I have had a few people write me concerning my articles on Aeroplan and Airmiles, asking how I created my formulas for figuring out how much money you would need to put through your credit card to get back the annual fee for the credit card. This only works for cards that have a reward feature like airmiles, aeroplan points, or some other reward points.

I will try and get a baseline value for each type of reward point on each card and keep it in a table on this page (see below). If you want me to look at a card, let me know the name of it and I will look up the details.

This page will have 3 sections.

1. Show how I create my formula for how much money you need to spend on a credit card to pay for the fees.
2. List the formula for major cards.
3. Use one of the reward items available for each card to figure out an exact value for how much money needs to go through the card to pay for itself for that reward item. I'll try to stick to gift cards since the value is fixed (i.e. $20 gift card) and is subject to change like airfare is.

The reason I give you the formula and my estimation is that every reward is different and can give you a different value to your points. Depending on what you use your card for, it can really change how much you are getting out of each point. Movie tickets give you more than a gift card for example. But who is going to want to use all their points on movie tickets.

Creating A Credit Card Formula

There are two pieces of information you need to know when figuring this out.

• The annual fee for the credit card (i.e. $29/year).
• The rate at which reward points are accumulated (i.e. 1 Aeroplan point per every $2 spent).

I will show formulas with the following variables:

• PointsEarned: The number of reward points we can get from spending money.
• MoneySpent: How much money we put through the credit card.
• EarningRate: How quickly we can earn reward points. This should be expressed as points per dollar. If you earn 1 point for every $2 spent, then it is written as 1/2. You could also say 1 divided by 2.
• PerPointValue: How much each point is worth if we used it to buy something. This is a dollar value. If a 2 for 1 movie pass is 25 points and it saves as $10 because that is the cost of a movie ticket, then each point is worth 40 cents. 25 points x 40 cents/cent = $10. So $0.40 would be our PerPointValue.
• CardFee: The annual fee to own the card (i.e. $29/year).

How Many Points Do You Earn Formula

The first concept we need to know is that if we spend a certain amount of money, we receive a certain number of reward points.

PointsEarned = MoneySpent x EarningRate

How Much Do You Need To Spend To Recover the Fee Formula

The second concept is that we want to spend enough money on the card to at least cover the fee we paid to have the card. So we put the CardFee on one side of the formula and the other side of the formula is our calculation for dollar value of our accumulated points.

CardFee = PointsEarned x PerPointValue

Combining Formulas

The next step is to substitute our PointsEarned value in our second formula with the formula for PointsEarned we created in our first formula. Our equation now looks like this:

CardFee = MoneySpent X EarningRate X PerPointValue

What I am interested in is the MoneySpent value so if we divide both sides by EarningRate and PerPointValue, we end up with:

CardFee / (EarningRate X PerPointValue) = MoneySpent

Re-arranged again.

MoneySpent = CardFee / (EarningRate X PerPointValue)

In words: The money you would need to spend is the card's annual fee divided by the point earning rate and then divide that whole number by the value per point.

Example

I have a BMO Gold Mosaik Mastercard. The annual fee is $90 and I will receive 1 Air Mile for every $15 I put on the card. I can get a $20 gift certificate for Shell gas stations for 175 Air Miles. That means each Air Mile is worth 11.4 cents. So my variables are:

CardFee = $90
EarningRate = 1/15 or 0.06666666
PerPointValue = $20/175 or $0.114

The formula is:

MoneySpent = $90 / (0.066666666 x $0.114) = $11,842

Wow, I would have to spend $11,842 on my mastercard just to get back the fee I paid for it if I was going to use the miles for the gift card at Shell.

Keep in mind that this is for the Shell gift card reward. Other rewards give you move value for your points (movies, airfare, theatre tickets, etc).

Since the value of your point can change based on your use, I usually leave this part of the formula as a variable so you can plug in whatever you want:

MoneySpent = CardFee / (EarningRate X PerPointValue) = ($90 / 0.0666666666) / PerPointValue

MoneySpent = $1350 / PerPointValue

Just plug whatever you think it is worth in there and then you can get how much you need to spend to recover your annual fee value in points.

Formulas for Various Credit Cards

Using the same method I did in my above example, I have made formulas for the various cards. Just plug in how much you think a reward point for your card is worth and it should give you a number. As a hint...Airmiles PerPointValues I use are between 13 cents and 45 cents. Aeroplan PerPointValues can be between 1 cent and 3.5 cents. I know the range is big, but it really depends on what you use your points for.

I am also including cards that do cash back or have no fees just to keep the information filled out.

