Time to look at another bank’s credit card options. I am looking at two of the Aeroplan point gathering credit cards from CIBC. Personally, as you will read later on, I don’t think these cards are really worth it for most people. The advantage they have are that they are Aeroplan miles and Visa, but the overall return is substandard compared to other cards.
If you are not familiar with my site, I have written a number of articles that analyze Aeroplan, Air miles, and the cards that you can collect them with. Check out these articles for more information:
- Collecting Air Miles and their Value
- Air Miles Versus Aeroplan Points
- Collecting Aeroplan Points and Their Value
- TD Travel Visas
What Aeroplan Cards Are There with CIBC?
The CIBC Aero Classic is the entry level card and has an annual fee of $29/year. It has an interest rate of 19.5% and you earn 1 Aeroplan mile for every $2 you spend through the card.
The CIBC Aerogold is the next step up. It has an annual fee of $120/year and an interest rate of 19.5%. You earn 1 Aeroplan mile for every $1 you spend through the card and some stores actually give you 1.5 miles per dollar. You have to look up the list of participating stores to see if they qualify.
Which Card Is Better?
The reasoning behind which card you should get is pretty easy. You want the one that returns the most money to you. This depends on how much money you spend per year. You want to earn back enough Aeroplan miles on these CIBC Visas to cover your annual fee and then some. If you don’t even spend that much, you might as well go with a no fees card like what is offered by a number of the other banks such as the American Express Air Miles credit card.
If you really want to stick with the CIBC brand of money back visas, then here are the numbers. The formula for the break even point on the CIBC Aero Classic is 58 / AeroplanPointValue. I value it at $0.016 so that means you need to spend $3,625 to get enough Aeroplan miles to cover your annual fee.
The formula for the CIBC Aerogold Visa is 120 / AeroplanPointValue. Its break even point is $7,500. You might think this is fairly low so you will cover your cost, but remember that if you went with the CIBC Aero Classic you would have already covered your fee plus earned extra miles.
The formula for how much you should spend to make upgrading to the Aerogold from the Aero Classic is 182 / AeroplanPointValue. At $0.016/point this comes out to $11,375. That isn’t that much more really. So if you are spending $1,000 a month on your card, this is an easy target to hit.
Summary of the CIBC Visa Cards
I personally think the Aero Classic is a waste of time unless you really want to collect Aeroplan points, stick with CIBC, and you want a Visa. The better option would be the no fee American Express Air Miles card. You earn at a better rate in my opinion than the Aero Classic. American Express Air Miles earns at 1 Air Mile per $20 spent, which I estimate to be worth around 1.25% back on your money spent (I value an Air Mile at around $0.25 a piece). The Aero Classic returns around 0.8% (I value an Aeroplan mile at around $0.016 a mile). Plus, you have to earn enough to cover off you $29 annual fee.
That being said, with my same valuation of an Aeroplan point, the Aerogold returns around 1.6% back of the money you spend on the card ($0.016 divided by the $1 to earn that much is 1.6%). This is a better earning rate than the American Express, but you still need to at least pay off the annual fee.
That leads into a new formula. At what point is it worth upgrading from the American Express to the CIBC Aerogold. This formula is 2400 / (20 x AeroplanpointValue – AirMileValue). Using the same values as before, this comes out to over $34,000 you need to put through on the card. Now that is significant. So unless you are spending more than this or have a specific reason for needing a Visa, I would recommend getting the American Express card.
If you want to see any of the formulas I use, just post a comment. I will add them to this article or in the comments section below.