Canada is in for some dramatic changes to its credit card landscape in the next year. Aeroplan, long associated with Canada’s largest and most successful credit card portfolio, is gearing up for a new world order as approximately 50% of its existing customers residing with CIBC will be acquired by TD. Aeroplan was already challenged by an increasingly competitive travel rewards landscape offering more flexibility and richer rewards. Recent surveys point to Canadians being more active and receptive than ever to explore alternatives.
For years, Aeroplan cardholders have complained about the inflexibility of the program,and now Canadians are telling issuers they’re ready for a switch. In one survey conducted on behalf of Capital One, 75% of those aware of the changes taking place, will take a closer look at their options and 17% of those with a travel credit card are planning to switch issuers. This represents a significant opportunity for Canadian issuers to make a dent into the previously formidable Aeroplan credit card portfolio.
So why are Canadians so willing to take a look at alternatives to Aeroplan? “68% of travel credit card users are frustrated with difficulties redeeming points, hidden fees, and blackout dates” says Andrew Clarke, spokesperson for Capital One Canada. These have all been long standing issues with the Aeroplan program that are increasingly being solved by competitive offers. RBC was the first to offer an alternative with its motto of “any airline, any flight, any time.” Capital One does the same but has one-upped the offer by allowing cardholders to pay for taxes and fees with their points as well with their Aspire World Masrercard. Aeroplan has long suffered from the extra fees, which in some cases match the cost of the ticket itself.
In a brilliant and fun way to bring attention to the issues and alternatives, Capital One has launched a campaign called #PointsPain, with a website at www.endpointspain.ca , where Canadians can share their issues with their rewards program with other Canadians and find solutions as well. Other issuers have similarly addressed the opportunity. BMO is offering its highest sign-up bonus points ever, RBC has upped its sign-up bonus selectively as well.
Aeroplan,CIBC and TD need to provide a seamless portfolio conversion experience to prevent significant attrition. However, regardless of what Aeroplan, CIBC and TD do, they’re going to have to pay to retain cardholders seem to be all too happy to explore alternatives. Lastly, as we’ve always said, cardholders will continue to be the net beneficiaries as issuers actively compete for their attention with welcome bonus offers, annual fee waivers and introductory rates.
For those considering alternatives, weight your offers carefully. While sign-up bonuses and annual fee waivers can be impressive, don’t forget to look at the long-term value of the points offering when comparing programs. That said, if you’ve been eyeing a particular card for a while, and you’re offered an atypical incentive,this is the time to pounce. Others might want to compare Canadian credit cards to see how much they can earn from each rewards credit card based on an individuals unique credit card spending profile.