Note: If you want me to add a card, just post a comment and I will add it (and email you if you leave your address).

Credit Card	Annual Fee	Earning Point Rate	Formula
American Express AeroplanPlus Card	$60	1 per $1	60/PerPointValue
American Express AeroplanPlus Gold Card	$120	1 per $1 up to $10,000 and then 1.25 per $1 after that	(150/PerPointValue) - 2500
American Express AeroplanPlus Platinum Card	$499	1.25 per $1 up to $10,000 and then 1.5 per $1 after that	(748.5/PerPointValue) - 2000
American Express Air Miles	$0	1 per $20	N/A
BMO Gold Mosaik Mastercard	$90	1 per $15	$1,350/PerPointValue
BMO Silver Mosaik Mastercard	$35	1 per $20	$700/PerPointValue
BMO Mosaik Mastercard	$0	1 per $40	N/A
CIBC AeroClassic Visa	$29	1 per $2	$58/PerPointValue
CIBC AeroGold Visa	$120	1.5 per $1	$80/PerPointValue
ScotiaBank No-Fee Money Back VISA Card	$0	1% back	N/A

Is The Credit Card Fee Worth It?

Listed below are some major credits cards and how much money you would need to put through the card if you were going to at least get back the value of the fee you paid for the given reward.

Credit Card	Annual Fee	Example Reward	Points For Reward	Value Per Point	Money To Recover Fee
American Express AeroplanPlus Card	$60	$50 Gap Gift Card	6,000	$0.0083	$7,200
American Express AeroplanPlus Gold Card	$120	$50 Gap Gift Card	6,000	$0.0083	$15,500
American Express AeroplanPlus Platinum Card	$499	$50 Gap Gift Card	6,000	$0.0083	$87,820
American Express Air Miles	$0	$20 Shell Gift Card	175	$0.114	$0
BMO Gold Mosaik Mastercard	$90	$20 Shell Gift Card	175	$0.114	$11,842
BMO Silver Mosaik Mastercard	$35	$20 Shell Gift Card	175	$0.114	$6,140
BMO Mosaik Mastercard	$0	$20 Shell Gift Card	175	$0.114	$0
CIBC AeroClassic Visa	$29	$50 Gap Gift Card	6,000	$0.0083	$6,960
CIBC AeroGold Visa	$120	$50 Gap Gift Card	6,000	$0.0083	$9,600
ScotiaBank No-Fee Money Back VISA Card	$0	N/A	N/A	N/A	$0

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This is perhaps the best explanation video I have seen for a basic look at the mortgage crisis going on in the U.S.. Check it out if you want to know more about it.

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I just learned of another way to get air miles at no extra cost by using the site airmilesshops.ca.

This site, which is part of the Airmiles Official Site allows you to use your Airmiles collector number and look for retailers which offer AirMiles on-line. This is above and beyond the usual stores you can think of like Shell, Boston Pizza, and Westjet. I also shop at Dell and Expedia which are on-line stores that do not directly let you collect Air Miles with them. You can get points from them at airmileshsops though.

How AirMilesShops Works

When you click on a retailer on airmilesshops, you are taken to a page that explains the Air Miles you will receive if you make a purchase on-line. You can then enter your AirMiles Collector number if you haven't already and click on a button that redirects you to the retailer's site where you can shop as you normally would and make a purchase if you want. If you place an order on-line then they give you a certain number of Air Miles based on the rate they are offering.

This is great, because now Air Miles are available at more stores than they normally were. For example, I just booked tickets on Expedia for a business trip of mine. They normally don't offer Airmiles, but they were listed on the airmilesshops.ca website and when I clicked on them I found out they offer 1 Airmiles for every $35 spent on their site and you get a bonus 35 miles the first time you make a purchase. I was going to buy my tickets on Expedia anyway, but this was a way to gain a few extra miles.

Do You Pay More?

I was worried that they might charge more when Air Miles were included, but I was wrong. I compared prices by trying to book from a different computer where I did not go to the Expedia store by using the affiliate link from airmilesshops (would not get the AirMiles) and by using a computer where I did use it. The prices were identical and I could not even see a difference in how the site looked.

So basically, it is just another way to get Airmiles from companies that don't offer it directly (why I don't know).

Double Dip To Maximize Your AirMiles

If you already have a credit card that collects Air Miles like the American Express Air Miles card or the BMO Mosaik Mastercard then you will collect miles when paying with your card and you will receive the airmilesshops miles in addition to that.

