Earning travel reward points can help to achieve your travel dreams. But sometimes, you need a high number of points to redeem for a flight or hotel night. How do you earn a substantial amount of points within a short period of time?
The answer lies with credit cards and will be the focus of this article.
Previously in part 1 of this series, the first steps to traveling the world with points and miles were explained.
- Determine your travel goals
- Establish how many points are needed for your trip
- Sign up to reward programs
- Track your reward accounts
- Start earning reward points and miles
Click here if you haven’t read the article or need a refresher.
In this next part, I will provide the following steps relating to earning a significant amount of point and miles with credit cards.
6) Boost your earning potential with credit cards.
This is the most lucrative way to earn a substantial amount of reward points. In Canada, credit card companies make money off credit card annual fees, penalty fees and interchange fees they charge to merchants. So to attract new customers, they offer big credit card sign up bonuses ranging from 15,000 to 60,000 points after spending a certain amount in the first three months of receiving the card!
“Great, I want to earn 60,000 points!” I hear you say. “Where do I sign up?”
Well, before you go applying for your next credit card, you need to understand some of the fundamentals of credit cards and their sign up bonuses. The following steps and tools will help keep you organized and avoid costly mistakes.
Credit card fundamentals
A) Firstly, it’s important to understand your credit report and know your credit score as it will affect if you’re approved or declined for a credit card.
Your credit report is a record of your history with debt including any credit card, loan or mortgage inquiries and accounts. It lists the date you applied for credit and which accounts are open and closed. It’s a good idea to review your credit report once a year to see if your account information is accurate and if there are any irregularities.
If you’ve never checked your credit report and want to learn more about how to obtain your free credit report by mail or telephone, click here.
Your credit score is a mathematical formula that translates the information in your credit report into a number between 300 and 900. The higher the number the better where a score between 650 and 750 is good and anything above 750 is an excellent.
This number determines your credit worthiness so when you apply for a credit card, banks will check your score. This check is called a “hard inquiry” and will show up on your credit report regardless of the outcome of your application. Therefore, it’s important to know your credit score before you apply for a credit card as it will improve your chances of being approved.
So, how do you check your credit score?
In Canada, Equifax and TransUnion are the 2 credit bureaus that provide your credit report and credit score. Each one uses a different proprietary formula to calculate your credit score hence why they differ between both bureaus.
You can stay up to date with your TransUnion® Credit Score & Credit Report with a $1 trial offer for the first 7 days. Afterwards, you can choose to keep the service (for $19.95 per month) or you can cancel.
Otherwise, you can check your TransUnion score for FREE with Credit Karma or online if you bank with Scotiabank or RBC.
You can check your Equifax credit score for FREE with Borrowell or through the CIBC mobile app if you bank with them.
Check your Equifax credit score with Borrowell
B) Secondly, it’s important to note that with credit cards, you should pay your bills entirely every month and don’t carry a balance. Avoid paying interest on your credit card balance at all cost as it leaves you in a risky financial state, lowers your credit score and negates the purpose of earning reward points. If you currently have any credit card debt, it’s best to pay off your balance and fix your financial situation before earning points through credit cards.
Now that we have some of the fundamentals understood, let’s look at some of the best Canadian credit cards for beginners.
MBNA Best Western MasterCard
- Annual fee: $0
- Signup bonus: 20,000 Best Western Rewards points
- Minimum spend: $0
- Earning rate:
- 5 BW Rewards points per dollar spent at Best Western properties
- 1 BW Rewards point per dollar spent on all other purchases
This is one of my favorite credit cards for beginners. It’s a no annual fee card that offers 20,000 Best Western Rewards points after your first purchase. Those 20,000 points are enough for a 1-2 nights in any Best Western hotel around the world!
I’ve written previously about this card so click here to learn how to get a $50 cash bonus through Great Canadian Rebates when applying for this card.
Marriott Bonvoy American Express card
- Annual fee: $120
- Signup bonus: 50,000 Marriott Bonvoy points
- Minimum spend: $1,500 in the first three months
- Earning rate:
- 5 Marriott points per dollar spent at Marriott hotels
- 2 Marriott points per dollar spent on all other purchases
- Bonus: Marriott Silver Elite status and anniversary free night award
An excellent card for Canadians who wish to get free hotel nights, the Marriott Bonvoy Amex card offers 50,000 points after spending $1,500 in the first 3 months. Those points are enough for 1-5 nights depending on the hotel category.
Other benefits that come with this credit card include automatic Marriott Silver Elite status and a free night certificate worth up to 35,000 points (category 5 hotel) on your card anniversary date.
But if you’re not interested in staying in Marriott hotels, you can also transfer your Bonvoy points to over 40 airline partners. For example, 60,000 Bonvoy points could be converted into 25,000 Aeroplan miles, enough for a round trip flight within North America!
So there’s a lot of flexibility in redemption options with Marriott Bonvoy points.
The annual fee is $120 for this card but you can earn a $20 cash bonus by applying for this card through Great Canadian rebates.
