Maximize Credit Card Points for Travel

Maximize Credit Card Points for Travel

The opportunities to maximize credit card points for travel are getting better in Canada, although are still pale in comparison to our southern neighbours.

Credit cards remain the best way for non-frequent fliers to collect points. Sign up bonuses have increased occasionally and it can be worth your while to have multiple cards. Collecting points through credit card spending can bring in a decent number of points.

While many sites that help determine which is the one best credit card to have in your pocket, here we care about which cards are the best to sign up for and keep for a year or less. There are cards that are worthwhile to hold long-term, but most cards have the greatest value if they are only held long enough for their sign-up bonus. Choose when to apply wisely as sign up bonuses go up, down and disappear. You may have only one shot at getting a bonus for a particular card so wait if you think it will go up.

Other means of collecting points

Collecting points through air travel is well understood by frequent fliers. Collecting points at merchants is mostly straight-forward but beware of surcharges on those points (e.g. car rental).

The Benefits of Credit Card Bonus Offers

Credit cards in Canada have started offering first year free and sign-up bonuses valued at $300 or more. Some cards offer additional travel bonuses such as lounge access or “free” companion flights. The bonuses usually require a single purchase and/or a minimum amount spent. Furthermore, bonuses may also require that you not cancel the card for a set period of time (e.g. 3 or 6 months). “First year free” periods and extra bonuses come and go as banks and other issuers fight for market share.

Credit card bonus offers are an opportunity to get free points for a minimum effort and a temporary decrease in your credit score. Cancel any card that won’t provide a worthwhile return before you need to pay an annual fee. Try to negotiate a reduced fee or eliminate the fee for credit cards you use regularly and wish to keep beyond the first year (it doesn’t always work but it may for some cards if you spend enough on those cards). Some cards will provide renewal bonuses, especially to heavy spenders. Those are the cards who want your business and are rewarding your loyalty appropriately.

Prioritize cards that offer a high sign-up bonus that will be of use to you. If you plan to cancel a card to avoid paying a fee will you be able to make use of the points? Points that are rolled into a separate rewards program do not need to used before cancelling a card. If a card offers extra benefits then time that card for when you can make best use of those benefits. If you are an infrequent traveller planning a once in a lifetime trip and want access to airport lounges and hotel benefits then getting the Amex Platinum and keeping it for only a year make a lot of sense. If you travel regularly then holding onto that same card may be the right thing to do.

Of course you need to consider what you will sign up for and how it will affect your credit.

Current Sign up Bonuses

Aeroplan and Avios points are assumed to be worth 1.5 cents per point. Your mileage may vary. Air Miles are worth about 10 cents per point.

Amex cards offer referral bonuses. Referrals are an excellent way to get extra points from both sign up bonuses and from referring friends and family (or even your blog readers :) ). For some Amex cards you will get more sign up points if you a referred by someone with a card in the same Amex family. If you have an Amex card and you refer someone else for a card in the same Amex family you can get points if your card is ordinary, gold or platinum (the points are based on the type of card the referrer has, not the card applied for).

The Amex families are (AeroplanPlus, AeroplanPlus Gold, AeroplanPlus Platinum) and (Gold Rewards, Platinum, Business Gold Rewards, Business Platinum) and (Starwood Preferred Guest, Starwood Preferred Guest Business) and (Air Miles, Air Miles Gold, Air Miles Platinum, Air Miles Platinum Business) and (Blue Sky) and (Holt Renfrew).

You can only refer within an Amex family, not between families. For example if you have a Gold Rewards card you could refer your spouse to the Platinum card but not the Aeroplan Gold card.

