Readers asked about the best cards for travel benefits, and how best to use reward points.Getty Images
On Oct. 16, journalists Chen Wang, Yang Sun and Salmaan Farooqui answered reader questions about The Globe’s first-ever Big Guide to Credit Cards. The guide compiled credit cards according to the value of the rewards they provide, and organized them in categories based on cash-back rewards, travel perks, and ease of balance transfer.
Here are some highlights from the Q+A:
Creating the guide
Why did The Globe decide to put the guide together? How easy is it to find comparable information on available credit cards?
Chen Wang: One year ago, our personal finance editor noticed that no one in Canada was producing an unbiased, unsponsored guide to credit cards, so The Globe set out to create this resource. While it was easy to find general information, such as cash back rules and travel benefits, it was challenging to gather everything in one place, let alone compare them. Comparing details like ever-changing promotions and insurance coverage — which often comes with many restrictions — was even harder. We want to emphasize that every card is different, and your selection should be based on your preferences and lifestyle. We hope our guide can serve as a starting point to help you find the card that’s right for you.
Why did you decide to focus on the categories you did? Is there anything you’d like to add or include in a future version?
Wang: Cash back and travel cards are the most common types, so it’s a no-brainer for us to include them. Initially, we featured low-rate cards that combined both low-rate and balance transfer options. However, we decided to separate them and focus solely on balance transfer cards — credit cards that offer ongoing promotional rates for transferred balances — to help those looking to manage their debt and pay it off quickly. In future iterations, we may add more card categories and features for further customization.
Yang Sun: For example, users will be able to input their own bill amounts, and the product will generate customized rankings to recommend the best cards tailored to each individual’s spending habits.
Our reporters say if you frequently travel to the U.S. or make purchases there, U.S. dollar credit cards are worth considering.Illustration by Joanne Joo
Thinking about travel
What is the best card to use overseas (without the added fees)?
Salmaan Farooqui: These days some favourite cards for travel are actually the prepaid and debit style cards on offer from Wealthsimple and Wise. They’re very competitive on fees - for example the Wealthsimple prepaid card doesn’t charge fees on foreign transactions and calculates your purchases at the actual exchange rate, rather than inflated ones that some banks charge.
Are there any credit cards that help with getting better currency exchange rates when travelling?
Sun: Several of the credit cards we ranked for this project have no foreign transaction fees. For example, the Scotiabank Gold American Express Card, Scotiabank Platinum American Express Card, and Scotiabank Passport Visa Infinite Card don’t charge foreign transaction fees on purchases made in foreign currencies, whether online or abroad.
If you frequently travel to the U.S. or make purchases there, U.S. dollar credit cards are also worth considering. For example, the CIBC U.S. Dollar Aventura Gold Visa Card has no currency conversion fees when paying in USD.
If I travel about once a month and wish I could use airport lounges, do travel cards with $600-$800 annual fees make sense?
Farooqui: If you travel once a month, then the experts I spoke to say a premium travel card is likely worth it, especially if you value lounge access, priority boarding and free luggage. If you’re using all those benefits every month, the value should quickly add up beyond the annual fee, and that’s before you consider the points earnings and rebates on restaurants and travel that these cards give each year.
Making the most out of rewards
I have banked rewards points to wait for the right opportunity, but I found the points were significantly devalued by the airline when I went to use them. Are credit cards with travel point benefits too risky now to use because of diminished benefits?
Farooqui: Devaluation is a tricky thing to predict, and it’s one of the reasons a lot of rewards experts say it’s best to use your points in a year or two, rather than holding onto them for years in an attempt to redeem them for a bigger purchase.
The financial situation of the loyalty program you’re with also can affect devaluation. We saw that with Air Miles a few years ago - they devalued their points multiple times as they struggled to retain retail partners. Some of the experts I talk to say that Aeroplan and Scene+ seem to have some of the most momentum and strength in the rewards business these days.
Which points programs have the best value in points for day-to-day purchases? Any strategies for making the most of these programs? With grocery prices so high, I’ve been using Scene points to redeem at Safeway & Home Hardware and PC Optimum to redeem at No Frills.
Farooqui: Your best earnings rates will often come from cards that are associated with the businesses you shop at. If Safeway, Home Hardware and No Frills are where you usually shop, you’re probably earning great rates already.
What credit cards should I be using to maximize any potential benefits from the high amount that I spend on my card, and from holding a higher balance for a longer time?
Farooqui: The specific best card is going to depend on where you make these purchases (certain cards offer better points rates on recurring bills, or at certain stores).
What I can say is that, at that spending level, you should be taking advantage of the higher points earning rates for cards with an annual fee. For example, you’d earn thousands more points with an Aeroplan Visa Infinite card (with a fee of around $120) than with some of the basic no-fee Aeroplan cards. The points earnings alone would offset your annual fee, not to mention some of the benefits you get with the fee cards (such as a free checked bag).
Managing your cards
How many credit cards do I really need?
Farooqui: It’s a very personal question and it depends on your comfort level with credit and how keen you are to maximize your points and benefits.
Personally, I have two cards. One is for travel benefits with a fee of around $120, which I make pretty much all my purchases on. It gets me travel insurance, a free checked bag and great points earnings that I use often for flights.
My second card is a no-fee card that happens to have roadside assistance included for free, something I think is super valuable.
That said, I know people who chose to only have one card and others who have way more than me in order to get the maximum points they can from certain retailers. As long as you’re using your credit responsibly and not paying interest on your cards, the right answer is up to you.
