A person walks into an HSBC Bank on Yonge Street in Toronto, Nov. 29, 2022.Duane Cole/The Globe and Mail
At the end of the month, HSBC Canada credit cardholders will receive Royal Bank of Canada RY-T cards as part of the biggest domestic banking takeover on record. And some consumers might think they’ll end up with credit cards that are a downgrade.
But that’s not to say you should cancel your cards immediately. RBC Avion Rewards points are still more flexible and potentially more rewarding than what HSBC offered. It is, however, a good time to shop around.
HSBC cardholders have already been informed about which RBC credit card they’ll be getting. That decision was based on what HSBC credit card you currently hold. Most former HSBC credit cardholders will end up with the RBC Avion Visa Infinite Card. While it’s great that RBC is adding no foreign transaction fees as a standard benefit to the card and honouring the travel credit HSBC cardholders received for one year as part of the transition, the earning rate is just 1.25 Avion points per dollar spent on travel purchases, and one point on everything else.
If your goal is to earn a lot of points on all your purchases, you might be better off with the American Express Cobalt Card. You’ll earn five points per dollar spent on eats and drinks including grocery stores, three points on streaming services, two points on travel and transit and one point on all other purchases. American Express Membership Rewards points are highly valuable since you can redeem 1,000 points for a $10 statement credit.
Another thing to consider is that the new RBC cards use the Visa network. That means if you mainly used your HSBC card where Mastercard is accepted, such as Costco, you’ll likely want to get a new card regardless.
Rogers, Fido or Shaw customers should look at the Rogers Mastercard as an alternative since they can earn up to 3 per cent in cash back rewards. If you don’t use those service providers, a PC Financial Mastercard or RBC WestJet card are good solutions.
Anyone looking for a card with premium travel benefits might be best served with the American Express Platinum Card, which gives you unlimited airport lounge access, an annual $200 travel credit, hotel status upgrades, a $100 NEXUS credit, travel insurance and a $200 annual dining credit.
Even though there are better credit cards available than what RBC offers, there’s no denying that Avion Rewards – the points you earn with some RBC cards – are highly appealing, so it could be worth sticking around.
The standard redemption rate is 1,000 Avion points for $10 in travel. You also have access to the RBC Air Travel Redemption Schedule, where you could more than double the value of your points. Alternatively, you can transfer your points to RBC airline partners, such as British Airways, Cathay Pacific, American Airlines and WestJet.
Another redemption worth considering with RBC is 12,000 points for $100 in financial rewards – such as paying down your mortgage or contributing to your registered retirement savings plan. Even though travel redemptions give you better value immediately, financial rewards could be worth more in the long term when you factor in compound interest. However, for this to be beneficial, you would need your mortgage or investments to be with RBC.
It’s worth noting that HSBC users being transitioned to the RBC ION Visa will have their points switched to Avion points at the premium level – Avion Infinite cardholders earn points at the elite level. You won’t lose any value on the points transferred over, but premium tier points are less flexible since they require more points for travel redemptions and have fewer airline transfer partners than the elite tier.
Since the points you’ll earn with the RBC ION Visa also earn you premium tier points, you may want to consider switching to a more lucrative card. That said, you still have access to financial rewards at the premium level, so that’s a good reason to stay.
Despite all of these changes, there’s no reason to rush. All of your cards and points will automatically be transitioned over to RBC with no hit to your credit score by the end of the month.
When you’re ready to review your credit-card needs, you shouldn’t look at just the earning rate and benefits. It’s just as important to consider the points you’ll be earning and what you can redeem them for.
Some people may feel that the RBC credit cards they’re getting aren’t as good as what they currently have with HSBC, but most people will agree that RBC Avion Rewards is a better rewards program.
Barry Choi is a personal finance and travel expert at moneywehave.com. He was previously affiliated with RBC, American Express, and Rogers but currently has no relationship with any of the brands.
