The Travel Group

The most common question our points-redemption department answers is what is the value of a point anyway? Generally, and for most airlines and credit card points programs, a point is should have the value of 2 cents. The best way to measure a loyalty program is to determine if the award you are interested in works out to 2 cents a point value.

There are exceptions: the AirMiles program and TD Infinite Travel Card are two programs that make things a bit more difficult to calculate.

The reason people ask this question is they are trying to figure out if it is worth it to redeem points for a particular trip. So, for example, if the best available airfare for a trip you want to take is, say, $750, and it takes 25,000 Aeroplan points to buy this on points, then the 2-cents-a-point formula means it makes sense to redeem the award instead of buy the ticket. Remember, most programs and all frequent-flyer programs only allow you to cover the airfare for free; taxes must be paid. And, on credit card programs such as Avion or Adventura, which have set dollar limits to their reward levels, if the airfare of the ticket exceeds the limit, you pay whatever is over that limit, in addition to the taxes.

At least two programs, the TD Infinite Travel Card (“First Class” being the only one to consider) and Amex’s revamped Amex Rewards Program, allow you to redeem points for ANY travel purchase through your travel agency. This includes taxes on airfares, cruise bookings, travel insurance, and even agency services fees! This feature is very appealing because it allows you and your travel agent freedom to shop for the best deal, so that you can minimize your points expenditure; but my arithmetic tells me that these programs are only giving you 1 to 1.5 cents per point value. So, more freedom, but at a cost!

Finally, as in the past, I have to insist that the very best way, without question, to use points – any kind of points – is through airline frequent-flyer programs. Virtually all credit card programs now – including Amex, Avion, Adventura, TD Travel Infinite, etc. – have an airline partner that you can transfer your points to. Most are a simple 1:1 transfer ratio; some are less desirable. No matter what formula they use, however, the fact remains that most people want to use their points for business class travel, something you cannot do without wasting a lot of points and a lot of money (ie. to “top up”) on the credit card programs’ own in-house rewards programs. You need to redeem business class travel through airline frequent-flyer programs. And, just as important, when you book a business or first class ticket on points, you are getting between 4 cents to 8 cents a point value!

The rule of thumb in the loyalty points game is this: choose two credit card programs which will cover you for two of the three major airline frequent-flyer alliance programs. Typically, people opt for an Aeroplan-affiliated program such as CIBC Aerogold/Infinite Visa or for American Express and an Alaska Airlines or British Airways-affiliated program (such as the Band of America Alaska Airlines Mastercard or RBC Avion Visa.) The former, affiliated with Alaska Airlines, affords you far more airline choices (covering almost all major airlines not covered through Aeroplan), but the latter, RBC Avion Visa, offers a more flexible all-round rewards program, allowing you to redeem retail tickets when points space is not available.

A second principle when considering your two points-based credit cards is to favour the two that are compatible with the frequent-flyer programs you already earn points on when flying. So, if you follow the Aeroplan/Alaska Mileage Plan strategy that I generally recommend to clients, you’ll want to go with an Aeroplan-affiliated card and the Bank of America Alaska Airlines Mastercard. If you happen to be high tier on another program, such as British Airways, go with the RBC Avion card. Or if you have status with American AAdvantage, consider the TD Travel Infinite. Amex is unique in Canada, in that it offers affiliation with a number of airline programs (Aeroplan, Delta, Continental, Cathay Pacific, and soon British Airways), but in many cases their transfer ratio is less than 1:1, so you do pay a premium in points when you transfer to, for instance, Delta Airlines or Cathay Pacific.

Finally, one caution about the future. All of these high-value affinity cards are despised by merchants around the world, due to much higher merchant fees. There is a back-lash in the retail world against affinity cards, and you may be seeing disincentives to use them or incentives to use other cards in the future. If credit card merchant fees continue to increase you may see Canada and the USA start to go the way of many countries where credit cards are refused or there are “discounts” if you pay cash. I’m with everyone else in loving my affinity credit cards, but I do fear for a future that loses the convenience of using a credit card universally.