Tag Archives: reward points

Aeroplan Sale & Cell Phone Sales

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A new update on Aeroplan for the five million of us Canadians who are in the program. It turns out that your points won’t likely depreciate in value, and you won’t need to have them all cashed out next year.

The re-purchase of Aeroplan was finalized yesterday. $450 million price and assuming the ($1.9 billion) points liability the (outstanding points IF they’re all claimed…and less than 70% will be, according to Consumer Report studies). But Air Canada received $622 million from TD and another $308 million for future points. CIBC also has a card that gives you Aeroplan miles, so they kicked in $200 million and another $92 million for future points. Right now, they’re still negotiating with Amex to continue with Aeroplan.

So Air Canada paid $450 million and received over $1.2 billion. As of the purchase date, they got the whole company AND made $772 yesterday. There’ll now be a lot of competition with PC Optimum and  Esso Extra points for your business. Those two are almost immediate gratification points. A month after I signed up for Esso Extra I had a free carwash already. Aeroplan miles are more dream rewards for the long term in hoping there’ll be enough points someday way down the road for a trip to Europe.

Right after last Wednesday’s segment, the Dow dropped 660 points and this time it wasn’t President Trump’s fault, but ours. It was started by Apple announcing that iPhone sales were way down. Yesterday, Samsung announced the same thing with a 22% drop in sales.

In the U.S., as we discussed last year, there are no more two or three-year locked-in plans with a so-called free phone. You need to pay for the phone and then get a month-to-month plan. It’s increased customer satisfaction with carriers a ton and reduces your cell bill by a lot. No more being locked in for two or three years and having the almost spit on you when it comes to customer service. However, if you need to buy your phone and can’t pretend it’s ‘free’ any longer, you’ll shop around more ,and will keep your old phone an extra year or two. That’s why Apple and Samsung stock has been way down, due to less sales volume. Apple was a trillion dollar company last fall – now they’re down 40% in stock values.

It’s also why Apple started discounting the price of their phones last month! If you can’t pretend it’s ‘free,’ a thousand dollar phone is quite the shock. You can also now get an Android for under $300 and apparently the Nokia 7-1 is really inexpensive and a great phone! That trend will continue with better phones at a much lower price, and the no-contract plans will come to Canada sometime soon – so don’t be stuck in a new two or three year contract. And avoid the big marketing starting soon on 5 G phones. It’s a much faster network – way faster than your home internet. But it’ll be three years before you’ll actually have the network to use it.

Update from first January segment to try some simply your life and get rid of 100 things:

I tried the Japanese method of decluttering where you hold something in your hands and if it doesn’t bring you joy, you throw it away. So far, I’ve thrown out all vegetables, my Amex bill, the scale and a mirror!

George Boelcke – Money Tools & Rules book – yourmoneybook.com

The World of Reward Points Is Changing

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The average Canadian has five reward programs of one kind or another. It might be a 10th free haircut, frequent flyer miles, 10% off if you spend over a certain amount, or rewards on your credit card.

Whatever you’ve figured out about them will be all different in the next few years. In short, the programs will be converting from volume to profitability and the opposite for credit card rewards. Right now, you’re getting rewards on your visits or spending totals. Down the road it’ll be whether you buy something profitable. No more points (or very few) to buy something at a discount, but now big rewards when you buy something way overpriced or at full retail price.

In the airline business, Air Canada has done three quiet changes to their reward programs already. Cheap seat-sale tickets now get you 25% of the miles versus full price so-called Flex tickets. Delta Airlines is already the process of fully converting their frequent flyer program. If you collect miles you need to know this. It will become the norm with every other airline. You’ll no longer earn miles based on distance flown, but on the amount you spent. It’s turning frequent flyer programs upside down. So, a last minute ticket to Vancouver at a big price will get you more miles than a discount flight to Europe.

The programs will be based on your profitability with the airline. If you make them a ton of profit – you’ll get a ton of miles. The biggest losers will be those of us who are price sensitive and bargain shop for flights. In the next few months I’m cashing out all my miles for gift cards or cash – better safe than sorry. When this comes to other airlines, you’ll be way better off getting a points reward card that lets you accumulate points for gas and other purchases – you’ll end up getting a lot more rewards than from an airline!

In the credit card world, the change will be to quantity of transactions. American Express has now introduced a new credit card that will increase your reward points by 20% once you reach 20 transactions in a month. For Amex that makes sense because their average client spends four times as much per transaction, and has a much higher average income. It’s just maximizing their transaction fees.

