Thoughts From My Life

Advice from someone who does not know everything.

Category: Loyalty and Credit Cards

Air Miles Cash Program

Another piece of news is the Air Miles Cash program. It is inline with their recent announcement that air miles expire. From what I understand, you can use your airmiles like a pre-loaded gift card at some retailers. Currently it appears to be only Shell and Rona, but hopefully that changes. It might help a lot of air miles members to use their miles up at a quicker pace.You can watch a video and get more details on the Air Miles Cash Rewards page on their site.

Cash versus Dream

The odd thing is that they have divided your miles into two concepts. The Cash air miles and the Dream air miles. The Dream miles are what you use to get rewards like travel or vouchers. So what it has always been. The Cash represents miles you can use like money.When you log into your account, they will ask you to set a preference. You can collect them all for Cash or set a percentage of cash versus dream that you want to collect. By default, if you haven’t set a preference, they have you collect all miles in the Dream account.The cash value is 95 air miles for $10 worth of credit at a store. This amounts to a value of 10.5 cents/airmile. This is quite a bit on the low side of the value as I have written about in my Collecting Air Miles and their Value article. So I have chosen to continue collecting 100% towards my Dream account at this point in time. However, if you have a hard time using your miles up, it is a convenient method to purchase gas at Shell or items at Rona.

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Book Through AirMilesShops For More Air Miles

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.

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Aeroplan Versus Air Miles – Comparing Them

Air Miles and Aeroplan points. The two biggest travel rewards programs. There is always the decision on which one to go with.

This will provide a bit of an analysis on them and which one I think is better. Personally, I think you should sign up for both, since the programs are free. There are credit cards that allow you to collect more miles and that is what I am going to focus on. For the record, I am going to assume points were obtained from a credit card alone and that the individual put $10,000 on their credit card in one year. I will also assume they are using their rewards for travel.

Basically, both programs are good. They are free to sign up and free to collect for most situations. Using the credit cards and paying fees change things though. Air Miles is the only one with a \”no fee\” credit card (Bank of Montreal\’s Mosaik Mastercard and the American Express Air Miles card) and whether paying the fees is worth it to you or not, you need to read my other articles to figure that out.

The basic air miles Mosaik Mastcard is free, but the American Express is free as well and pays out more AirMiles so that is a no brainer if you want it. I figure you need to put at least $3600/year on the basic CIBC AeroClassic Visa card (the Aeroplan credit card) to make it worth your while there. For most people, that isn\’t a problem.

You will find some interesting information in these articles as well.

In my other articles, I value an Air Mile at 23 cents/mile for flights and I value an Aeroplan point at 1.6 cents/mile for flights. You can read them to see how I figure that out (links above). Using the $10,000/year situation, it would be in my best interest to pay the fee for the best credit cards. That would be the $120/year CIBC AeroGold Visa and the $80/year BMO Gold Mosaik Mastercard.

The Visa card would give me 15,000 aeroplan miles. These are valued at 15,000 times 1.6 cents or $240. Since I had to pay $120 for the yearly fee I would get $120 back from my spending.

The Mastercard would give me 666 Air Miles. These are valued at 666 times 23 cents or $153.18. Since I had to pay $80 for the yearly fee I would get $73.18 back from my spending.

I\’m getting better value out of my Aeroplan Visa card? Yes, in this situation you are. I used the \”travel rewards\” scenario where an Air Mile is worth around 23 cents.

However, Air Miles has a variety of rewards and entertainment rewards are worth up to 45 cents/mile. You can only get these with an Air Miles card (this isn\’t totally true, but there are so many more rewards with Air Miles you can\’t really compare them). In that scenario the Air Miles card actually would give you $220 back from your spending (after deducting the $80 fee).

Here is a brief look at the pros and cons of these credit card programs and the reward systems in general.

Aeroplan Points Pros and Cons

Pros: This is a better \”travel\” rewards program.

  • Collecting Aeroplan points with a credit card for the purpose of travel will give you better return on your credit card purchases.
  • You can collect them at a variety of stores.
  • Aeroplan has a good website for booking travel online
  • More international destinations available.

Cons:

  • There isn\’t a \”no fee\” credit card option.
  • There aren\’t as many rewards options.
  • Aeroplan points have an expiry on them (its several years though).
  • You can\’t use them for WestJet flights (airline in Canada).

Air Miles Pros and Cons

Pros: This is better for rewards flexibility and better returns for the entertainment options.

  • There is a \”no fee\” credit card option. If you don\’t put a lot on credit cards, then this card is for you.
  • There are a lot more rewards possibilities.
  • Entertainment rewards make the return on credit card purchases worth more than the return on Aeroplan credit card purchases.
  • You can collect them at a variety of stores.
  • They don\’t expire.
  • They are good for travel with Air Canada and WestJet.
  • Excellent automated phone system for booking non-travel rewards.

