Money and travel expert Barry Choi is with us today to provide an update on what’s happening in the world of customer loyalty programs. There’s a lot to catch up on. Air Miles has a new owner in Bank of Montreal, grocery stores have become a prime place to earn points and dynamic pricing has become a factor in booking reward flights. Here’s the exchange we had recently by e-mail:
Q: Let’s start with Air Miles, which sought bankruptcy protection and was then acquired by Bank of Montreal. Air Miles was once a star among customer loyalty programs – how do you rate it today?
A: It needs work as it stands now, but we’re already seeing positive changes. There are now card-linked offers where you can earn Air Miles when you make purchases at select merchants with any linked Mastercard. You can also earn miles on select products by scanning your receipt. Air Miles has said they need to rebuild the program and eliminate pain points. For example, you’ll eventually be able to transfer your points between dream and cash miles. Having the backing of a major bank is instrumental as they can leverage their technology to provide a better experience for consumers and businesses. It’ll be interesting to see how things play out.
Q: Grocery stores are now a loyalty point battleground, with PC Optimum and Scene+ among the competitors. What’s your advice on how to earn the most points while doing your weekly shopping?
A: Applying for a co-branded credit card such as the PC Financial World Elite Mastercard or the Scotiabank Gold American Express Card will allow you to earn points on every purchase you make. In addition, both programs also have targeted and in-store offers where you can earn additional points. That said, the offerings from PC Optimum tend to be more generous as you can earn points in different ways, such as at Shoppers Drug Mart and Esso/Mobil gas stations.
Q: A lot of credit cards these days are linked to Aeroplan. How do you rate Aeroplan benefits compared to programs associated with WestJet and other airlines?
A: Aeroplan has become arguably one of the best airline loyalty programs in the world. With Aeroplan, you can you use your points on any available Air Canada seat with no blackout dates. In addition, they have 40-plus partners, so you can get nearly anywhere in the world on points. They also just announced free seat selection for Aeroplan Elite Status members and their travel companions. That’s not to say WestJet Rewards is a bad program. It’s obviously beneficial to anyone who flies with them regularly. Instead of points, WestJet Rewards earns you WestJet dollars, so it’s like a cash back program that’s easy to understand. But overall, Aeroplan is a better rewards program and has better credit cards.
Q: Can you explain how dynamic pricing works for airline flights, and how it affects the value of travel reward points?
A: Flights are priced based on supply and demand and are priced accordingly for both cash and points redemptions. Unfortunately, this means prices could change even daily. Depending on the cash fare and the number of points required for a redemption, the value of your reward could change. Let’s say you want to redeem a flight with your Aeroplan points. The first thing you want to do is figure out your cost per point (CPP) with the following formula:
(Value of the redemption − surcharges) x 100 / points required = CPP
As a general rule, you want to aim for a CPP of 1.5 to 2 cents. If the value falls below that, paying cash is better.
Q: It looks like we may be seeing the end of a spending boom driven by the lifting of pandemic lockdowns. What does this mean for credit card reward programs – do you see a risk of points devaluations for any programs?
A: Regardless of consumer spending habits, there’s always a risk that loyalty points can be devalued. Your strategy should always be to earn and burn points as quickly as you can. There’s nothing wrong with saving your points for a high value redemption, but don’t hoard them just for the sake of it.
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Rob’s personal finance reading list
Home ownership’s phantom costs
The cost of owing a home go way beyond the mortgage. An important read for anyone still comparing rent with mortgage payments.
If your flight is delayed or cancelled
A how-to on claim compensation for delayed or cancelled flights, including an account of the author’s application for compensation from Air Canada. You have to read this story – it really captures what air travel is like today.
How to stretch a box of cereal
Cereal is shrinkflation-central. Who hasn’t noticed how much less cereal we’re getting for the dollar these days? Here, you’ll find a food writer’s secret for making cereal last longer.
An RESP investing strategy
Thoughts on using balanced exchange-traded funds to build a registered education savings plan. These exchange-traded funds, also known as asset allocation funds, are a super simple way to build an RESP. If these funds were around when I was managed the RESP for our boys, I would have used them for sure.
Q&A
Q: My parents live with me. They both are senior citizens and permanent resident of Canada with combined income under $5,000 per year. Can I claim them as dependants on my taxes, or are there any other benefits that I can claim for them as senior citizens? They are staying in my home.
A: Jeff Dessau, a chartered professional accountant (CPA) at Yale PGC LLP, offered these three thoughts:
- If this individual pays for his or her parents’ medical expenses because the parents are dependent on this person for financial support, the expenses can be claimed. Amounts in excess of 3 per cent of each parent’s net income will be eligible for the credit.
- If either (or both) of the parents are dependent on this individual due to a physical or mental infirmity, they may be able to claim the Canada Caregiver amount. The parents need not be eligible for the Disability Tax Credit (DTC); however, the CRA may request a signed statement from a medical practitioner indicating the nature of infirmity and whether the person is dependent on others as a result of this impairment. The amount of the non-refundable credit was $7,525 in 2022; the amount that can be claimed would be reduced to the extent that each dependent’s income exceeded $17,160 and would be eliminated completely if the dependent’s net income was $25,195 or more.
- Additional information for others with aging parents/family: For 2023 and subsequent years, there is a Multigenerational Home Renovation Tax Credit, which is a refundable credit for up to $50,000 of eligible expenses to create a secondary unit like a basement suite intended to be occupied by a family member who is 65 or older, or an adult eligible for the DTC.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Tools, Explainers, Guides and Charts
What I like about WOWA.ca’s mortgage rate listings is that they show rates for insured, uninsured mortgages and for investment properties.
The Money-Free Zone
As a one-time Toronto Blue Jays play-by-play announcer used to say, the team went quickly and quietly in the major league baseball playoffs this year. For a look at better days for the Jays, check out the Today in Dave Stieb History feed on X, formerly Twitter. Highlights from when Stieb was one of the best pitchers in baseball, and the Jays were one of the best teams.
Watch this
A TikTok video about whether it’s smarter to use cash to pay down a mortgage or invest it. I totally get the urgency some people feel to pay down their mortgages, especially with mortgage rates as high as they are. But you can do a lot of long-term good for yourself by investing.
On social media
A look at how prices for various types of food have increased in the past year.
What I’ve been working on
– Why is this retiree having so much trouble finding a financial planner to help him draw on his savings tax-efficiently?
– Your finances and investments are getting pounded right now – here’s how to stand your ground
– If you can’t afford a house, a recession will help a lot more than building more homes
More Rob Carrick and money coverage
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Rob Carrick