American Express Gold card
- Annual fee: $150
- Signup bonus: 25,000 Membership rewards (MR) points
- Minimum spend: $1,500 in the first three months
- Earning rate:
- 2 MR points per dollar spent on gas, groceries, drugstores, and travel purchases
- 1 MR point per dollar spent on all other purchases
The Amex Gold card is one the best value cards available to beginners. It offers 25,000 Membership Rewards (MR) points after spending $1,500 in the first 3 months. Membership Rewards are a flexible transferable rewards currency that can be transferred to select travel partners. For example, points can be converted to Aeroplan at 1:1 ratio meaning with this sign up bonus, you could have 25,000 Aeroplan miles (round trip flight in North America). Or, you can choose to convert to Marriott Bonvoy at a 5:6 ratio which would net you 30,000 Bonvoy points (1 or 2 nights in a category 1-4 hotel).
Plus, it’s possible to redeem your MR points against other types of travel purchases where 1,000 Membership Rewards points = $10 travel credit. This gives you the most flexibility as you can redeem your points for other types of accommodation like Airbnb.
Again, the $150 annual fee may seem quite high, but you can get a $50 cash bonus by applying to the card via Great Canadian rebates.
Lastly, when you apply for the Gold card as a member of either Perkopolis or CPA Canada, you receive a $150 statement credit upon meeting the minimum spending, which indirectly makes the card first year free.
TD Aeroplan Visa Infinite (promo until May 31st, 2020)
There’s also currently an interesting promotion with the TD Aeroplan Visa Infinite. Receive 15,000 Aeroplan miles upon first purchase and earn 5,000 miles when you spend $1,000 in each of the first 3 months, up to a total of 15,000 Aeroplan miles.
Remember that the $120 annual fee is waived for the first year! So this promotion isn’t as lucrative as previous ones with TD, but it’s still a good way to start earning some Aeroplan miles for free!
Hurry, this promotion is valid until May 31st, 2020.
7) Track monthly spending
As you can see, with most credit cards you need to spend a certain amount in the first three months to receive the welcome points. So, it’s important to understand and track your monthly expenses in order to know if you can reach the minimum spend and unlock those sweet bonus points.
The best way to do this is to use a budget tracking app on your smartphone. There are many available but my preferred one is Spendee which is available on Android and iPhone. You can manually input your expenses or connect your bank account(s) and Spendee will keep track of all your incoming and outgoing transactions and categorize them. It’s then possible to review how much you’ve spent on a daily, weekly, monthly or yearly basis!
Plus, another interesting feature included with Spendee is the ability to track expenses in multiple currencies. This is extremely useful while traveling as you enter the expense in a foreign currency (USD, EUR, etc) and Spendee will automatically convert to your home currency based on the daily exchange rate.
Spendee offers multiple different plans. The basic plan is free and sufficient to get an overview of your finances but you need to manually enter your expenses. Otherwise, if you want to automatically track your expenses by connecting to your bank account, you’ll need to subscribe for Spendee Premium which cost US$22.99/year.
8) Establish a strategy to meet minimum spend
Now that you’ve applied for one of the best Canadian reward credit cards, it’s time to start spending! Make sure to put all your daily expenses on your credit card for the next 3 months. It’s important to note that this three-month window starts on the credit card approval date and not when you receive the physical card in the mail (usually 1-2 weeks later).
But what if you don’t spend enough or have too few expenses to reach the minimum spend on your new credit card?
Well, here are some tips to help you achieve your credit card minimum spend.
- Plan in advance. Consider applying for a credit card before a large household purchase, the Christmas shopping period or an event like a wedding so that you can put all your upcoming expenses on that card.
- Purchase gift cards. If you regularly shop at a certain grocery store or gas station, consider buying some gift cards for those stores for future use. You’ll quickly reach the minimum spend on your credit card and just use the gift cards you bought in the coming months. Just make sure you currently have the money to pay for this upfront expense on your credit card bill.
- Pay bills with Plastiq.
Plastiq is a bill payment service that allows you to pay for bills that you usually can’t pay by credit card like mortgage payments, rent, taxes, tuition, and utilities. The catch is that you have to pay a fee of 2.5% to use a credit card but at least it means you can attain your minimum spend and receive the bonus points. Read more about Plastiq.
Summary
Credit cards are by far the best way to obtain lots of travel reward points. But before applying for a new credit card, it’s important to understand the basics of credit cards like checking your credit score and fully paying bills on time. It’s then possible to apply for some of the very best beginner credit cards in Canada like the MBNA Best Western card, the Amex Marriott Bonvoy card and the Amex Gold card.
Finally, by knowing your monthly expenses (using apps like Spendee) and establishing a strategy to meet the credit card minimum spend, you will be able to unlock highly valuable bonus reward points and miles to be used for your travel dreams.
Stay tuned for the next section of this beginner’s series, to learn about how to redeem your Aeroplan miles.