Time To Shop For A New Travel Rewards Card

Travel rewards were thrown into the spotlight this summer when TD Bank and CIBC fought for the right to issue Aeroplan credit cards. While the battle raged on, other banks and card issuers were busy enhancing their rewards programs and coming up with offers to entice new customers.

What it all means for consumers is that now may be a good time to shop around, something Canadians don’t do often enough.

Related: The Top Cashback Credit Cards In Canada

According to a survey from American Express Canada, 60 percent of Canadians applied for a credit card through their bank while only 15 percent say they researched their options.

That’s a mistake, according to Brian Kelly, a rewards expert and founder of ThePointsGuy.com, who says that you need to spend some time learning about the programs if you want to get the best deal.

“It’s incredibly important to do a little research upfront to ensure you choose the credit card that actually fits your spending habits and lifestyle rather than a default card provided to the masses,” said Kelly in an interview.

Consumers should look at the flexibility of the program and how points can be earned, redeemed, and transferred — all valuable considerations when it comes to making your spending work for you.

Related: Why Your Debit Card Is Costing You Money

Just over a quarter of those surveyed say they don’t even understand what their rewards program offers, and it’s easy to see why when you look at the sheer number of choices, different programs, and affiliated cards available today.

One card that’s worth a closer look is the American Express Gold Rewards Card, which ranked 2nd in MoneySense magazine’s best travel credit cards for 2013.

The Gold Rewards Card lets you transfer points to frequent flyer programs like Aeroplan and Avios among others, or redeem points for travel anywhere in the world without any restrictions or black-outs.

You’ll earn two points for every dollar spent at eligible gas stations, grocery stores and drugstores in Canada, plus two points for every dollar spent on travel.  You’ll get one point for purchases made everywhere else.

In a promotion that may put this card over the top, American Express now offers the Gold Rewards Card at no annual fee for the first year ($150 savings), plus a welcome bonus of 25,000 Points when you spend $500 in the first three months.  The points are enough for a round trip economy flight to almost anywhere in North America.

American Express also offers a refer-a-friend program, the first of its kind within the financial industry, which gives Card members reward points for referring their friends or family to an American Express Card.  For the Gold Rewards Card specifically, this will give 10,000 bonus points to the cardholder for referring a friend or family member to sign up for the Gold Rewards Card.

Note that the Gold Rewards Card is a charge card, and not a credit card.  The distinction is important because charge cards, unlike credit cards, don’t come with a pre-set spending limit, meaning that if you spend a lot you can put it all on one card and rack up the reward points.  Charge cards must be paid off in full each month – late payers face a stiff penalty of 30 percent of the balance.

The Gold Rewards Card has an impressive suite of insurance that covers emergency medical, trip interruption, purchase protection, car rental theft and damage, and lost or stolen baggage.

Related: Why Travel Insurance Is Essential For A Worry Free Vacation

All the insurance coverage in the world doesn’t mean anything if the company doesn’t follow through when you make a claim.  Kelly said his experience with American Express customer service has been amazing.

“I bought a hat when I was on a cruise vacation and lost it when it blew off the boat.  I called AMEX Travel Insurance and they reimbursed me for the charge,” said Kelly.

You can learn more about the Gold Rewards Card here – https://www.americanexpress.com/ca/en/content/gold-rewards-card/

This post was sponsored by Amex Bank of Canada. The views and opinions expressed in this blog, however, are purely my own.

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  1. Michael on October 27, 2013 at 8:39 pm

    Wasn’t Amex rated the worst for customer satisfaction? I know a few people who have Amex cards and have had nothing but problems with them

  2. Echo on October 27, 2013 at 9:11 pm

    @Michael – I think Amex regularly ranks quite high in customer satisfaction. Where did you see that they were rated the worst?


