Points 1: Canada's Favourite Points Programs

A couple of conversations with friends lately about my points and miles collecting hobby (obsession?) led to requests for me to post on the subject. So over the next few weeks, I'll try to cover the basics of how to get the most out of loyalty programs. Keep in mind, these are my preferences; they may not always be suitable for you, but I hope you'll find something of use here.

For starters, many points experts advise that you focus on one program so you can achieve rewards quickly. I take the opposite view. I believe in signing up for almost any program, focusing on several, and taking a patient, long-term approach. There are a number of reasons why, but one is that I collect with the goal of travel rewards (hotels stays and flights), rather than merchandise or cash-back rewards. That takes a lot of points and that takes time. I find the dream of travel to be more inspiring than cash-back, and the value of travel rewards greater than merchandise.

I'll begin by discussing three of the programs most popular with Canadians.

PC points are earned through a variety of activities with President's Choice Financial, chiefly through the use of its credit and debit cards. Points can also be earned through bonus offers at supermarkets that sell President's Choice products. Rewards come in the form of groceries and other products sold in the stores and are redeemed right at the checkout, using your credit or debit card. No separate membership card is required. Ease of earning and redeeming makes this program the right one for many people.

I do have a PC Financial chequing account, but not a credit card, so my point earning is minuscule. The reason I don't focus on this program is because $20 off groceries doesn't inspire me (see paragraph 2, above), and because I can use a different credit card at the supermarket to earn points in another program that has more value to me.

Air Miles can be earned through a variety of retailers and affiliated credit cards offered by the Bank of Montreal and American Express. It is perhaps the most popular loyalty card in Canada. It seems almost everyone has one. Except me.

The main reason Air Miles has little value to me is that few of their partners are located in my town, so I have little chance to earn. But if you're a BMO customer and can shop at Air Miles retail partners, this program can be valuable to you, especially if you like merchandise or grocery certificate rewards.

That brings me to Aeroplan. Though a separate company, Aeroplan is essentially Air Canada's frequent flier plan and offers reward flights not only on Air Canada, but also on its partners in the Star Alliance, such as United, US Airways, Lufthansa, Singapore, Air New Zealand, and many others. As well, points can be redeemed for hotel stays, car rentals, cruises, and merchandise.

Aeroplan miles can be earned through flights, retail and travel partners, and affiliated credit cards and other products at a range of financial institutions. Aeroplan's gas and grocery partners (Esso and Sobeys) are located in my town, and that's a big reason why I collect Aeroplan miles.

Next time, in Points 201, I'll take a look at points-earning credit cards, with the emphasis on earning points and miles without having to pay an annual fee.

Save Some Money on a U.S. Holiday

Preparing to leave for a week's holiday in Florida recently, I went to my local Bank of Montreal branch to buy U.S. currency. With the Canadian and American dollars roughly at par, I'd decided to use mainly cash on my holiday to avoid paying the foreign currency conversion fee that's applied to Canadian credit card transactions made in foreign currencies.

What's a "foreign currency conversion fee" you ask?

Like many people, until recently, I didn't know that, when the credit card bill arrives from your American holiday (or online purchase), the prices you see converted into Canadian dollars include not just the exchange rate difference, but also this foreign currency conversion fee. So, for example, when I paid the rent for the Florida condo in US$ with my MasterCard, $30 of the C$99.27 differential was for this foreign currency conversion fee. Before leaving, I called several institutions, since I have several credit cards, to see if any offered a better rate than the others, but they were all charging the same 2.5%.

While I was buying my US dollars, a teller at the bank told me about its US$ credit card. These are Canadian credit cards that don't charge a foreign currency conversion fee because they bill in US$ and are payable in US$. What you pay at the till in the U.S. is what you see on your credit card statement. You pay only the exchange rate differential when you pay your bill.

It sounded good, so I let her sign me up. The card arrived by courier a few days later.

Unfortunately, I'd already paid the rent on the condo, but we still "saved" money on the rest of our holiday spending. (It was some consolation when we were ransacking the outlet mall.) And since I go to the US a few times a year, and buy online several times as well, I expect to save more than the US$25 annual fee charged by the card.

Yes, there's an annual fee, but in the case of Bank of Montreal, it's only US$25, and the bank waived it for the first year. A US$25 annual fee means that, if I spend more than US$1,000 per year, I save money.

Paying the bill is simple. If I'd had a US$ account with BMO, I could have paid it online, but since I don't I simply went to the local branch. I used some U.S. currency I had left from my holiday and the teller converted the balance to a figure in C$, which I handed over in cash.

I've learned that other banks have these cards as well, though the annual fees vary. I suggest going online to check the annual fee for the US$ card at a few financial institutions to find the best price, and apply at your local branch so you can negotiate a waiver of the first year fee.

If you spend more than $1,000 a year in $US credit card purchases, easy to do if you're a snowbird, one of these cards can save you money.