Column: Going the extra mile to earn rewards? It’s not always worth it

Michael Prentice
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While it might seem tempting to shop at a specific retailer to rack up loyalty points, it’s a smart idea to do the math beforehand

Who can resist getting something for nothing? I certainly can’t, which is why I collect both Air Miles and Aeroplan reward points.

For illustrative purposes only.

(Editor's note: Several weeks after this column was published, Air Miles announced it was changing its plans. Please see this story for updated information.)

But it’s growing increasingly difficult to know how best to cash in these rewards once you’ve earned them. And – if you are not careful – you may never get the reward you’ve earned under either of Canada’s two leading loyalty programs.

Air Miles has announced that as of the end of 2016, reward miles will expire five years after they were earned. Five years might seem a long time to save up enough reward miles towards a round-trip flight anywhere within North America, but it isn’t when you know how little a reward mile is worth.

As far as I know, Aeroplan does not intend to place any such time limit on earning or spending  rewards under its program. But collectors of Aeroplan reward miles already risk losing them if they do not collect or redeem any Aeroplan points in a 12-month period.

Aeroplan spells out its policy on this on its website, where it says: “Mileage will expire in accounts that have no qualifying activity in the previous 12 months. This means that you must earn or redeem at least one mile in a 12-month period to keep your account active.”

While this is Aeroplan’s policy, some banks offering Aeroplan credit cards say their customers are exempt from the 12-month expiry policy provided their accounts are in good standing.

As an avid collector under both these rewards programs, my golden rule is to never, ever shop somewhere simply because a retailer offers Air Miles or Aeroplan points.

An Air Mile may be worth only about 10 cents, while an Aeroplan reward mile may be worth as little as three cents.

Why buy a tank of gas to collect a couple of Air Miles, perhaps worth less than a quarter, when you might be able to save a dollar or more by filling up at a cheaper gas station?

It’s not true that all gas stations charge the same. In Ottawa, the biggest influence on retail gasoline prices appears to be the Costco shopping club near the intersection of Merivale and Hunt Club roads.

Costco, which charges a membership fee of slightly more than $1 a week to shop there, charges gasoline prices that are usually several cents a litre below the city average, causing nearby stations to also charge less than the city average.

But back to the Air Miles and Aeroplan rewards programs.

While I’ve been collecting Air Miles for years, I only recently learned I have a choice in how to spend them: They can be put towards travel costs or other rewards of uncertain value, or they can be exchanged for vouchers, with a specific cash value, to be spent at a wide range of retailers. However, there is a catch: You must choose between these two options before collecting the Air Miles.

With the cash option, at least you know what you’re getting for your Air Miles. For 950 Air Miles, you receive a cash voucher worth $100 – meaning an Air Mile is worth slightly more than 10 cents.

My first thought was it’s better take the cash option. But then I wondered, how much are those Air Miles really worth when used for air travel? The answer, at least in the example I chose, was about 16 cents.

I looked at how many Air Miles would be required for a round trip from Ottawa to Vancouver in the spring of 2017. The answer: 4,900 Air Miles plus $136.54 in taxes and fees.

Then I checked Air Canada’s fare for that trip. It was $937.71, all taxes and fees included. From that, I was able to calculate that the value of my Air Miles was about 16 cents each.

I still can’t decide whether it’s better to take the bird in the hand (the cash voucher worth about 10 cents per Air Mile) or the two birds in the bush (assuming each Air Mile is worth about 16 cents on air travel).

Still, it’s a nice dilemma. If you’re careful, it costs nothing to earn these rewards. But be sure you collect your reward!

Michael Prentice is OBJ’s columnist on retail and consumer issues.

Organizations: Air Miles, Aeroplan, Costco Merivale and Hunt Club Air Canada

Geographic location: Canada, North America, Ottawa Vancouver

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  • john ostris
    November 26, 2016 - 10:00

    These point reward programs really hook people and every yr, the skrew get tightened in how to use them or reaching the ever increasing threshold to attain certain miles/status levels - Aeroplan for one is like this, i hear it from my corporate clients early in every new year when their program gets 'tweaked' - RBC avion is one of the best reward programs out there.. John ostris, manager Centrum Travel Carlson, Earl Grey dr, Kanata