How to Choose the Right Travel Credit Card in Canada: A Guide for Savvy Travellers

Choosing the right travel credit card in Canada can enhance your travel experiences. Not only can you save money, but you’ll also be able to take advantage of some great benefits. 

With various options available, understanding your travel habits and preferences is crucial in selecting a card that aligns with your goals. The key is to look for a card that offers generous rewards, flexibility in redemption options, and essential travel benefits like insurance and no foreign transaction fees.

You’ll quickly realize that no single card meets all your goals, so you may need to apply for multiple ones. Look for ones that match your spending patterns or offer additional perks like lounge access, priority boarding, and travel insurance.

While it may seem daunting, choosing the right travel credit card is easy if you follow these steps.

Set your travel goals

Identifying your travel goals is crucial when selecting a travel credit card. Consider where you plan to travel, which loyalty programs align with your goals, and how many points you need to make your dream trips a reality.

Determine where you want to go

Start by listing the destinations you wish to travel to. Generally, you want to come up with a few different destinations. Once you know where you want to go, make a priorities list. With your preferences set, it will give you some insights to help you choose a travel card that offers the best rewards and perks for your destinations.

Figure out what loyalty points will help you achieve your travel goals

Research the loyalty programs associated with your travel destinations. For example, if you live in eastern Canada and wish to go to Europe, the easiest way for most people to cross the Atlantic is with Air Canada. Therefore, you should focus on Aeroplan.

That said, it’s not always that simple. If you live in Toronto and want to visit London, you might naturally assume British Airways’ Avios is the best option. While this is sound logic, BA doesn’t make every seat available, so you could collect a ton of points with nowhere to go. 

Besides flights, you might have a specific property in mind. For example, the Ritz Carlton in the Maldives. In this scenario, you’ll need to start earning Marriott Bonvoy points.

Before applying for cards, research the loyalty programs to ensure they align with your travel goals. You want cards that provide rewards that maximize value.

Estimate how many points you’ll need

Calculating the points required for your desired trips is essential. Begin by checking the average point cost for flights or hotels in their respective loyalty programs. This information is available on the loyalty program’s website or app. You just need to create an account first.

For example, a return flight to Europe from eastern Canada costs roughly 80,000 Aeroplan points in economy class. If you want to fly business, you could easily spend 300,000 points. There’s no denying that business is a better experience, but you must earn 3.5 times more points for that journey. You need to decide what’s best for you.

Estimate the points based on when you plan to travel. If you’re travelling during peak times, you shouldn’t check prices during the shoulder season. You can develop a credit card strategy once you know how many points you’ll need.

Apply for Credit Cards

Once you know what type of rewards and the number of points you need to collect, choosing a travel credit card in Canada becomes much easier. You’ll mainly consider welcome offers, high earn rates, and transfer partnerships. Your focus should also extend beyond collecting points; consider additional benefits such as travel insurance and lounge access.

Choose cards based on the points you need

Once you know what type of points you’ll need, the natural thing is to apply for a credit card that earns you those points. For example, the TD Aeroplan Visa Infinite Card is a great card to earn Aeroplan points on all your daily purchases.

Alternatively, you could consider an American Express Card that earns you Membership Rewards points since you can transfer your Membership Rewards points to Aeroplan at a 1 to 1 ratio or to Marriott Bonvoy at a 1 to 1.2 ratio.

This can be handy because a card such as the American Express Gold Rewards Card has a good earning rate, four free airport lounge passes and great travel insurance. 

At the start of your points-accumulating journey, getting as many points as possible quickly will be more important than any airline benefit. That means you may need to apply for multiple cards.

American Express Gold Rewards Card

  • $250 annual fee
  • Earn 5,000 Membership Rewards points when spending $1,000 each month for 12 months (60,000 points total)
  • 10,000 additional points when using a referral link and spending $4,000 in the first 3 months
  • Earn 2 Membership Rewards points per $1 spent on grocery, gas, pharmacy, and travel purchases
  • Earn 1 Membership Rewards point per $1 spent on all other purchases
  • $100 Annual travel credit
  • Priority Pass Membership + 4 annual Plaza Premium passes
  • MESSAGE ME FOR A REFERRAL LINK

Analyze welcome offers

Look for cards offering attractive welcome bonuses that align with your spending ability. These bonuses might include additional points that can be used towards future travel. For example, there might be an offer of 40,000 Aeroplan points when you spend $5,000 in the first three months. If you would naturally spend that much, you should sign up for a new card to take advantage of the welcome offer.

Sign-up bonuses can significantly boost your rewards balance. But there is one catch, the sign-up bonuses are becoming more complicated. Instead of getting a huge number of points that require you to spend $1,000 to $5,000, we’re now seeing bonuses that require monthly spending or a huge minimum spending requirement.