There was a recent study that found over a third of all reward programs are never claimed. In the airline world, according to Consumer Report, over 75% of miles are never claimed. Stop chasing and start cashing out. You won’t be a prisoner to one company or another and will become a free agent that can get the best deal from any company. I’ve started cashing out my Aeroplan miles by getting $2,000 in Esso gift cards. Check what you can redeem for the least amount of points or miles. With Aeroplan, chasing a free ticket can be a fools game. Gift cards tend to be a good deal on redemptions. Amex gift cards cost 7500 points for a $50 card whereas the Esso gift cards cost me 6500 points each.

The (Last) Half Hour

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For the past two weeks, we talked about a number of financial steps that can be done inside of half an hour that will have a significant impact on your financial life.

Do a budget just once
Set up a separate savings account
See your payroll department: Fill out the payroll form to have some money deducted right off your cheque
Apply for a charge card that has no monthly payments and makes you pay the balance in full each month
Set up a TFSA (Tax Free Savings Account)
Get your kids or grandkids on track with one-third of their money into savings, one-third to giving, and one-third for spending.

Here are the final three steps. We’ve saved the best, or most important, for last:

-Get your free credit report: Once a year you’re entitled to see your credit report. It’s the snapshot of what all lenders report about you. Go to Equifax.ca for the form. It’s free by mail with some ID, or spend the few bucks and get it online. You have to know what’s in your credit file. About one-third of credit files have errors big enough to prevent you from getting preferred interest rates or getting approved at all. You can’t change what you don’t know.

-Make a financial date night with your partner: In relationships, most people do not want to talk about money, debts, or budgeting. Small wonder money and money arguments are the top reasons for divorce. Take half an hour, longer if you can, and just talk about the state of your finances, bills, budget, and what your goals and dreams are. It’s your partner in more than title. It isn’t HER money or HIS money – it’s our money.

If only one of you handles all that, you’re in trouble. The partner in control isn’t your Mommy or Daddy, and the other partner often starts to rebel by dialing out, making an argument, getting entrenched about THEIR money, or lashing out through stupid spending or hiding debts. You need to do this together.

-Cash out your points: Take half an hour and look at the various points or rewards you’re chasing. Unless you’re honestly on track for something big, cash them out. Many expire and even more never get used. Don’t do it – get them redeemed. Rough rule of thumb is the best bang for your buck – or points – is to redeem them for gasoline gift cards. That way they turn to real cash, and you’re guaranteed to use them up. Plan B is to buy that toaster with points, instead of going to a retailer and buying it for half the money…

Today you haven’t reached your financial dreams or goals yet. But you’re one day close than you were yesterday. That’s assuming you have dreams or goals. After all, you can’t reach what you don’t work towards.

Reward & Frequent Flyer Points: Think of Them as Bananas

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The deal with any reward program was always that you spend literally tens of thousands of dollars on airline tickets, or charges on your credit card. In return, you would get some free flights, or other kind of rewards, way down the road when you finally accumulated enough points.

You kept your part of the deal. You charged away, and kept flying and staying loyal to a specific airline. But right now, you’re being played, as the airlines and many other reward programs are not keeping their part of the bargain. According to the Wall Street Journal, overall reward perks dropped by 29% last year and an IBM Global survey reports that less than 48% of us are satisfied with our airline reward program.

Should you go in arrears on your credit card, cancel it or the company goes under, your reward points will be gone. To assure you receive at least some of the benefits of what you signed up for, forget collecting points for the super expensive and cool reward. Take your points and redeem them. At least you will get something, which is a whole lot more than nothing. Read the fine print for changes, redemption fees, and watch for increased points thresholds with fewer rewards.

In the airline industry, the shrinkage of points and the growth of restrictions are even more noticeable. Start to take the convenient schedule, the direct flight and cheapest ticket. Never mind any loyalty to a particular airline that will most assuredly change the goalposts on you, way before you ever get close to a free flight.

The sharp drop in frequent flyer point values has also started to erode loyalty from customers – and rightly so. The percentage of people who are loyal to an airline is down to 25%, according to Forrester Research. And airlines have done it to themselves. The programs used to be about 2 cents per mile in these programs. Now it’s down to barely 1 cent, that’s a 50% drop in what you’re getting, and in what you’re holding in points values!

At the same time, there can now be fees to redeem, to call them, to book a flight, to check a suitcase, massive last minute surcharges in points, and the likes, which drastically erode the value of these so-called “free” points even more.

The other big killer is that airlines make a pile of money selling their points to car rental companies, flower and hardware stores and, well – anyone that wants to pay cash up front. Last year, United Airlines made over $800 million just by selling points. At American Airlines, it was more than a billion dollars! Those are cash for an airline but it’s a staggering amounts of points dumped into the world, and now there are literally billions of points chasing the same few seats. It’s supply and demand.

Right now, it’s heads they win, tails you lose. Do not let your points get eaten up, wiped out, or shrink away. Make it a point to redeem what you can and think of them more like bananas instead of an asset! Something sort of free today is better than nothing down the road.