Reward credit cards allow you to earn free cash back or other incentives just for using your credit card. Savvy shoppers can maximize their rewards by using their credit card for everyday spending, like on groceries and gas. Here are some other tips to get the most out of your reward credit cards:
Choosing the right Reward Credit Cards
In order to maximize the rewards from your credit card you need to identify which reward credit cards best fit with your spending habits. It doesn’t make sense to pay an annual fee for one of the top travel credit cards when your monthly spending doesn’t earn you enough points to cover the fees.
Similarly, if you are spending more than $5k a month on your credit card, you might be limiting your rewards by sticking to a basic, no fee credit card.
There are a few types of reward credit cards to choose from:
No Fee, Basic Rewards
No fee reward credit cards do exist, and there are some decent options out there. One of the top no fee reward credit cards is the PC MasterCard, where you earn 1% back on every purchase you make in the form of PC points. Another good no fee option is the American Express Air Miles credit card, which offers 1 Air Mile for every $15 spent at Air Miles rewards sponsors, and 1 Air Mile for every $20 spent anywhere else.
These reward credit cards are fine if you don’t spend more than $2,000/month on your credit card and like to keep things simple for earning and redeeming points. Keep in mind that you are typically earning 1% or less with these no fee, basic reward credit cards.
Travel Reward Credit Cards
Travel reward credit cards are the most popular type of rewards cards in Canada. What can we say, Canadians love to travel! There are currently over 70 travel reward credit cards available to Canadians, consisting of airline credit cards, hotel credit cards and more broadly defined travel credit cards.
There are a few no fee options for travel reward credit cards, but to truly maximize your rewards shoppers need to consider cards with an annual fee. The CIBC AeroGold Visa Infinite has an annual fee of $120 but offers 1.5 Aeroplan Miles for every dollar spent, meaning that if you spent $5k/month on your credit card you could be earning approximately $750 per year in travel rewards.
Travel reward credit cards are great for people who like to save up their rewards and redeem them for free trips every year or two. If you enjoy traveling and spend over $3,000/month on your credit card, consider a travel rewards card.
Cash Back Reward Credit Cards
Some people just like to earn cold-hard cash back from their rewards credit card. It’s a nice feeling to be able to put a bit of cash back in your wallet just for using your credit card for everyday spending. As with the other rewards credit cards mentioned earlier, there are no-fee options that give you around 1% cash back, or you can choose a credit card with an annual fee and cash back of up to 2%
If you spend less than $2,500/month the MBNA Smart Cash MasterCard is a great option that gives you 2% cash back on groceries and gas (up to $400/month) and 1% on everything else.
If you are a big spender then you might want to shell out the $99 annual fee and get the Scotia Momentum Visa Infinite which gives you 4% cash back on gas and grocery spending, 2% cash back on recurring bills and drug store purchases, and 1% cash back on everything else.
Related: Why Cash Back Beats Travel Rewards
Supplement Your Spending With a Loyalty Card
The quickest way to maximize your rewards is by complementing your reward credit cards with a loyalty card like Aeroplan or Air Miles. Again, in order to determine the best loyalty card for you, consider where you do the majority of your spending.
If you regularly shop at Safeway, fill up at Shell, and fly with WestJet then get an Air Miles card to double-dip on your rewards. If you shop more at Sobey’s, fill up at Esso, and fly with Air Canada then use your Aeroplan card to earn points even faster.
Think outside the box when it comes to collecting rewards, you don’t need to limit yourself to just one card. Two of the best rewards cards and loyalty programs in Canada are the Starwood Preferred Guest hotel rewards program and the Shopper Optimum points program. They offer much higher return on spending than the traditional 1% or less that you receive from other programs, even more so if you double-dip with their affiliate credit card.
By using these tips you can maximize earnings from your reward credit cards and put some cash back in your wallet or take your dream vacation even faster. Remember to match your reward credit cards to your shopping needs, and then use that card for all your daily spending, from groceries and gas, to monthly bill payments.
If you spend less than $2,000/month on your credit card then stick to the basic, no-fee options. But if you use your credit card regularly for small business needs or for travel and want your rewards to go even further, consider an annual fee travel rewards or cash back credit card.
What are some of the ways you maximize earnings on your reward credit cards? What card do you recommend?
Aeroplan is one of the most popular loyalty programs in Canada, with millions of Canadians earning and redeeming Aeroplan miles each year. So how do Aeroplan members collect miles even faster? By using Aeroplan travel credit cards to earn points on everyday spending.
Aeroplan Travel Credit Cards
American Express offers the most comprehensive line-up of Aeroplan travel credit cards. There is an option for every Aeroplan member, from the casual collector to the frequent traveller and everything in between. Let’s take a look at the different Aeroplan travel credit card options available:
- AeroplanPlus – With the basic American Express AeroplanPlus Card you will receive 1 Aeroplan mile for every $1 spent. There is a bonus of 2,500 Aeroplan miles for signing-up. The AeroplanPlus Card has an annual fee of $60, which includes Buyer’s Assurance Protection as well as Front of the Line preferred ticket access.
- AeroplanPlus Gold Card – With the American Express AeroplanPlus Gold Card you can earn up to 1.25 Aeroplan miles for every $1 spent. There is a bonus of 10,000 Aeroplan miles for signing-up. The AeroplanPlus Gold Card has an annual fee of $120, which includes Buyer’s Assurance Protection, Front of the Line preferred ticket access, and enhanced Travel Insurance.
- AeroplanPlus Platinum Card – With the American Express AeroplanPlus Platinum Card you can earn up to 1.5 Aeroplan miles for every $1 spent. There is a bonus of 15,000 Aeroplan miles just for signing-up. The AeroplanPlus Platinum Card has an annual fee of $499, which includes Buyer’s Assurance Protection, Front of the Line preferred ticket access, and enhanced Travel Insurance, including emergency medical insurance.
Is The Annual Fee Worth It?
To receive $50 in Aeroplan rewards, members would need to redeem 6,000 Aeroplan miles. Most Aeroplan partners award 1 Aeroplan mile for every $2 spent in-store, making the cost to accumulate 6,000 Aeroplan miles approximately $12,000. That’s a return of only 0.42% if you only use your Aeroplan card without any supplemental credit card or bonus points event. With Air Miles rewards, members receive a return of approximately 0.57% just on purchases at Air Miles sponsors alone.
If we used a travel credit card like the AeroplanPlus Card for our everyday spending we could speed up our earnings at more than twice the rate. At 1 Aeroplan mile for every $1 spent, assuming we spend $2,500 a month on our card, we could earn an additional 2,500 Aeroplan miles each month. That’s 30,000 Aeroplan miles over an entire year, or about $250 worth of free products from Aeroplan. Subtract the $60 annual fee and you come out with $190 worth of free products.
With the AeroplanPlus Platinum Card we could now earn 1.5 Aeroplan miles for every $1 spent. If we used the same formula of spending $2,500 per month, that would work out to 3,750 Aeroplan miles each month, and 45,000 for the year. That only works out to $375 in rewards each year, when the annual fee is $499.
Final Thoughts on Aeroplan Travel Credit Cards
If you are going to pay an annual fee for travel credit cards in order to earn Aeroplan miles or Air Miles, make sure that you spend well over $3,000 per month on your credit card. These travel credit cards should be reserved for frequent business travellers who can claim the rewards for themselves, rather than the business. Business owners would be wise to look at a small business credit card to maximize their business spending and earn rewards.
What are your thoughts on paying an annual fee on your credit card in order to earn points faster?