  3. Stephen @ HowToSaveMoney.ca on October 28, 2013 at 6:39 am

    Sponsored post or not, the Amex Gold Rewards Card is definitely a card Canadians should consider getting. It’s actually the card I am currently using as my primary card and I couldn’t be happier with it except for when I run into the odd retailer that doesn’t accept Amex. In those cases I just use my backup rewards card instead.

    30,000 points (including referral bonus) is an unheard of sign up bonus and the fact that they are throwing in the first year annual fee for free makes it a no-brainer to at least try out for one year. 2 points per dollar on gas, grocery, pharmacy, and travel is also the best you can get considering this card competes with all the Aeroplan cards out there because you can convert points 1:1 to Aeroplan. Those cards typically offer 1.5 points per dollar or less and they usually only have 2 or 3 bonus categories, not 4.

    Amex is not paying me to say this either as I’ve never received any money from them related to the Gold Rewards card. However, I am available if they are interested 🙂

    • Echo on October 29, 2013 at 8:30 pm

      @Stephen – Glad to hear from someone using the card as a primary rewards option. I’ll put in a good word for you 🙂

  4. Bryan@FatWallet on October 28, 2013 at 8:03 am

    I have had nothing but good experiences with AMEX customer service. I had to use their extended warranty program, and they had everything resolved & my account credited in under a week.

    I have been looking for a travel card, and i’ll take a close look at this one. 🙂

    • Echo on October 29, 2013 at 8:32 pm

      @Bryan – thanks for sharing your experience with Amex. You always hear about the benefits of extended warranty and travel insurance on your credit card but it’s rare to hear examples of them being put to use.

  5. Dave on October 28, 2013 at 8:06 am

    A $150 annual fee for one Amex card!? That seems a bit steep. How do the rewards compare to the MBNA smart cash back card (1% cash back on most purchases with no annual fee)?

    • Stephen @ HowToSaveMoney.ca on October 28, 2013 at 8:38 am

      It depends on how you value travel rewards. I only look at it from the Aeroplan perspective because I find that’s how you get the most value. It takes 25,000 points/miles to fly anywhere in North America. I value that at $700 (before taxes and fees) because I use my miles to book high value tickets (long routes, small airports, etc).

      Doing math using those numbers you end up with a return of 2.8% at 1 point earned per dollar. For special category purchases that doubles to 5.8%. There’s also the sign up bonus of 30,000 points to consider. Using the same valuation that would be worth $900 right off the bat, which covers 6 years of annual fees.

      If you spend $25,000 on your card every year then you are looking at somewhere between $750 and $1500 in rewards per year depending on how much of your spending is in bonus categories. If you spent the same on the Smart Cash at 1% you’d be looking at $250. You can up that slightly using the smart cash bonus categories but you still be well under $500. Probably somewhere in the $300 range.

    • Echo on October 29, 2013 at 8:35 pm

      @Dave – I wouldn’t compare this card to a no-fee cash back credit card. I’d compare it to other premium travel rewards cards like Capital One Aspire Travel, TD First Class Visa Infinite, or RBC Avion.

      Annual fee cards are only beneficial if you spend a lot on your card (and pay it off in full). There’s a very clear break-even point once you spend about $2k per month on your card, at which point the rewards you can earn with a premium card go way beyond what you get with a vanilla, no fee card.

  6. Dave on October 28, 2013 at 10:17 am

    I’m not sure about aeroplan but just browsing thru the Amex gold card rewards section most $100 gift cards require 12,000 points. If I spent $12,000 I’d get 12,000 points, or a $100 gift card (minus the bonus categories of gas, groceries etc). With most cash back cards I’d get at least $120, or 20% more….plus Amex has a $150 annual fee so the return would be even less. Sounds like it’s only good for travel (ie. aeroplan) as you get more bang for your buck there than any other category and you’d have to keep your spending up to try and recover the hefty $150 annual fee

    • Echo on October 29, 2013 at 8:40 pm

      @Dave – I’ve been a big proponent of cash back because I don’t travel that often with two young kids at home and I like how straightforward the cash back programs are (cheque or statement credit, no messing around trying to figure out how to redeem your points for the best value).

