Weekend Reading: Replenishing Travel Points Edition
We spent a few years building up a massive bank of travel points before our first trip to the U.K. in 2019. Indeed, we put nearly 1 million travel points to work booking flights and hotels for a 32-day trip to Scotland and Ireland. Then we went back to work replenishing travel points for our revenge travel year in 2020, which ended up getting postponed to 2022. We took it easy(ish) on travel in 2023, but have three trips booked this year that pretty much drained all of our points again.
I get it. Obsessing over travel points is not for everyone. My wife and I have collected rewards from more than a dozen credit cards, all in a well thought out goal to maximize our travel points, save money on flights and hotels, and upgrade our experience whenever possible.
We’ve also willingly paid – wait for it – more than $3,000 in annual fees! Crazy, right?
But I’ve done the math and figured that paying $3,000+ in fees was a good investment to earn more than 1 million travel points. I valued those points at about $20,000. How? Let me explain.
The main rewards program to drive all of this was the American Express Membership Rewards program. It’s the most lucrative in terms of number of cards available, the incredibly generous sign-up bonuses, and the ability to transfer Membership Rewards points to other programs such as Aeroplan and Marriott Bonvoy.
I typically transfer Membership Rewards to Aeroplan on a 1:1 basis. I value Aeroplan miles at 2 cents per mile. That means 1,000,000 Aeroplan miles x 2 cents per mile = $20,000 worth of travel rewards.
Marriott Bonvoy is not as lucrative – these points are only worth about 0.9 cents – so I limit the number of points I transfer to Bonvoy on an as-needed basis. Besides, we mostly rent Airbnbs when we travel as a family.
Amex Cobalt
I start with the Amex Cobalt card – the best card for everyday spending in Canada with 5x points for food & drink. Sign up and spend $750 per month on this card to get an extra 15,000 Membership Rewards points (plus the 45,000 points you’d earn if you spend $750 per month on a 5x spending category).
Then use your own referral link to refer your spouse or partner (called: activating Player 2), and have them do the same thing. This could be worth a total of 120,000 Membership Rewards points in a year, plus another 10,000 for the referral bonus.
Amex Platinum
Next, go big with a premium card like the American Express Platinum Card. This one is great for airport lounge access, plus preferred status at Marriott Hotels (automatic Gold Elite tier). Yes, it’s a steep annual fee of $799 but you get a $200 annual travel credit AND a $200 annual dining credit to offset $400 of that fee. Plus, in the first year you can earn up to 100,000 Membership Rewards points when you spend $10,000 within the first 3 months.
Amex Aeroplan Reserve
Wanna get crazy? Refer your spouse or partner to the American Express Aeroplan Reserve Card where they can earn up to 90,000 Aeroplan points (plus a sweet 30,000 point referral bonus for your partner).
This card comes with a whopping $599 annual fee but includes access to select Air Canada Maple Leaf Lounges, plus Priority Check-In, Priority Boarding, and Priority baggage handling with Air Canada. Not bad!
American Express Business Gold Card
The best sign-up bonus in Canada right now is for the American Express Business Gold Card, where you’ll get 75,000 Membership Rewards points when you spend $5,000 within the first 3 months. The annual fee is just $199, which is reasonable for a business card.
I *just* completed my $5,000 spend on this card (deposits for Airbnbs for this summer) and instantly received the 75,000 Membership Rewards welcome bonus. I transferred that to Aeroplan and it allowed us to upgrade our flights to business class to Edinburgh on October. Nice!
Again, refer your partner or spouse and do it all over again to earn another 75,000 Membership Rewards points.
Marriott Bonvoy Cards
Chalk this one up as an absolute no-brainer card to have in your wallet. The Marriott Bonvoy Card gives you 55,000 bonus (Bonvoy) points when you spend $3,000 within the first three months. Not only that, you get an annual free night certificate to stay at a category five hotel (easily worth $300+), making this a card a keeper from year-to-year. The annual fee is just $120.
We just used our free night to stay in the Calgary Marriott Airport in-terminal hotel the night prior to an early flight departure. Nothing beats walking out of the hotel lobby and right to your gate without stepping foot outside!
Again, refer your spouse or partner and do it all over again to earn another 55,000 Bonvoy points, plus 20,000 referral points, and another free night certificate.
Building your Travel Bank
By my count, that’s up to 530,000 Membership Rewards points and 130,000 Bonvoy points (plus two free nights, plus $400 in travel & dining credits) from eight cards, split between spouses so there’s only four cards each. Spread these out over the year so you can better align your regular spending with the minimum spend amounts required for each card.
