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Many loyalty programs will have merchandise, gift cards and even statement credits available. That said, the value of each redemption can differ by quite a bit.

Filippo Bacci/iStockPhoto / Getty Images

With most people’s travel plans on hold because of restrictions brought on by the global pandemic, many Canadians are wondering what to do with all the loyalty points they’ve collected over the years. Travel rewards will always yield the most value, but is claiming merchandise, gift cards or credits to your account statement really so bad? And if your points are about to expire, should you cash in everything now to avoid losing them? The decision is personal, but before you start burning your points, make sure you know all your options.

Know the value of your points

The first thing you need to do is establish the base value of your points. For example, with American Express Membership Rewards points, you can redeem 1,000 points for $10 in travel. That’s a value of one cent per point.

Regardless of your loyalty program, you can figure out the value of one point by taking the dollar value of the redemption and multiplying it by 100. Then divide that number by the points required. In the above example, it’s (10x100)/1,000 = 1.

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With airline points such as Aeroplan, things can be a bit complicated. Ricky Zhang, founder of travel rewards website Prince of Travel, compared the number of Aeroplan points required to the cash price of thousands of domestic and international flights and came up with a fair value.

“For most Canadians, 1.8 cents per Aeroplan point is a reasonable target to aim for when redeeming an economy ticket,” Zhang says. “However, if you’re booking in premium economy, business class or first class you should strive for 2.1 cents per point to extract maximum value.”

The same logic can be applied to Marriott Bonvoy, the loyalty program for Marriott International, which has more than 7,000 properties globally. Zhang says that a value of 0.9 cents per Marriott Bonvoy point is a good target. “It’s easier to achieve higher value if you book at either the low end or the high end of Marriott’s hotel categories,” he adds.

Knowing the value of your points when redeeming for travel is essential because you can quickly compare things if you’re considering any non-travel rewards.

What else you can do with your points

If you’re itching to use your points, there are a lot of choices. Many loyalty programs will have merchandise, gift cards and even statement credits available. That said, the value of each redemption can differ by quite a bit.

With American Express Membership Rewards, many $100 gift cards cost 13,000 points (a value of 0.77 cents per point). Statement credits are 1,000 points for $7 (0.7 cents per point). Merchandise varies, but currently, you can claim a Bose SoundLink Color Bluetooth Speaker II that typically retails for $169.99 plus tax ($192.09 after tax in Ontario) for 26,100 points (0.74 cents per point).

As you can see, gift cards would be the best value given your current options. However, it’s still a considerable devaluation compared to travel redemptions. That said, for a few months last year, American Express increased the redemption rate of statement credits for those who held the Platinum, Gold or Cobalt cards to 1,000 points for $10 (one cent per point). Personal Platinum cardholders had an additional limited-time offer where they could claim 1,000 points for $20 (two cents per point), which was incredible for a non-travel redemption. It wouldn’t be a surprise if American Express has additional campaigns planned for the upcoming year that would give card members more value.

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Marriott allows you to use your points for Marriott Bonvoy Moments, which are unique experiences that money can’t buy. You could get VIP seating at prime sporting events, backstage access to concerts and more. Unfortunately, because of the pandemic, Marriott has paused the program. A unique alternative could be using your points at Marriott Bonvoy Boutiques for robes, skin care sets, linens and pillows that are found at your favourite properties. It’s like staying at a hotel without having to leave your home.

With Aeroplan, gift cards and merchandise are available for purchase with your points, but the redemption value is significantly lower than flights, so it’s not recommended.

Make sure your points don’t expire

For some people, the urgency to redeem their points is the result of an upcoming expiration date. There’s no need to rush things as you can keep things active without much effort. Credit card loyalty points rarely expire as long as you have an open credit card. If you’re worried about the annual fee that your card charges, you could switch to a low-fee or no-fee card that earns the same points, so your account stays active.

Marriott Bonvoy gives you two years of account inactivity before your points expire. Aeroplan recently changed their expiration policy to 18 months, up from 12. Even if you’re approaching the deadline, with either program you could donate some of your points to a partner charity, which would reset the clock.

Using your points for travel redemptions will always give you the most value, so wait things out if you can. However, if you plan to use your points now, you should still treat them as a currency and get the most bang for your buck, er, point.

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