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Maximizing reward points programs

Written by
Written by
Accredited Financial Counsellor (AFCC), owner of Engineered Growth Financial Coaching, and former engineer

I help couples understand each other so that they can work together and create a plan. With this plan they gain clarity and control over their money so they can pay off their debts and reach their goals.

Christine Urbanowski
Reward points

I used to live in Northern BC, where flights out were expensive, but being able to fly out of the remote location on a semi-regular basis was essential for my sanity. So, I collected Air Miles rewards points. I even drove 45 minutes to Safeway to buy bars of soap—just for the Air Miles! For about $50 in soap, you could get a flight that often costs about $500. I even called my sister to do the same so she could get a flight up to visit me. It was an amazing deal! While deals that good are harder to come by these days, knowing how to maximize your reward points is still a valuable skill.

What are rewards programs?

Rewards points are customer loyalty programs designed to encourage spending and customer loyalty. Earning points for your purchases encourages you to shop at specific stores that give you reward points. These points can be redeemed for travel, gift cards, movie tickets, statement credits, or even cashback. Popular rewards programs in Canada include Aeroplan, Air Miles, PC Optimum, and More Rewards Travel.

This guide will help you take advantage of popular Canadian rewards programs and avoid the pitfalls that can come with them.

How to maximize reward points and programs

Choose the right credit card

Your credit card is a powerful tool in the rewards game. Many credit cards in Canada are tied to rewards programs, offering points or miles for every dollar spent, like the Aeroplan Visa Infinite. Choose a card that earns points on things you already buy and allows you to redeem points for things you need or value, like groceries or travel.

Use rewards credit cards strategically

To earn rewards faster, make most of your purchases with a rewards credit card. However, if paying off your card every month might be an issue, use your rewards credit card only for large purchases where you already have money set aside to pay it off.

Know your bonus categories

Most rewards credit cards have categories, such as groceries or gas, that earn you extra rewards. Some cards even allow you to choose which categories earn bonus points. Align your spending with these categories. If you’re organized, you might consider having multiple credit cards to maximize rewards in different categories. Just ensure they’re all paid off in full each month.

Maximize bonus events

Watch for special promotions like bonus point days or increased earning opportunities. For example:

  • PC Optimum often offers “20x the points” events at Shoppers Drug Mart or bonuses on minimum grocery purchases at Superstore.
  • Air Miles occasionally provides bonus offers for specific purchases.
  • Aeroplan points can multiply during partner promotions.

How to redeem points effectively

It used to be clear that travel rewards offered the best value, especially for flights. However, redeeming points for flights has become more challenging as costs have risen. Here are some tips:

  • Book Early: Redeem points for flights as early as possible to get the best value. The last time I booked a flight with points, I booked a full year in advance.
  • Compare Values: Compare the value of different redemptions. For example, gift cards for items you’d buy anyway can help your budget and sometimes offer better value than travel rewards.
  • Look for Redemption Bonuses: PC Optimum often has bonus redemption days where points are worth over 50% more.

Tips for responsible credit card usage

Be cautious with credit card spending

It’s estimated that we spend up to 17% more when using a credit card versus debit or cash. While using a credit card for all purchases can maximize rewards, only do so if you’re disciplined about paying off your balance each month. Otherwise, the interest charges will outweigh any rewards earned.

Pay off your balance

Always pay your credit card balance in full to avoid interest charges. If you can’t do this, you shouldn’t be trying to earn reward points—the cost of interest will likely negate any benefit.  If you are struggling to pay off your balance, check to see if your points can be applied as a statement credit.

Avoid overspending

Don’t buy items you don’t need just to earn points. Reward programs are designed to encourage spending, so stay mindful of your budget.

Common pitfalls to avoid

Ignoring annual fees

Some rewards credit cards have high annual fees. Ensure the rewards you earn outweigh the cost. Many cards offer a first-year fee waiver, but you should evaluate whether the card remains worthwhile in subsequent years. Compare it to free versions of the same card to ensure the extra perks are worth the fee.

Letting points expire

Know if and when your points expire. I once lost enough Aeroplan points for a short-haul flight because I forgot to use my card at least once a year. Don’t let this happen to you!

Spreading spending too thin

Focus on one or two rewards programs to maximize points instead of spreading your spending across multiple programs.

Buying things just to earn points

Avoid buying things you don’t need just to earn points.

Assuming flights are completely free

Flights may be free by using rewards, but remember, you must still pay the taxes and fees. Sometimes these fees are only slightly less than the cost of booking a flight outright, so always compare the cash cost to the points redemption.

Conclusion

Maximizing rewards points can be a smart way to stretch your spending, but it requires careful planning and responsible credit card usage to avoid common pitfalls. Start today by reviewing your spending habits and aligning them with a rewards program or credit card that offers the best value for your needs.

Get caught in a debt spiral because of trying to earn reward points? One of our trained Credit Counsellors can help set you up with the best debt solution for your situation. To get started, call for a free consultation.

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