For example: I $500 flight through Expedia for the first time would give you the following miles (assuming your have the Gold BMO Mosaik Mastercard):

• BMO Mosaik Mastercard (1 for $15): 33.3 miles
• Expedia (1 for $35): 14.3 miles
• Bonus miles: 35 miles
• Total: 82 Air Miles (rounded down)

That is 82 AirMiles instead of the 33 you would normally expect. Even if you have already used your first purchase the 14 extra miles is over 40% more than you would have received normally and there is no extra cost.

What Retailers Are There

A lot of good on-line retailers are listed. This includes Expedia, Dell, Apple, Bose, TigerDirect, Chapters, Amazon, La Senza, and the list goes on. Here is a screenshot of some of the top ones from the site.

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I was recently emailed from someone concerning the Air Miles for Everyone event currently going on.

It is for their 15th anniversary event. I thought Air Miles were around longer than that, but maybe I'm just getting too old.

There are a set of anniversary coupons you can receive. You have to enter your collector number to get them and then you get bonus air miles depending on how many you use.

The second part to the event is a story submission section. Basically, individuals submit their heart warming stories about how they have used their Air Miles and people vote on them. The best story will receive 15,000 Air Miles. That is enough for a return trip from Calgary to Victoria or a number of other destinations depending on where you live.

Definitely check it out for interest's sake and if you want some more coupons to help collect. Remember my math on how much an Air Mile is worth. If the coupons aren't giving you enough of a deal it might not be worth it.

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Having good credit is a huge advantage when making financial decisions in your life. It opens up opportunities to further your business, personal lifestyle standard, or fulfill any travel ambitions.

Unfortunately, bad credit can do the opposite for you. Unpaid bills, bankruptcy, large debt to service ratios, and other circumstances can put a real damper on what type of credit a banking institution will be willing to grant you.

If you are someone who is in the bad credit category, then there are options available to help relieve the situation. I have been looking over RMCN Credit Services website. They have ordered up a LinkWorth LinkPost review. I always enjoy these opportunities as it gives a good opportunity to look over a site in detail.

Credit Repair Using Credit Scores

RMCN offers services to review your financial situation and generate a credit score. The score basically describes the likelihood that you will default on a loan within the next 24 months. It can be used to help close on mortgages or other loans.

Basically, RMCN is in the business of credit repair. There goal is to help you attain the necessary loans and at better rates then you might be able to attain on your own. If you need credit help then read over their site for information regarding how a credit score will be calculated for you and how it can be used.

Highlights Of RMCN's Website

At the beginning of the page are some examples of what bad credit can cost you in your mortgage or car loans. Then they follow up with an overview of what is used and what is not used in determining your credit score.

On the Credit Scores page there is a large amount of good information. It is organized quite well and you could almost print this off to read if you wanted as there are several pages here.

The Do's and Don'ts sections are very good. If you want to start down the path of achieving a better credit rating, then read this over. Nothing that is rocket science, but a very good overall for establishing some goals and focus points in your current financial future.

Further down the page there is a breakdown of what is a good score or not and what some of the reason codes are on the different credit score reports.

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How much is a United Airlines Mileage Plus mile worth?

I thought I would take a look at another airline rewards program. This time it is the United Airlines Mileage Plus Program. After doing some calculations I valued one of the United Airlines Miles to be worth 1.28 cents or $0.0128 when you redeem your miles for flights and up to 5 cents or $0.05 when redeeming for restaurant certificates. I know that seems like a small number especially with how many decimal places I have gone to, but they add up when you are talking tens of thousands of miles to fly somewhere.

Keep in mind when I say the 1.28 cents/mile is for flights that is a rough estimate based off of one flight I found. Using it for other rewards will also change its value. I find travel is one of the worst uses for it in terms of monetary value. Entertainment rewards are usually the largest value/mile (probably because of the high markup). Using mileage plus miles for restaurant certificates on Restaurant.com, it appears that you can get anywhere from 2.5 cents/mile to 5 cents/mile. That is a much better deal.

I was not able to check electronics as they are not immediately accessible anyways until you reach Elite status.

The ultimate resource for the Mileage Plus Program is the United Airlines Mileage Program page itself. There are lots of links on how to redeem for rewards and earn miles by traveling or using a Mileage Plus Visa Card.

What Is The Value Of A United Airlines Mile?

Travel

I priced out a flight from New York to Los Angeles and back using Mileage Plus miles and just paying for it regularly. To try and be a bit more fair, I found the cheapest flight I could for a one week round trip as well.

The price to leave 2 weeks ahead was US$318.80 for a round-trip. The price in United Airlines Miles was 25,000 miles and no booking fee because I booked far enough in advance.

If you do a bit of math you find the $318.80 divided by 25,000 will give you the price per United Airline mile (I will just say price per mile from now on.