This strategy is not for the faint of heart. You’d be paying more than $2,200 in annual fees for these cards. But the payoff could be worth $12,700 or more, depending on how you redeem your points. Plus, hotel status, airport lounge access, priority boarding, etc.
The time to use this strategy is when you have multiple trips lined up for a year.
Guess what? Cancel the cards after almost a year so you don’t have to pay a second annual fee. I keep the Cobalt card as my everyday card, since it has a high earn rate, plus the Platinum Card for the hotel status and airport lounge access, and the Bonvoy Card for the free annual night certificate. The others have been rotated through over the years by either me or my wife to capture the bonuses.
Questions? Hit me up in the comments.
This Week’s Recap:
Kyle Prevost shared the details on his new DIY retirement planning course for Canadians. Worth checking out!
Also popular was the last Weekend Reading edition all about when to RRIF.
From the archives: A two-fund solution for investing in retirement.
Promo of the Week:
Author and friend of the blog Mike Drak has generously offered to send Boomer & Echo readers a free electronic copy of one of his three books, choosing from:
- Retirement Heaven or Hell
- Victory Lap Retirement (2nd Edition)
- Longevity Lifestyle by Design
If interested, please email Mike directly at michael dot drak at yahoo dot ca. He’d also love for you to write an Amazon review afterwards.
Weekend Reading:
Short and sweet this week.
The always eloquent Morgan Housel shares a few thoughts on spending money.
Dr. Preet Banerjee asks if today’s young, diverse investors are making good choices with their money?
It’s a Ben Felix trifecta. First up, Ben explains the role of bonds in retirement portfolios, and suggests we move beyond common asset allocation advice.
Then, on YouTube, he says that popular personal financial advice suggests that portfolios should contain at least some bonds and that asset allocations should shift increasingly into bonds as investors move toward retirement, but new research suggests that this thinking is due for an update:
Finally, Ben takes a hard look at ESG investing and says it may be counterproductive:
“Hedging ESG risks and feeling good about your portfolio are valid reasons to consider the ESG characteristics of the companies that you own. When it comes to making the world a better place, I don’t have the solution, but ESG investing probably isn’t it.”
The Humble Dollar’s Jonathan Clements says our experiences – especially those during childhood and that involve family – tend to triumph, shaping our world view and potentially setting us up for costly financial mistakes.
Jason Heath shares some surprising retirement math you need to know, from how long you’ll live to deferring CPP.
Advice-only planner Anita Bruinsma compares active versus passive investing.
Finally, retirement expert Fred Vettese explains (and charts) why you should be able to save more money closer to retirement.
Have a great weekend, everyone!
Do you worry about credit score being impacted by cycling through cards over the years?
For sure. I went a bit overboard one year and my credit score dropped by 120 points!
I figured each new credit inquiry (sign-up) drops your score temporarily by 10 points.
But if you spread these out reasonably throughout the year (3-5 over 12 months) the impact should be minimal to non existent.
And, it should go without saying, don’t apply for a bunch of credit cards right before you may need to apply for a mortgage or car loan, for example. Be smart about it.
My credit score was about 793 last I checked.
Hi Robb, how do you get your spend on Amex cards? Grocery stores in Ontario generally do do accept. Any problem churning Amex? I thought they clamped down on that (no bonus if you previously had the same card). Thank you
Hi Gregory, we can use Amex at Save on Foods, Sobeys, and Safeway here locally (Alberta). Agree it’s a lot tougher if you do your grocery shopping at Loblaws or Costco.
To be clear, we also shop at No Frills for some things that are just too darn expensive at Save On / Safeway. But we just have to use a Visa or MC there.
I don’t regularly churn Amex cards for the reason you mentioned, but I have received the welcome bonus multiple times for the same card.
I’d just space those applications out over a couple of years.
Wow!! How many years after applying and presumably cancelling the card were you able to reapply and get the bonus again?? I also thought there was a restriction on this but would love to hear if there is a hack!!
I would wait at least a year (after cancelling) before re-applying for the same card type. And they can change terms at any time so there’s no guarantee you’d get the bonus again.
Hi Robb. Thanks for the article!
1) Can anyone actually apply for a business card without a business?
2) Do you stop using the card right after hitting your spending requirement?