Aeroplan Point cards

card offer deadline first year cost free bonus purchase bonus min spend total value return on purchases notes
Amex AeroplanPlus Gold unknown $120 26000 with referral from a cardholder (25000 otherwise) $500 $270 1.5% for 1st $10K purchases, 1.875% after  The link to the left is my referral which will give you the bonus – if you do not have a referral please consider using it.
Amex AeroplanPlus unknown  $0 5000 $1 $75 1.5% The link to the left is my referral – if you do not have a referral please consider using it, however there are no extra points if you are referred for this card.
Amex AeroplanPlus Plat unknown 499 25000 26000 (for a total of 51000 with a referral, 40000 without) 1000 $266 1.875% for 1st $25K purchases, 2.25% after   The link to the left is my referral which will give you the bonus- if you do not have a referral please consider using it.
TD Aeroplan Infinite Privilege unknown 399 25000 $1 -$24 2.25% on gas/grocery/pharmacy 1.875% all other
TD Aeroplan Infinite May 8 2015 120 15000  10000 bonus with $1000 spent in 1st 90 days $1 $105 2.25% on gas/grocery/pharmacy 1.5% all other
TD Aeroplan Platinum May 8 2015 89 10000  10000 bonus with $1000 spent in 1st 90 days $1 $61 1.5% on gas/grocery/pharmacy 1% all other
CIBC AeroGold Infinite unknown 120 15000 0 $1 $105 2.25% on gas/grocery/pharmacy 1.5% all other
CIBC AeroGold unknown 120 15000 0 $1 $105 2.25% on gas/grocery/pharmacy 1.5% all other

Amex Membership Rewards Points (convert to Aeroplan or Avios at 1:1)

card offer deadline first year cost free bonus purchase bonus min spend total value return on purchases notes
Amex Gold Rewards unknown 0 25000 $500 $375 3% on gas/grocery/pharmacy 1.5% all other The link to the left is my referral – if you do not have a referral please consider using it, however there are no extra points if you are referred for this card.
Amex Platinum unknown 699 60000 (with referral – 50000 without) $1000 $600 1.875% Total value based on using 2x$200 travel credits.  The link to the left is my referral which will give you the bonus – if you do not have a referral please consider using it.
Amex Business Gold Rewards unknown 0 25000 $5000 $375 1.5% (3% at 3 suppliers) The link to the left is my referral – if you do not have a referral please consider using it, however there are no extra points if you are referred for this card.

Air Miles

card offer deadline first year cost free bonus purchace bonus min spend total value return on purchases notes
Amex Air Miles unknown 0 1000 0 $1 $100 1% on gas/grocery/pharmacy/sponsers 0.67% all other

ALASKA Airlines Points

Points are redeemable on partner airlines.

card offer deadline first year cost free bonus purchace bonus min spend total value return on purchases notes
MBNA Alaska Airlines unknown $75 25000 0 $1 $300 1.5% Extra bonus is a companion flight each year.

RBC Points (Can convert to Avios at 1:1 or book with RBC)

card offer deadline first year cost free bonus purchace bonus min spend total value return on purchases notes
RBC Avion Infinite unknown 0 15000** 0 $1 $225 1.5% In the past has had conversion bonuses to Avios which would increase the value. RBC points vary wildly according to use.

CIBC POINTS (Redeemed only with CIBC Booking)

card offer deadline first year cost free bonus purchace bonus min spend total value return on purchases notes
CIBC Aventura Inf unknown 120  15000 0 $1 $105 2.25% on gas/grocery/pharmacy 1.5% all other
CIBC Aventura unknown 120 15000 0 $1 $105 2.25% on gas/grocery/pharmacy 1.5% all other

BMO POINTS (Redeemed only with BMO Booking)

card offer deadline first year cost free bonus purchace bonus min spend total value return on purchases notes
BMO World Elite unknown 150  30000 0 $1 $150 2% on purchases Get bonus airplane lounge passes

Post Purchase Redemption Cards

card offer deadline first year cost free bonus purchace bonus min spend total value return on purchases notes
Capital One Aspire unknown $120 35000 + $75 0 $1 $260 2% Reward are tiered and require consideration to maximize value.
Scotiabank Gold Amex October 31 2014 $99 30000 0 $1 $201 4% on first $50K gas/groceries/pharmacy, 1% all other
TD First Class Infinite unknown 0 20000 0 $1 -$20 1.5% (3%/4.5% phone/online travel with TD) $120 fee waived for top end TD account holders.

Hotel Associated Cards

card offer deadline first year cost free bonus purchace bonus min spend total value return on purchases notes
Chase Marriott Rewards Visa $0 30000 0 $1 $300-$600 4-8% at Marriott, 1.2-3.2% Airline, car rental, restaurant, 0.6-1.6% elsewhere Free Category 1-4 hotel on sign up. 50000 point offers appear occasionally. Renewal bonus of a free Category 1-5 hotel each year. Value of points varies widely.