This number if US$318.80/25000 = $0.0128/Mile. This is rounded to the nearest 100th of a cent.

Keep in mind this is the value of an Mileage Plus Mile for this specific flight. You can calculate the value for any flight or any other products by taking the amount of money that would have come out of your pocket that you have saved by using the miles and dividing it by the number of miles you used. This will tell you the value per mile on that product. Some flights are better than others. Electronics are typically a lower rate of return for you mileage plus miles, but entertainment is better.

Entertainment

Advertised on the website are restaurant certificates from Restaurant.com. These are gift vouchers for partnered restaurants that you can search for on their website.

The gift vouchers are $25 for 1,000 miles or $100 for 2,000 miles. $25 divided by 1,000 and $100 divided by 2,000 give you 2.5 cents and 5 cents per mile. That is a very good return compared to the flight, but you have to remember you are getting food and that's it. Depending on what you are looking for, you are going to spend your miles on what you want.

If you like eating out and like traveling, it tells you to use your miles for eating out and just pay for your plane tickets out of your own pocket.

How To Earn United Airlines Miles

There are lots of ways to earn these United Airlines miles, but please note that they all involve spending money. There is no way around it, these programs are to encourage spending. The good thing is, you have to spend to live, so why not take advantage of by signing up for free programs like this.

Current methods of earning United Airlines Miles are:

• Booking flights with United Airlines. They are a member of Star Alliance as well. This is a group of airlines all over the world, so it opens up the possibilities of flying to a number of locations.
• Spending money using the United Airlines Mileage Plus Visa Card.
• Spending money at United Airlines Mileage Plus Partners. These include Safeway, NetFlix, Neiman Marcus, and variety of other stores and restaurants.

Mileage Plus Visa Card

Just a note about using the Mileage Plus visa. For me, credit cards are the quickest way to earn miles. Unless you travel a lot on business, it is probably the same for you. Currently there are 4 cards featured on the United Airlines Visa Card page. What visa card should you pick? Good question.

Let us get one thing out of the way. If you carry a balance on your credit card...THEN STOP IT!. These cards do not have a very good interest rate on them (still over 18%), so if you can find a credit card with a better rate, it will still save you more money (you might as well pay for the flight yourself).

Each card offers varying features, but they all have an annual fee (as far as I can tell). Keep in mind that you need to spend enough money on the card to get enough miles to pay for the annual fee. If you do not spend at least that much money, then you are better off getting a no fee credit card somewhere else.

An example of this is if I plan on using my Mileage Plus miles for travel then I will value them at around 1.28 cents per mile like I stated above. The lowest fee card that is available is $25/year. To recover that $25, I need to at least get that money miles. $25 divided by 0.0128 (price per mile) is around 1,953 miles. That many miles will get you around $25 worth of flights. Now, to get that many miles with the $25/year card (the Mileage Plus Visa Check Card) you need to spend around $3,906 because you only earn 1 mile per every $2 put on the card.

That was assuming the 1.28 cents/mile value I feel I am getting from booking a flight as well. Let's say that I plan on using my miles for eating out at restaurants that are affiliated with Restaurant.com. Now I can max out my value at 5 cents/mile. $25 divided by 0.05 comes out to $500. That is a far lower amount of money to be spent to break even.

That is just that card and using the value per mile from the example flight above. Each one has its own perks (for higher fees of course). Some pay 1 mile per every $1 spent, some pay 2 miles per every $1 spent on a United Airlines product (flight, etc). Except for the Platinum Visa card, they limit to how many mileage plus miles you can earn in one calendar year (60,000 or 100,000 for the Gold card). These can all play a factor.

I have done a chart for each Mileage Plus Visa card. In the chart I show the name of the card, the yearly fee, the dollars needed to be spent to earn 1 mile, how much spending it would take to pay off the annual fee when using the miles for travel and then for restaurants, what the yearly limit is on how many you can earn, and other notes. Keep in mind I am not factoring in the bonus miles for signing up, earning bonuses for buying certain products, or other factors. This is a worst case scenario for uninfluenced spending on each card. You might have spending patterns that cater to using a card and earning even more miles at a better rate.

Visa Card	Annual Fee	To Earn 1 Mile	To Break Even Travel	To Break Even Restaurants	Yearly Earning Limit	Other
Mileage Plus Visa Check Card	$25	$2	$3,906	$500	60,000
Mileage Plus Visa	$60	$1	$4,688	$1,200	60,000
Mileage Plus Gold Class Visa	$53 *($85)	$1	$4,140	$1,060	100,000	Fee is $85, but you get 2,500 miles for free every year (worth $32).
Mileage Plus Platinum Class Visa	$140	$1 or $0.50	$10,938 or $5,468	$2,800 or $1,400	Unlimited	A lot more opporunities to get 2 miles per $1.

