Making the most of it: Credit card rewards meet consumer demand for value and fl exibility
For Steve Blisset and his wife, ‘ points make fantastic holidays really manageable.’
Steve Blisset and his wife recently returned from a European vacation to Amsterdam and Paris using points collected on an RBC Avion Visa credit card.
Needless to say, he’s a strong advocate for the rewards program, which he has used before for an ambitious trip. “The points also made it possible for us to go to my cousin’s wedding in Scotland two years ago,” says the Coquitlam, B. C., resident. That trip included excursions to Rome and London. “Two of the fl ights were business class and two were fi rst class, all on points. We had a really wonderful holiday that cost us less than $ 500” to top up their travel costs.
Blisset, who owns a heating, ventilating and air conditioning company, says he travels “purely for pleasure.”
“The points make fantastic holidays really manageable,” he says. “This is why I try to use my card whenever I have the opportunity, even for small purchases, at Subway, for instance. We’re not too sure of where we’re going next, but we are working at accumulating as many points as we can. We already have 30,000 just since June.”
“I really like the flexibility of being able to book on any airline with Avion,” he adds, noting that he added to the value of his points by transferring some to British Airways to take advantage of a BA 50 per cent add- on promotion.
RBC Royal Bank vice- president of global loyalty program and rewards Donna Lue- Atkinson says the Avion loyalty program off ers “fl exibility and choice that enables consumers to customize their points in travel. They can transfer points to British Airways, Cathay Pacifi c and American Airlines, and there is tremendous value in getting to their destinations, especially in international travel, in being able to explore other frequent flyer programs. They can also use points for airline taxes and fees. We have found that clients value not being out of pocket for airline tickets.”
Noting that “consumers are becoming more and more invested in collecting points” through loyalty programs, she says not all reward points are created equal. “Consumers need to take a balanced approach to evaluating which programs are best for them,” says Lue- Atkinson. “They need to look not only at the earning side of the equation but also at how this translates into value when it comes to redeeming — how much the points are worth and how easy the program makes it to redeem points. Acceleration of points is one aspect, but diversity and fl exibility are equally important in making loyalty programs a great experience.”
The focus at Scotiabank is on value, says senior vice- president of retail payments Mike Henry. “Our philosophy has always been about helping our customers get ahead financially and enjoying the richness in their lives,” he says. “We really believe Canadians should benefi t from fi nancial products that help them make the most of their money.”
As an example, he highlights the newly launched Scotia Momentum for Business Visa card. “This card is designed specifi cally for small business owners,” he says. “It provides them with up to three per cent cash back on eligible purchases, such as gas, offi ce supplies and recurring bills like utilities. Everything about the card, including a slightly longer interest- free grace period, is designed with the unique needs of the small business owner in mind.”
Richard Valentine, director of credit card partnerships with American Express, says card selection should be based on individual needs and lifestyle- appropriate rewards.
“At American Express, we know that everyone has different lifestyles and needs and the demands they place on credit cards are different,” says Valentine. Flexibility is also a key factor. “We have products that fi t a wide range of needs.”
For example, he says, the recently launched Air Miles Reserve credit card, which carries an annual fee of $ 299, is “built around a premium travel experience, including fl exibility when booking on Air Miles, access to additional airlines, personalized travel planning and a companion fl ight benefi t once a year.”
The no- fee Gold Rewards card is one of the most popular Amex off erings, says American Express director of consumer cards and partnerships Tim Elgar.
“It has been No. 1 in its category for multiple years. Through a combination of options, it gives customers the ultimate fl exibility, such as the choice of transferring points to Aeroplan or other programs.”
Capital One focuses on a particular group of consumers with its newest card, launched on Aug. 27, the Vibe MasterCard.
“This card is designed specifi - cally with students in mind,” says Capital One director of communications Laurel Ostfield, noting that the cashback rewards card has an additional dimension. “What really makes it tailored for students is that we are integrating credit education into the experience. For a lot of students, this is the first time they have used a credit card and we want to empower them with the tools they need to structure fi nancial decisions.”
BMO Bank of Montreal also appeals to this demographic with its no- fee student credit card. The SPC card includes such benefi ts as discounts at a number of retail outlets and Air Miles or cashback rewards.
“Students can fi nd real savings and value by leveraging rewards and student discount programs to off set everyday spending,” says BMO director Nick Mastromarco.
Cheryl Longo, executive vicepresident of CIBC card products, says, “We’re seeing more Canadians enjoying cashback reward cards, particularly young Canadians who value receiving cash to help them save or off set other expenses.”
This, she says, is why CIBC recently launched the CIBC Dividend Unlimited World Elite MasterCard. “This premium card offers up to two per cent cash back with no limit on the cash reward. CIBC customers also love that the card has purchase security and extended warranty insurance to protect such purchases as electronics.”
CIBC also launched a new premium travel rewards card earlier this year. The CIBC Aventura Visa card for business off ers small business owners the ability to earn loyalty rewards for flights on a variety of airlines and other modes of travel and includes a number of travel- related benefi ts.
TD Canada Trust, meanwhile, launched its fi rst MasterCard in the spring.
“We are seeing strong results from the cashback MasterCard,” says the bank’s associate vicepresident of consumer credit card products Stephen Menon, noting that this card made TD a dual- issue bank providing customers with both Visa and MasterCard.
“We added a straightforward value proposition, fi ve per cent on all purchases with no limits or caps and we find customers are enjoying the clarity as well as the fl exibility of being able to redeem cash at any point in $ 25 increments.”
While some credit cards offering rewards are no- fee cards, most credit cards involved in reward programs charge an annual fee, usually between $ 90 and $ 150; the top price ( other than the Amex Centurion card at $ 2,500) is $ 650. Some also off er a supplemental card at a reduced rate, usually $ 50. They may require a minimum annual income, usually from $ 25,000 to $ 35,000, and frequently offer signing or renewal bonuses in the form of points.
The higher- end cards often include access to Air Canada’s Maple Leaf Lounge or other airport lounges and travel or accident insurance as additional cardholder benefi ts. Some also include baggage and trip cancellation insurance, car rental insurance, hotel burglary insurance and purchase protection. Many cards also carry medical insurance for travellers.
A detailed comparison of fees and benefits of credit cards is available at www. rewardscanada. ca.