points and still offers good value. You can use additional Aeroplan miles for taxes and fees. But generally speaking, your points are better used for flights. Aeroplan points are worth $0.012 each.
Recommended card: TD Aeroplan Visa Infinite Card
Frequent Air Canada flyers will want to sign up for the TD Aeroplan Visa Infinite card. Although the specific details change frequently, this card usually comes with generous sign-up and spending bonuses of up to 30,000 miles which would be enough for a return trip to anywhere in Canada or the continental U.S. Additionally, you’ll earn 1.5 points for every dollar spent on eligible gas, groceries, travel, and drug store purchases. All other purchases earn you one point for every $1 spent.
Alyssa Furtado is a passionate entrepreneur, financial expert, digital marketer and educator and founder of RateHub.ca, a website that compares Canadian mortgage rates, credit card deals, deposit rates and insurance. Its goal is to empower Canadians to search smarter and save money.
