How to use travel rewards cards correctly?

Last summer, for his bachelor party, Ricky Zhang was able to travel around the world at almost no cost. ” That was all [payé] thanks to points,” says the founder of the Prince of Travel website.

This weekend in Toronto, the entrepreneur was one of many travel industry players who took part in the event Travel Summit. Nearly half of the conference sessions touched on the growing world of rewards programs.

Fans of programs like Ricky Zhang collect credit cards that offer travel points. The Vancouverite proudly notes that he has 20 credit cards; his colleague, Josh Greenberg, has three times as many.

Nearly 90% of Canadians are enrolled in at least one rewards program, according to Scotiabank, but the average Canadian is enrolled in a dozen. In 2019, the KPMG firm estimated that the average consumer had up to five loyalty cards.

During the pandemic, some airlines’ loyalty programs were worth more than the airlines themselves because they are so popular, notes Benjamin Lipsey, program director Flying Blue of Air France and KLM, which was also at the conference.

[Le] loyalty program exists to incentivize irrational behaviorillustrates Benjamin Lipsey.

Certain risks

Jean-Maximilien Voisine, founding president of the Milesopedia website, which offers advice on loyalty programs, emphasizes that you still have to be careful when trying to benefit from programs.

It is not recommended to take out multiple credit cards and spend more than this [qu’on a] the habit of spendinghe explains.

The president of the group Air Passenger Rights, Gábor Lukács, notes for his part that airlines can devalue the reward points in their program at any time. This does it hesitate to use them, he said.

Loyalty programs also allow companies to collect a lot of data on consumer behavior, notes Professor Frédéric Dimanche, of the school of tourism at Toronto Metropolitan University.

The use of these cards therefore involves cybersecurity risks.

Advice and myths

To avoid problems when using loyalty program cards, Jean-Maximilien Voisine and Ricky Zhang advise travelers to determine an objective before deciding which programs they will sign up for.

Sometimes, Ricky Zhang observes, travelers have not determined how they will use their points correctly. Determine where you want to go and then which points will get you therehe said.

With its customers, Milesopedia tries to understand what type of trip they want to experience before recommending a credit card. It’s really about discerning which reward programs fit bestsummarizes Mr. Voisine.

The president also maintains that having more credit cards in his wallet is not going to damage credit rating. If it’s done the right wayusing multiple cards will not impact the odds, says Ricky Zhang.

The programs represent a good advantagesays Gábor Lukács, but they cannot motivate your decisions.

The Government of Canada recommends that Canadians be aware of the monthly or annual fees associated with the card and pay the entire balance each month. The increased interest fees associated with a credit card may outweigh the benefits of a rewards programdeclares Ottawa online.