Cons:

  • If used strictly for travel rewards (flights), the return value from the credit card isn\’t as good as Aeroplan.
  • The Air Miles website is terrible and there is no ability to book flights online, only other rewards.
  • Fewer international destinations than Aeroplan.

Update June 15, 2007: A reader commented that you can Collect Airmiles by just flying, which I said you could not. If you use your card in conjunction with booking you can receive more Airmiles.

Summary

My summary would be that you should sign up for both programs. You should always carry a blue Air Miles card and the orange Aeroplan card. Choosing a credit card depends on your rewards preferences and how much you expect to spend on your card. If you rarely use a card and don\’t want the fee then just get the basic American Express Air Miles Card.

If you do spend more and will use the miles for traveling, then go with CIBC\’s Aeroplan Visa cards. Read my article on Aeroplan to determine whether a credit card upgrade is worth it or not.\r\n\r\nIf you would like other types of rewards (like entertainment) or just more variety in your rewards, then go with Air Miles. Read my article on Air Miles to determine wheter a credit card upgarde is worth it or not.

Collecting Air Miles and their Value

Why I think an airmile can be worth anywhere between 13 cents and 44 cents depending on what you use it for.

Air miles, Aeroplan points, HBC points, PetroPoints, etc, etc, all the way back to Club Z Points at Zellers. They seem like such a gimmick and just a way to influence your spending. The thing is, they are everywhere now and you can’t really avoid it, so you might as well take advantage of it. I have calculated how much I think they are worth so read on.

I personally collect Air Miles and Aeroplan Points so I just talk about those. This posting is about Air Miles specifically, but the same techniques can be used to figure out Aeroplan. You can read these related articles…

Basically, I value an airmile differently depending on the product. Here is my summary.

  • Entertainment gifts are about 40 cents/airmile.
  • Travel is around 20 cents/airmile.
  • Gift cards are around 10 cents/airmile.

So when you see those “double your airmiles when you buy this…” deals, you can add up how much you are going to spend and how many airmiles you will get and see if it will actually pay for yourself. Unless of course you actually need what you are buying, then it doesn’t matter.

How to Collect Air Miles

Air Miles, first of all, is free and there are three different ways to collect.

  • You can apply for the blue Air Miles card and just keep it on you. If you shop at stores that are affiliated with them (Shell, SportChek, Turbo, Boston Pizza, Safeway, Rona, etc) then you just hand them your card and you collect some points.
  • If you have the blue Air Miles card then you can also earn points buy purchasing on-line through the retailer links at airmilesshops.ca using your collector number. Read more on it at Book Through AirMilesShops For More Air Miles.
  • You apply for a no fee BMO Mosaik Mastercard and link it to your Air Miles card you got above. They will give you 1 AirMile for every $40 you spend on their credit card. For a yearly fee you can increase the AirMiles you earn. You will get 1 for every $20 you spend for $35/year (the silver card), or you get 1 for every $15 you spend for $80/year (the gold card). The card upgrades can also give you some cheaper AirMile rates on flights.
  • You apply for a no fee American Express card and link it to your Air Miles card you got above. They will give you 1 AirMile for every $20 you spend on the card. This is way better than the Mosaik card above (there 1 for 20 card is $35/year), but you cannot upgrade this one any further. You don’t get any special rates on flights either.

So you may get airmiles on any purchase if you use your Mastercard/Amex and at AirMile affiliates you can \”double dip\” by collecting airmiles using your blue card that they give you and paying for your actual purchase with your credit card and getting airmiles from BMO.

These points can later be used to buy flights, car rentals, gift cards, tickets, electronics, and a variety of other products. With flights and car rentals you will still have to pay the taxes, but the base fees are covered by the air miles.

So this is the basics of the system. Now I will discuss what they are actually worth.

What is the Best Value for My Airmiles? (How I Figure Out How Much They Are Worth)

This is an interesting question. This tells you what your airmiles are worth. I decided to investigate this. Basically, I looked at how many airmiles it took to purchase something and divided it into the cost of the item. This gave me the cents per airmile they were good for. There is a large difference depending on what you buy with them.

For example, I will compare 3 items for you right now. I\’ll list the value you save, the airmiles it takes, and the value of each airmile for that item. I priced out a round trip flight from Calgary to Victoria, a Starbucks gift card, and 2 for 1 movie coupon.

