Many Canadians sit on their points: survey

Canadians may love to collect credit card and loyalty points, but they are failing to treat them as real financial assets and are thus missing opportunities to maximize their value, according to a new poll by Canadian Imperial Bank of Commerce.

The poll found that of the 52 per cent of Canadians who collect points, 64 per cent do not think of them as assets.

“We did the survey because we noticed a very large number of accumulated points in people’s statements with little activity of them being used,” said Jamie Golombek, managing director of tax and estate planning at CIBC.

Though many people associate credit card or membership points with travel and leisure expenses, in some cases they can also carry a direct monetary value.

That means consumers, in such cases, can use points to either pay down debt — including credit cards, lines of credit or mortgages — or invest in registered plans, such as TFSAs, RRSPs and RESPs.

Every credit card or loyalty card has different redemption options that are made clear online or upon purchase. CIBC notes that for its clients, if your selected card offers these options, you will be able to delegate where you want the points to go through your online banking account. Other banks also provide such options.

Also overlooked is the ability to transfer loyalty points to charitable donations. A third of those surveyed did not know they had this option.

When made aware of the potential financial opportunities tied to rewards programs, more than half of those surveyed indicated they would prefer to use points to try to improve their financial position, rather than for nonessential purchases.

When deciding just how to optimize your points, Golombek suggested a number of factors should be taken into account. For example, when deciding between paying off debt with your points or placing more money in a registered account, interest rates matter.

“The best move is to look at your expected rate of return versus your debt. If you’re holding consumer debt, then clearly the No. 1 thing for people is to pay that down. If the concern is more on paying off your mortgage, which may be at a very low interest rate, then long term it may be better to invest the money,” Golombek said.