For example, you might get 5,000 points when spending $1,000 monthly for 12 months. Alternatively, you might need to charge $10,000 to your card in the first three months to get 100,000 points. Those are still good offers, but they require longer or more spending to earn points.

Since welcome offers always change, you should sign up immediately if you find a good one and can meet the minimum spending requirements.

Take advantage of referrals

When signing up for an American Express Card, there’s usually an elevated offer of 5,000 to 10,000 points when you use a referral link. These referral links come from existing members. If you sign up through their link, you get extra points.

The advantage here is obvious, but you can turbocharge things if you plan with a partner. For example, say you signed up for the American Express Platinum Card and received an enhanced offer of 10,000 points when you use a referral link. Once you have the card, you could refer your spouse. You could get an extra 10,000 points, and so would they, since they’re using your referral link.

Overall, you’ll receive roughly 30,000 extra points compared to signing up directly without a referral link.

Look at the earning rate

When you’re not working on a welcome bonus, you want to use a credit card with a high earning rate that gives you points in your preferred loyalty program. For example, if you spend a lot on groceries and eating out, then the American Express Cobalt Card is a good choice since it earns you 5 points per dollar spent on food and drinks. 

Remember, those points can be transferred to Aeroplan at a 1 to 1 ratio. Since one Aeroplan point is worth 1.5 to 2 cents each, you could get a return of up to 10% on dining and groceries.

American Express Cobalt Card

  • $12.99 Monthly fee ($155.88 yearly)
  • 1,250 monthly points when charging $750 each month for a year (15,000 points total)
  • Earn 5 points per $1 spent on eats and drinks
  • Earn 3 points per $1 spent on streaming services
  • Earn 1 point per $1 spent on all other purchases
  • MESSAGE ME FOR A REFERRAL LINK

Consider benefits beyond points

Don’t overlook additional benefits that complement reward earnings. Features like travel medical insurance, travel insurance, and airport lounge access can add great value. That said, many of these benefits are only relevant when you actually need to travel, so focusing on points accumulation is always the priority.

When you are ready to travel, you want to make sure you have cards that offer immediate benefits, such as free checked bags, priority boarding, and lounge access. Cards such as the TD Aeroplan Visa Infinite Privilege and American Express Aeroplan Reserve are ideal for this.

Balancing rewards, fees, and additional benefits helps select a card that offers comprehensive value.

How to Meet Minimum Spending Requirements

When you’re aiming to meet your credit card’s minimum spending requirements, strategic planning is key.

  1. Plan large purchases: Consider timing significant expenses such as travel bookings, home renovations, or insurance charges to align with your new card. These can quickly add up toward your spending target.
  2. Prepay bills: You can prepay utilities, cell phone, or cable bills. This helps you meet spending milestones faster and ensures you don’t overextend each month.
  3. Use gift cards: Purchase gift cards for stores or services you frequent. Note that you shouldn’t buy four to five $500 gift cards with American Express each month, as you’ll likely get banned. Smaller purchases of $100 to $200, combined with other purchases, are probably fine.
  4. Family or friends’ expenses: Offer to pay for family or friends’ large expenses on your card and have them reimburse you. Make it clear to them what you’re doing so they don’t feel cheated. Also, only offer this if your friends and family can pay you back immediately.

Remember, tracking progress is vital. Keep an eye on your spending through your credit card portal or app to ensure you meet the required amount within the allotted time. Even if you’re $5 under, you will not get the bonus if you miss the spending deadline.

How New Credit Applications Affect Your Credit Score

Applying for new credit in Canada can notably impact your credit score. When you submit a new credit application, lenders perform a “hard inquiry” or “hard pull” on your credit report to assess your creditworthiness. 

Each hard inquiry will lower your credit score by 10 points. Multiple inquiries in a short period, especially for different types of credit, can compound this effect. While one or two applications may not significantly damage your score, frequent applications within a short time frame can raise red flags for lenders, suggesting potential financial instability. 

The good news is that this drop in your credit score is temporary. Your credit history will improve after a few months if you always pay your bills in full and on time each month.

When to Cancel Credit Cards

Cancelling a credit card can impact your credit score, so it’s important to consider the timing and reasons. You might want to cancel a card if it’s no longer serving its purpose or if the annual fees outweigh the benefits.

Consider these factors:

  • No more use: You already received the welcome bonus and the card doesn’t have a good daily earning rate or yearly benefits
  • Credit mix: It’s worth having two types of cards (American Express and Visa) so you have a backup card if one is not accepted.
  • Annual fee: Annual fees can add up, so only keep cards where the annual benefits are more valuable than the yearly fee.
  • Credit utilization: Your credit utilization ratio will change when you cancel a card, potentially increasing if your overall available credit decreases. It won’t make a difference if you’re cancelling a card with a low limit, but it might have a significant impact if you only have two cards.

Always verify that you’ve cleared any outstanding balance before closing your account. Double-check your credit report after cancellation to ensure accuracy.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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