  1. A flight from Calgary to Victoria on Westjet. This is an approximate savings for the flight I found.
    • Money Saved: $181 (this can be higher)
    • Air Miles Used: 800 (A discount because I\’m a gold card member)
    • Air Miles Value: 23 cents/air mile
  2. A $25 Starbucks Gift Card.
    • Money saved: $25
    • Air Miles Used: 200
    • Air Miles Value: 13 cents/air mile
  3. A 2 for 1 movie pass.
    • Money Saved: $11 (move ticket in my city)
    • Air Miles Used: 25
    • Air Miles Value: 44 cents/air mile

So you save the most money on movies, then the flight, then the starbucks card. Now don\’t run out and use your air miles for as many movie passes as you can buy. The problem here is, what do you want to buy with them? Not everyone wants to go to the theatre all the time. This is just to keep aware of what kind of value you are getting

A couple years ago, my future wife was living in Victoria and I was in Calgary. Oil prices were still low and flights were really cheap. If we waited for seat sales to see each other on the weekends, I priced out my airmiles were only worth 8 cents each. So I just shelled out the money for my plane tickets and used my air miles for something else.

Basically, my advice is to check out how much money you \”actually\” save by using air miles to purchase something and how many airmiles it takes and plug it into this formula:

Air Miles Value = Money Saved / Air Miles Used

Should I Upgrade my Mosaik Mastercard?

Should you pay the annual fee to get more Air Miles? This depends on how much money you spend on your credit card and what you will use your miles for. The more you spend, the more likely an upgrade will be a good thing.

Update (March 22, 2007): American Express offers a no fees card that pays out 1 AirMile for every $20. This is better than the Basic and Silver card. The only question is whether you should go for the Amex or the Gold Mastercard. If you don’t care whether you have an AMEX or Mastercard then read the section below called Should I Get a Gold Mosaik Card or an American Express. There is an update below regarding how to choose.

Now that we did our calculations above to see what an airmile is worth we can figure this out. Ask yourself what you want to use it for. For me, it is flights.

Upgrading Between the Mosaik Cards

If you do not want the American Express then here is the reasoning behind upgrading the Mosaik cards.

I will show you whether you should upgrade for each of the 3 examples I did above. To calculate this I made a formula that took into account the annual fee and what the value of an airmile is to figure out how much money you would need to spend to at least recover the annual fee in extra airmiles value. The formula for upgrading to the silver card is 1400 / Air Miles Value. The formula for the gold card is 1920 / Air Miles Value. If you want to see how I figured these out, send me an email and I’ll send you the proofs.

For example, if I value an air mile at 20 cents, this is the formula:

1400 / 0.20 = $7000

1920 / 0.20 = $9600

This means that I would need to put $7000/year on my Mosaik card to make it worth the fee to upgrade to the Silver card and $9600/year to upgrade to the Gold card.

For the examples I list above here are the results:

Minimum Spending Amounts Based on Reward Types

ItemValue per Air MileSilver CardGold Card
Flight$0.23$6087$8348
Starbucks Card$0.13$10769$14769
2 for 1 Movie Pass$0.44$3182$4364

Should I Get a Gold Mosaik Card or an American Express?

Updated March 22, 2007

This is an update to this article since I have looked at the American Express. This card pays you 1 Airmile for every $20 and has no fees. So it is not even a comparison to the Basic and Silver Mosaik cards, the Amex beats them hands down. However, the Gold card will pay you more miles if you put enough money on it.

The formula is $MoneySpent = 4800 / AirmileValue

So depending on how you value an airmile, the amount of money you need to spend to make the Gold card worth your while is shown in the table below. Remember you have to make enough extra miles to cover the $80 yearly fee you have paid.

Minimum Spending Amounts Based on Reward Types for Amex to Gold Card

ItemValue per Air MileGold Card
Flight$0.23$20,870
Starbucks Card$0.13$36,923
2 for 1 Movie Pass$0.44$10,909

Wow, that is some serious coin you need to be putting down now. Unless you own a business and are putting your expenses on it, the Amex is probably the better bet.Bottom line: The more value you get from your air miles, the less you have to put on your card to make it worthwhile for the upgrade. So if you are using all your airmiles on Starbucks gift cards, you will have to spend a lot on your credit card before you should think about upgrading.

If you are using the Amex, you can’t upgrade anyways so it doesn’t matter. UPDATE: There is a platinum Amex available now as well as Aeroplan earning cards. I will evaluate them at a later date. If you are not putting on at least the amounts I mention above to make the Gold card upgrade worth your while for the Mosaik card, you should just stick the American Express one. And based on the values, it looks the Amex is the best bet. The only question is how often you will be able to use it since it isn’t as widely accepted.

Collecting Aeroplan Points and Their Value

Why I think an Aeroplan mile/point is worth 1.6 cents and if you should collect them with a credit card.

