Canadians have dozens of choices when it comes to choosing a credit card for their spending needs. There are many options based on interest rates, affiliations and of course rewards. Perhaps the most common of these reward credit cards is the travel rewards card. This category in itself can be further split into three types of travel reward cards, the airline mile earning card, the travel point card and the hybrid card, which is a combination of the first two. An airline mile card typically earns 1 mile for each dollar spent, a travel point card typically earns 1 point for each dollar spent and then those points can be redeemed through the credit card's travel agency, a hybrid card typically earns 1 point for each dollar spent (those points can then be exchanged for airline miles or used as travel points through the credit card's own travel agency).
When it comes to choosing a card it comes down to what you want to get out of the card as a reward and your credit card spending habits. Are you a frequent flyer or someone who only takes one or two trips per year? Do you put tens of thousands of dollars on your credit card each year or only a few thousand? Answering these questions will help you choose the right credit card. Whichever it comes down to, you will want to increase your spending on your credit card to maximize your rewards, pay for all your bills on your credit card, put all your shopping on them even if it is just a jug of milk down at the corner store. In the end it will pay off as long as you pay off your credit card!
Each card typically offers other benefits such as travel insurance, purchase protection, car rental insurance and the list goes on. Of course with these benefits comes cost, almost all of the cards save a couple have a yearly fee ranging from the $30 range upwards of $300+ for cards with free companion air tickets, business class lounge access and so on. Once again it comes up to the consumer to do research to make sense of all the benefits available versus the yearly cost of the card.
For the frequent flyer or frequent spender an airline mile card or hybrid card are usually the most logical way to go. Now I say most logical but again it will come down to the final preference of the consumer. The reason why I say these type of cards is that a frequent flyer is already earning miles on a specific or a few specific airlines. Topping up the miles earned on dozens of flights a year with an airline mile credit card or a hybrid card will make those free trips in first class come even faster. That is the kicker, first class, only airline mile cards like the CIBC Aerogold Visa or Royal Bank British Airways Platinum Visa can have miles deposited into your frequent flyer account which can then be redeemed for trips in economy all the way up to first class. Most travel point cards like any Air Miles credit card do not offer the option of redeeming the miles for first class trips or in the case of cards like the TD Travel Visas only offer a small credit (ie. $50 for every 10000 points earned, 3 points equals $1 of spending on the card) towards first class tickets that cost thousands of dollars. The same holds true for someone who may spend $100,000 on a credit card each year, the airline mile earned for each dollar spent at that level is worth quite a bit more then each point earned on a travel point card. That $100,000 can get you a round trip business class ticket worth $3000+ from Canada to Europe (with points to spare) whereas a travel points card will only give you $1000 to $1500 credit towards the same ticket.
Now for the majority of consumers who are not frequent flyers or do not spend the equivalent of a Porsche 911 on a credit card, the choice for a card tends to lean towards the travel point card or again, the hybrid card. For the average consumer, these cards may not get you a free trip in a year but it can give you a significant discount towards your travel needs. As mentioned before, both the travel point card and the hybrid card offer 1 point for every dollar spent. Those points can then be redeemed as cash equivalent discounts towards travel through the credit card's travel agency or rewards center. Most of the cards offer $50 off for every 5000 points (a 1% return) however some do offer 1.5%, 1.7% or even 2% back.. So for those of you who don't spend much on your credit cards, these discounts can become very useful when it comes time for planning a vacation. Other perks with the travel points or hybrid cards is that there are typically no black out periods like those found with airline frequent flyer programs as you are actually buying a ticket through a travel agency which means you travel on your terms, and of course since it is a purchased ticket in most cases you will be able to collect frequent flyer points on your flights.
when it comes down to choosing that right card there are lots of factors to consider
and it does take some research to find the right one for yourself. Find out in
what way you want to be rewarded, look at the benefits of the cards, and of course
your spending habits.