As you can see there are a lot of options. Basically the higher the fee the quicker you can earn miles, but you need to spend the minimum amounts listed to get your money back on the annual fees themselves. They also give you more bonus miles on the higher fee cards, which gives you back some of the money, but remember that you are getting back miles and not real cash. Bonus miles are like "gift cards" for their own store, which will makes sure they get the money back anyways.

Using United Airlines Miles

United Airlines Miles can be used for a variety of options. Most common are flights or travel.

There can be some extra monetary fees with travel bookings depending on how far in advance you do it. Here are the rules currently:

• Award travel ticketed six days or less prior to departure $75.
• Award travel ticketed 7-13 days prior to departure $50.
• Award travel ticketed 14 days or more prior to departure $ 0.

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Okay. This is the last time I will write about it...I promise. The Canadian dollar went above $1.00 exchange rate with the US dollar.

Read about it on globeinvestor.

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Well, it is almost here and quicker than I expected. This morning, the Canadian dollar is trading over 99 cents to the American dollar. The Globe and Mail have an article on the Loonie today.

It also strengthened against the euro, so it isn't just the U.S. currency falling this time. Canada will have definitely lost the cheapness it has with its imports, both products and services. It will definitely bode well for travelers and those monopoly products we have, but who knows what will happen for the other sectors over time. They will have felt it for the past few years leading up to this anyways.

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The Canadian dollar reached a new 30 year high yesterday. At one point it was trading at 96.63 cents to the American dollar. That is a far cry from the 62 cents we were trading at in November of 2001.

The difference in the past 6 years has been astounding. I know it has been nice when I convert my money over, but I can't even imagine the impact it must have on trading goods and services. I was working for a company located in Canada that was owned by a major company in the U.S. in 2001 and that was a big plus for us being up here. We were cheaper employees, not because of our skill level, but because our salaries and expenditures were in Canadian dollars.

I don't know if it is positive or negative, but it is definitely interesting times. If we do hit $1 (which it looks like we are going to), it will be something never seen by an entire generation of Canadians (including myself). It was only part of stories that our parents told when we were younger about their younger years.

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Credit cards are often cited as being one of the great evils to your personal finance. This is for a good reason. For most people, they encourage you to purchase something now when you do not have the money and pay it off with interest over time. The unfortunate thing with credit cards is that the interest rate is quite high and 99% of the purchases are for items that will depreciate.

To get any benefit out of a credit card, you need to NEVER CARRY A BALANCE. Interest payments will kill you and outweight any financial perk the card has.

If you have control over spending habits, credit cards can be a great tool and even provide you with a few extra benefits.

• You do not need to carry as much cash and you do not have to write cheques (which are accepted in fewer places and can cost you).
• It is an easy organizational tool when most of your purchases are on one or two statements. It makes it very easy to see where your money is going and how often.
• The card's reward programs. These can save you money occasionally and give you a kind of "rebate" that you can use towards other items.

Reward Programs

This are a big market nowadays. Visa offers rental car insurance just by charging the booking to your visa card. When Canada 3000, an airline in Canada, went bankrupt a few years ago, Visa stepped up and reimbursed those individuals who had booked their travel on their Visa.

If you want to see some other articles comparing cards, then check out some of the following:

• Aeroplan Versus Air Miles - Comparing Them
• Collecting Air Miles and Their Value
• Collecting Aeroplan Points and Their Value
• Scotia Bank No Fee Money Back Visa Card Review

Even bigger are the many different reward systems on a credit card. If you consistently pay off your credit or you do not have a credit card, but think you can control yourself to pay it off regularly, then a rewards program may be right for you.

Start out with the most basic card being offered. There are Aeroplan, Air Miles, RBC points, and a variety of other programs. Basically, they work by giving you "points" every time you charge a certain amount of money to their card. Their hope is that you will not pay it off and they can charge interest on this "loaned" money. It is a huge industry.

The points you earn can be used for travel, merchandise, gift certificates, entertainment options, rental cars, hotels, and almost anything you can think of.

Let's put it this way: This is a free rebate program. Almost like insurance, where most of the people (paying interest on their credit card) are supporting few people (those without debt on their cards).

I am not talking a large amount of money, but it can add up to 1% or so and it can make a nice gift or buy you another gadget that you otherwise might not buy for yourself. Plus it feels fun to get some money back.

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