Aeroplan points, Air miles, HBC points, PetroPoints, etc, etc, all the way back to Club Z Points at Zellers. They seem like such a gimmick and just a way to influence your spending. The thing is, they are everywhere now and you can\’t really avoid it, so you might as well take advantage of it. I have calculated how much I think they are worth so read on.

I personally collect Air Miles and Aeroplan Points so I just talk about those. This posting is about Aeroplan Points specifically, but the same techniques can be used to figure out Air Miles. You can read these related articles…

Note: I interchange the word points and miles throughout this article. They mean the same thing. An Aeroplan Point and an Aeroplan Mile are the same.

To calculate the value of an Aeroplan point I priced out a flight on their website using points and then priced out a similar flight the same day using Air Canada\’s website. From that, I determined an Aeroplan point is worth 1.6 cents/point. I will explain later how I came to this.

How to Collect Aeroplan Points

Aeroplan, first of all, is free and there are three different ways to collect.

  • You can apply for an Aeroplan card and just keep it on you. If you shop at stores that are affiliated with them (Future Shop, Esso, etc) then you just hand them your card and you collect some points whenever you purchase something.
  • You use it whenever you fly with Air Canada or some other Star Alliance member airline. You will receive a certain number of Aeroplan points whenever you fly somewhere. This is free as well.
  • You apply for a CIBC Aeroplan VISA card. There is a fee for these cards. $29/year will give you the CIBC AeroClassic VISA card that will give you 1 point for every $2 you put on the card. $120/year will give you a CIBC AeroGold VISA card that will give you 1.5 points for every $1 you spend on it.
  • Apply for an American Express Aeroplan credit card
  • Apply for one of the many other credit cards that offer Aeroplan points as well

So you may get aeroplan miles on any purchase if you use your Visa and at Aeroplan affiliates you can \”double dip\” by collecting Aeroplan miles using your Aeropan card that they give you and paying for your actual purchase with your credit card and getting aeroplan miles from CIBC.

These points can later be used to buy flights, car rentals, hotels rooms, and a few other products. With flights and car rentals you will still have to pay the taxes, but the base fees are covered by the Aeroplan points.

So this is the basics of the system. Now I will discuss what they are actually worth.\r\n

What is Value of an Aeroplan Mile? (How I Figure Out How Much They Are Worth)

This is an interesting question. Basically, I went through the steps of booking a flight through Aeroplan and through the Air Canada website from Calgary to Victoria.

The cheapest price I could find for the flight was $321.54 including taxes (this was with the no baggage and other deduction options). With Aeroplan, it was 15,000 Aeroplan miles plus I had to pay $78.80 for taxes and other fees.

So I can assume my 15,000 Aeroplan miles were worth $242.74 (the difference in money out of my pocket). This means one Aeroplan mile is worth around 1.6 cents.

Note: Other products/rewards require more or less Aeroplan miles, which can make them worth more or less money than 1.6 cents/aeroplan point.

Basically, my advice is to check out how much money you \”actually\” save by using Aeroplan miles to purchase something and how many Aeroplan points it takes and plug it into this formula:

Aeroplan Miles Value = Money Saved / Aeroplan Miles Used

Should I Get a Aeroplan Visa Card or Upgrade My Existing One?

Should you pay the annual fee to get Aeroplan Miles? This depends on how much money you spend on your credit card and what you will use your miles for. The more you spend, the more likely an upgrade will be a good thing.

Now that we did our calculations above to see what an aeroplan point is worth we can figure this out. Ask yourself what you want to use it for. For me, it is flights.

I will show you whether you should upgrade for the flight example I did above. To calculate this I made a formula that took into account the annual fee and what the value of an aeroplan mile is to figure out how much money you would need to spend to at least recover the annual fee in aeroplan miles value. The formula for getting the $29 basic card is 58 / Aeroplan Miles Value. The formula for the $120 gold card is 80 / Aeroplan Miles Value. If you want to see how I figured these out, send me an email and I’ll send you the proofs.

For example, if I value an Aeroplan mile at 1.6 cents, this is the formula:

58 / 0.016 = $3625\r\n80 / 0.016 = $5000

This means that I would need to put $3625/year on my AeroClassic Visa card to make it worth the fee and $5000/year to upgrade to the AeroGold Visa card. Once you have spent those amounts, the extra aeroplan miles you have earned are valued at the same amount as the fee you have paid.

Note: If the value you get from an Aeroplan mile is greater than 1.6 cents/mile, the amount you need to spend goes down. Just plug the value into the formula and you will see. Hotels, car rentals, vacations, etc might be a better deal.

This is not the whole story either. There are other perks to these cards that I have not talked about. The AeroGold has better options for flights and other advantages so you should actually read up on it yourself. Sometimes there will be a feature to the card that will outweight the value I am talking about here (lower interest rate, other discounts, insurance coverage, etc.