Hi Mason, technically you do not need an actual business to apply for a business credit card. In my experience, CIBC has been the only financial institution to actually verify that you have a business (through an in-branch appointment).
It makes sense, just say you have a side hustle and want to keep separate tabs on those related expenses. No big deal.
And, yes, once I hit the minimum spend the card goes in a drawer and I set a reminder to cancel it before the annual fee comes due.
Ok thanks! How long would you wait after cancelling a card before applying for the same card again?
Hi Mason, I’d wait at least a year after cancelling before reapplying. Lots of other cards out there to tide you over in the meantime.
Thanks Robb. This is all very helpful including the questions & answers!
For the AMEX Platinum, which restaurants do you dine at to spend the $200 credit?
Hi David, this is a new feature so I haven’t had the chance to use it yet. And the eligible restaurants are mostly concentrated in big cities, so I’ll have to use it in Calgary or Vancouver when we’re there later this summer.
Full list here: https://www.americanexpress.com/en-ca/benefits/diningbenefit/
Thanks for the great info! I currently have 200,000 points on my Cobalt card 200,000 on my old Capital One World Card ( the one discontinued) Is there any advantage to getting a Aeroplan card and can I then transfer points over?
Gerry
Sudbury
Why would I not just leave my points with Amex rather than switching to Aeroplan. What’s the advantage of switching?
Hi Gerry, typical redemptions within the American Express environment work out to 1 cent per point. With Aeroplan, you can easily get 2 cents per point (or more) for flight redemptions. So that’s one major advantage of moving points from Amex to Aeroplan.
But, if you don’t fly Air Canada or Star Alliance carriers, or prefer to use the points some other way, then it’s perfectly sensible to leave them with Amex.
Thank you Rob!
With 2 Marriot Bonvoy AMEX cards (you and your wife) do you get 15+15 Elite Status nights upgrading you to Gold Elite Status? I’m wondering about combining my Bonvoy Personal AMEX and then getting the Bonvoy Business to get Gold Elite Status. Does it work this way?
Hi David, no – we each have our own cards and our own Bonvoy accounts.
With the Bonvoy card you can upgrade to Gold Elite status after you charge $30,000 in net purchases to your Card each year, or when you combine 10 qualifying paid nights within one calendar year with the 15 Elite Night Credits from your card.
Or, what we do, is hold the Platinum card which gives you free Gold Elite status.
You can’t double-dip your 15 nights by holding the Business and Personal cards. So either spend $30k (!) on the card, or stay 10 paid nights, or just get the Platinum card and receive automatic free Gold Elite status (I’ve had it for six years now).
Hi Robb,
In his article, Jason Heath states the following:
“CPP early can make sense for some seniors, especially for someone with health issues or a shortened life expectancy, those with cash-flow issues or high-interest-rate debt, or investors with a high investment risk tolerance and low investment fees.”
It’s that last part (“investors with a high investment risk tolerance and low investment fees”) that has me wondering whether it applies to me (I’m 55 and I do have high risk tolerance, and invest in asset allocation all equity ETFs, mostly VXC & VEQT) and what would the advantage be of taking CPP (or QPP in my case) early? Do you think it’s because my investments should grow faster than the increase I would get from delaying CPP ’til 70? Would that be a better option than guaranteed money?
Thanks for your insight!
Hi Paddy, I don’t necessarily agree with that part of Jason’s article. Sure, it’s tempting to invest the money and you have a better chance of success with a low cost global equity ETF. But there is absolutely no guarantee that you’ll beat a 7.2% (from 60-64) or 8.4% (from 65-69) rate of return, which is what you’ll get from delaying CPP (plus inflation adjustments). That’s a tough hurdle to climb.
Besides, what gets missed in the investing scenario is that you’re likely retired and so how are you generating income to live on if you’re taking CPP early and investing it?
Thanks for your answer Robb. I agree that the certainty of the increased CPP is more enticing than would be returns.
I hadn’t understood from the article that the CPP payments would be invested in that scenario. I had thought I would have collected CPP, and thus use less of my investment money that would have remained invested.
Thank you again for shedding some light.
Great article Robb and the Q&A section is helpful too. Was just wondering if you are charged the foreign currency conversion fee when you use these Amex cards when abroad. I’d rather avoid this fee, but then again maybe the points we get from using the Amex cards make it worth the while?
Hi John, unfortunately Amex cards do charge the 2.5% fx conversion fee. I use the Scotia Passport Visa Infinite card while travelling abroad to avoid this fee. There are a few other no fx options as well.