      However, I recognize that you can get tremendous value from a rewards card like this one when you redeem your points for travel. The gift card options will always net you the lowest value, whether it’s Aeroplan, Air Miles, or this program.

      I’d consider gift cards as a last resort if I knew I couldn’t spend the points on a trip.

  7. Bryan Jaskolka on October 28, 2013 at 4:16 pm

    I think consumers should choose their card based on things such as customer service, the interest rate, and how much all of the fees are for using them. Rewards shouldn’t even be considered in my opinion, because they are just that – rewards. If you get one that offers great rewards, GREAT! If you don’t, at least fees aren’t burning a whole in your pocket or you’re not paying exorbitant interest rates.

    • Kat on October 29, 2013 at 11:55 am

      Well said! Often times, the fees outweighs the rewards!

      I chose PC Mastercard simply because there was no annual fee, interest rate is comparable to a typical every day card (I do pay my balance in full every month) and every single dollar charged to the card translate to 1 PC point = $0.10. Considering that I do all my grocery shopping at Loblaws related stores, it paid for thousands of dollars worth of free groceries.
      Since I don’t travel, the travel rewards card doesn’t benefit me at all.

      • Stephen @ HowToSaveMoney.ca on October 29, 2013 at 5:48 pm

        For some people you may be right, but I feel like you have to do the math to know what’s right for you. If you can use the rewards for something you would buy anyway and the value of that something after the annual fee is much higher than what you would get with a no-fee card (be it cash or some other type of reward) then to me the best choice is to go with the card that has the fee.

        Spend money to make money as the saying goes.

        Don’t think Bryan is quite right on his explanation of PC points. Each dollar spent gives you 10 PC points and the return on spending is 1%. Therefore 1 PC point would be $0.01.

      • Echo on October 29, 2013 at 8:47 pm

        @Kat – If you shop at Loblaws often you should see if you can be upgraded to the PC World MasterCard (http://www.pcfinancial.ca/english/credit-card/pc-mastercard-world), which gives you 20 PC Points for every dollar spent at Loblaws stores.

    • Echo on October 29, 2013 at 8:42 pm

      @Bryan – I think rewards cards are best suited for people who never carry a balance and who want to collect the rewards for something meaningful, like a trip or to get cash back.

      Therefore, interest rate would be the last feature I’d be looking for in a card because I should never pay a cent of interest.

  8. Kanwal Sarai @ Simply Investing on October 29, 2013 at 5:52 pm

    I generally avoid cards with an annual fee. I guess the benefits (bonus points) would have to outweigh the annual expense.

    I accumulated a lot of points last year with a hotel travel card, but every time I wanted to redeem the points either the location or dates were unavailable. 🙁

    • Echo on October 29, 2013 at 8:49 pm

      @Kanwal – That’s the trouble with a lot of programs these days – either the points expire or there are blackouts and restrictions so you can’t use the points when you want.

  9. Tom on November 7, 2013 at 11:51 am

    Several years ago the PC points could be used for travel. I paid for my father in law’s funeral with it and the points earned paid for one flight to France for my wife and me. Jokingly, I used to say I was going to prepay my wife’s funeral just to get the points!
    We continued accumulating points again until we had a million. When I went to redeem them for travel, that option had unfortunately been discontinued. So we are free for quite a while (and stocked up one of our kids when she was at university.)
    Now we use the RBC Rewards card and have had one flight to France paid for using accumulated points. We switched from the Visa Gold Preferred ($150 annually) when the out of province medical benefits were no longer applicable to us, to the no fee RBC Visa Gold and have recently switched again to the RBC Visa Signature ($39 annually for the two cards) to accumulate double the points. We don’t put a lot on the card each month—we’re not in a hurry—and I use the Costco Amex for gas/restaurant purchases only for the rebate to offset the cost of the Costco Executive membership.

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