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Credit Card Rewards Redemptions Are Surging During COVID-19

Sept. 2, 2020
4 mins
Hands are seen holding a credit card and typing numbers into a laptop computer

The number of Canadians redeeming credit card points for everyday purchases is surging during the pandemic, according to a study by CIBC. Typically, Canadians would use their credit card points to travel this time of year. However, COVID-19 continues to restrict border crossings and flights, which is causing an unusual trend in credit card redemptions.

CIBC is one of the five largest banks in Canada and is a global institution that has over 10 million personal, business, institutional and public sector clients. The bank’s recent study reviews the redemption of CIBC Aventura rewards points between March and June 2020. The study found an immense increase in the redemption of points for merchandise and gift cards.

“While travel redemption is down significantly, clients are finding value in the flexibility of using their Aventura points where it matters most to them in this environment,” Jennifer Davidson, the Vice President of Cards Products at CIBC, said in a press release.

Additionally, CIBC suggests that credit card rewards redemptions for electronics and house and home improvement categories are up by 72%. Gift card redemptions in the grocery and retail categories are up by 8%.

Many people may not realize the full value of their points and how they can use them. “It’s important to think of your points as any other asset, which can be used to pay for everyday purchases or pay down a loan or credit balance,” Davidson explains.

Canadians are taking advantage of their points in other ways since travel redemptions are not a viable option. Let’s take a more in-depth look at credit card rewards earning and redemption options below.

Earning credit card rewards and points

Before you can use your points to make a redemption, you might need to build a rewards balance. Your credit card provider outlines the parameters of how you can earn points. For example, some credit cards have specific earning categories, like gas or groceries, whereas others may encourage spending through a loyalty program.

Regardless of your credit card provider and type of rewards card, it’s worth your while to know the earning rates and conditions inside and out. Once you know the finer details, it’ll be easy to find opportunities to earn additional rewards. Also, there are many tactics and strategies you can incorporate into your daily financial habits to maximize your credit card rewards, like adding an authorized user to your account.

Finally, signing up for email communications from your credit card provider can help you stay up to date with rewards promotions. There are often periodic opportunities to earn more points on certain items. At the moment, CIBC is currently offering double the points on purchases made at local restaurants through their Revival Rewards program. Check out your credit card provider’s website to determine if there are any special promotions.

Other redemption options

If you were planning on using your credit card rewards for travel this summer like many other Canadians, you might be looking for different opportunities to treat yourself. Thankfully, many credit card rewards programs offer more than one way to redeem points.

Options might include:

  • Purchasing merchandise or gift cards using the credit card provider’s catalogue
  • Using points to pay down credit balances or pay off a recent transaction
  • Donate to a charity
  • Buy other local experiences

Every credit card provider is different. Reach out to your provider to determine what other redemption options are available aside from travel. From there, you can choose the option that best suits your lifestyle and financial situation.

What about the value per point?

Unfortunately, not all credit card redemptions are made equal. More often than not, the best way to get the most bang for your buck is to redeem your points for travel purchases. Credit card rewards usually have the most value per point for travel redemptions. Keep in mind that this is purely from a monetary perspective.

The pandemic has put economic stress on many Canadians and using points to pay for everyday purchases may take away some of the financial pressure. Even though you may not be optimizing the monetary value of your rewards with non-travel redemptions, that doesn’t mean you shouldn’t do it. Your rewards points may be able to help pay the bills, pay down your balance, or finance a hefty purchase.

Even if you aren’t using a travel credit card, now may be the perfect time to cash in and redeem your cash back or grocery rewards. According to RATESDOTCA, over half (53%) of Canadians saw an increase in grocery spending since the start of the pandemic.

How should I use my points?

There isn’t a clear-cut answer on how you should use your points. The redemption decisions you make are dependent on your financial position and goals. If using your points will help you manage your debt and improve your economic position, that’s a pretty good reason to make a redemption!

Many Canadians feel the impact of the travel restrictions caused by COVID-19. The uncertainty of the situation means that Canadians may not be able to travel freely for some time yet. For this reason, you may want to consider investing your credit card rewards elsewhere.

To determine the best way to redeem your rewards, take a moment to consider your financial position and goals. Perhaps you want to eliminate old debt, make a renovation investment in your home, or treat yourself to something new. With the shifting economy, now is a great time to get creative with your hard-earned credit card rewards!

Veronica Ott

Veronica Ott specializes in personal finance, accounting and business-related writing. Veronica obtained her undergraduate degree in accounting from Western University. She completed her CPA designation shortly after, which was where she discovered her passion for writing in the world of business. Veronica has been working with various blogs and websites over the past three years. In addition to writing, Veronica works as an accountant. In both of her careers, Veronica’s goal is to help others become financially literate and achieve their monetary goals.

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