Slow and Steady Credit Card Applications

The less stressful means to maximize credit card points for travel is to make one or two credit card applications every 3-6 months. Because your credit score does not usually decrease linearly with the number of cards you apply for, a smaller number of cards at one time will have less of an effect. In fact having more than one card in the long term will actually help your credit score if you manage your credit appropriately.

App-o-rama

App-o-rama (AOR) is the strategy of completing multiple credit card applications in a short period of time. There are a number of reasons for doing this but this site is concerned with how to maximize credit card points for travel not for 0% transfers etc.

An AOR allows someone to maximize credit card points for travel in a short period of time. The applications are done in quick succession, before the other applications have had a chance to report to the credit agency. Too long of a delay could result in a rejection either due to a drop in credit score or because a bank notices the other newly applied for credit.

Risks of AOR

The greatest risk of AOR is the effect on credit. Your credit score will drop significantly (may be 80+ points) when you open several new credit accounts at once. How quickly your score recovers depends on a number of factors. The most important factors being how long a credit score you have and that your utilization. In the best case scenario you should see a substantial credit score recovery in 90 days, but in some circumstances it can take much longer. If your credit history is too short you should not consider an AOR.

Anyone doing an AOR should check their credit score before and after. Repeat an AOR only when your score has made significant recovery. You may need to wait 6 months to 2 years before doing another AOR.

An AOR is more stressful as your credit score will receive a large hit in a short period of time and you will have a greater number of credit cards to keep track of. This may include supplemental cards to track as well if you have a partner who will help you with the spending.

Some cards require a minimum amount of spending in order to receive all or some of the bonuses. Applying to multiple cards at once may make it more difficult to meet the minimum spending required.

Why do an AOR

For anyone trying to maximize credit card points for travel there are two primary reasons for doing an AOR. The first is that there a number of time limited offers that are of strong interest and you will benefit more by acting quickly than spacing out your applications. The second is that you have an upcoming need for travel points that is time limited.

Meeting the Minimum Spend

If you don’t think that you will meet the minimum spending requirements for receiving your credit card bonuses you can buy gift cards.

Amex minimum spends may be more difficult as they are accepted in fewer places.  If you wish to purchase something at a store that does not accept Amex you can see if that store has gift cards available in stores that do accept Amex. You may even be able to collect store points from both stores as well.

A supplemental card is recommended if you don’t believe you will make the minimum spend on your own.

Credit Rating Issues to Consider

There are a number of issues to consider when applying for any form of credit but the most important is to avoid applying for new credit 6 months to 2 years before applying for a mortgage or line of credit.

In order to maximize credit card points for travel you need to have a healthy credit score. A score that is high, and recovers quickly from a hit is considered healthy.

A score below 650 may limit your credit options. A score above 750 will be viewed very favourably.

How each factor affects your score depends on your individual profile. Although there are published averages you can’t assume those apply to you.

What Drops Your Credit Score

Insufficient Credit

Having only one credit card, especially with a low limit, means you aren’t demonstrating that you can resist the temptation of extra credit. Even if you pay your entire balance every month your credit score will either be low or will be likely to drop significantly with new credit.

Having no credit is worse, even if you have a high income (income plays no role in your credit score but will play a role in applying for credit). You might be the type of person who spends every cent you can get and are treated that way until you prove otherwise.

Hard credit Pulls

Hard credit pulls happen when you ask for credit, and shouldn’t happen if an institution has done a soft pull to increase your credit limit or to offer you a product.

Hard pulls should drop your score by 4-6 points immediately but are not the only way in which your score can be affected by new credit. The point losses from a hard credit pull effects diminish after 6 months and are irrelevant after between 1 and 2 years (as long as you keep your score high you should be able to churn cards as long as you quit 1-2 years before looking for a mortgage/line of credit). Hard pulls done in the same week may show up as a single check in the formula so requesting multiple cards on the same day could lessen the score drop. Hard pulls stay on your account for 3 years with Equifax and 6 years for Trans Union.

Hard pulls are usually done at either Equifax (for most cards) or Trans Union (Amex and possibly others) but rarely both. Choose cards that will pull from different agencies will lessen the credit hit. You will still see the effects of new credit on both bureaus.

New Credit

New credit initially affects your credit negatively in two ways. The mere fact that you have new credit is considered a risk initially and should reduce your score. New credit will also reduce the average age of your revolving credit accounts – the average account age is part of your score. If you obtain multiple new credit accounts at the same time this is seen as an indication that you might be having credit problems. One of the negative factors that appears can be the number of new accounts compared to the total number of open accounts. The reduction of your credit score for each additional credit card is likely to be greater than the reduction of the initial card.

After a period of time new credit will become old credit and hurt you less. The amount of time depends on various circumstances.

Store credit cards may be viewed negatively compared to bank cards.

Balances

Your credit score is partially based on the amount you have each month on each account and the average of all you accounts. The balance that is considered is the high balance of the month, not the amount you carry. Carrying a $2000 balance on a card with a $10 000 limit and paying the minimum each month may score better than spending $2000 and paying it off every month on a card with a $3000 limit. Keep credit card balances ideally under 30% or at least under 75% (doesn’t matter if you pay it off every month … trying to average under 30% usage if you can). Spread spending on multiple cards if your utilization on one card is too high.

Be careful when cancelling credit cards that you don’t increase your balance utilization too much.

Cancelling cards

A cards age is based on the approval date. Once a card has been approved it should not matter if it is cancelled or not with respect to the average age of your accounts. The exception being that if you cancel your oldest card it will eventually have a large effect.

Be careful closing a card that will increase your utilization significantly. Keep a card with a high limit if you don’t have older cards with high limits.

Cancelling a card that is too new can negatively affect your credit. Use a new card for minimum 3-6 months before cancelling so that it reports R1 instead of R0. Make sure you use it at least once (and pay it off) just before cancelling so it shows up as R1 on the credit report and as being active at the time of cancellation. This applies to equally to any old cards that haven’t been used in ages … use once, pay, THEN cancel.

Ideally use every card once a month to keep them reporting. A card that is R0 (to new to report) will affect your score negatively and will not be looked on favourably by any person approving your credit. A card that is closed R1 should not affect your score if it does not significantly increase your credit usage percentage or your average account age.

A credit card that remains unused for too long may be cancelled by the issuer. This could negatively affect you the same way that any other card cancellation would.

Missed payments and other Negatives

Missed payments stay on your record but it’s usually only reported if you miss by 30 days or more (Sears being a notable exception as they report right away). Missed payments can have a major affect on your credit score and should be avoided at all costs.

Negative information will stay on your record from 3-10 years (14 in the case of multiple bankruptcies).

What Helps Your Credit Score

 More Credit

New credit, if managed properly will gradually work in your favour. If you don’t increase your utilization then new credit means you are using less of your total credit which will increase your score over time. If you pay your bills on time and keep utilization low then your credit score will gradually reflect that you can handle this new credit.

More credit accounts and a mix of different types of credit account also work in your favour over time. Having multiple credit cards (3-5 being a good average) and other types of credit, such as a line of credit, a charge card etc will increase your score if you manage them properly.

Balances

Having a low balance on all your revolving credit will help increase you score. The lower the better, but remember to use all your accounts periodically.

Old credit

The age of your oldest revolving account (credit card and line of credit) will affect your score in two ways. Your score is partially based on the age of your oldest account and partially on the average age of all your accounts. Having a really old card or a couple of older ones is better. With a 20 year old card you can have 3 brand new cards and still have a 5 year average. The older your cards, the more cards you should be able to churn at one time.

Your credit cards keep their history (their age) if you convert them to a different card at the same institution. Keep your oldest card … don’t get rid of it but you can downgrade a fee based card to a non-fee based one and keep the history if you want.

Other Considerations

If your goal is to maximize credit card points for travel you may have a conflict between using those points and cancelling the cards. If your rewards include flights you may have trip cancellation/interruption insurance that will be gone if you cancel your card. Also, if you want the credit card extended warranty for a product, don’t use a card that you will cancel before that extended warranty ends.

Summary

A healthy credit score and a slow and steady pace is the best way to maximize credit card points for travel. An occassional app-o-rama may be called for but should be limited to those with a strong credit history who are willing to take the risk. Choose to keep cards that provide sustained benefits, and time your applications to make the best use of a cards features.

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