In This Issue:

⭐ Fixed or Variable Value Points? Let’s Break It Down.

🛫 Amex and Flying Blue. A Match Made In Heaven.

🏠 Crunching Mortgages in Canada During A Housing Crisis.

⭐ Not All Points Are Made Equal

🎁 The Uneven Playing Field of Points

Have you ever wondered how some savvy travelers explore exotic destinations without breaking the bank? Well, the secret might be tucked away in their wallets, and it's not about the cash they carry. Today, we're delving into the realm of Canadian credit card points and unveiling how they can be your ticket to unforgettable journeys.

Let's break down credit card points into two categories: "Fixed Value" and "Variable Value". But don't worry, this won't be an economics lecture – instead, think of it as your guide to achieving affordable luxury or substantial savings on your family holiday during the festive season. Starting with the dependable "Fixed Value" points, these gems come with a predetermined value. For instance, if 1 point equals 1 cent, you spend, earn, and travel with simplicity. No complications, no hassle. These points are ideal for those seeking a straightforward way to trim travel expenses.

Here are some key players in the Fixed Value realm:

• Air Miles: Redeemed at 10.5 cents per point.

• BMO Rewards: Redeemed at 0.67 cents per point for eligible travel.

• CIBC Aventura: Redeemed at 1.25 cents per point (through a bonus redemption until March 21, 2024).

• MBNA Rewards: Redeemed at 1 cent per point.

• National Bank A La Carte Rewards: Redeemed at 1 cents per point.

• Scene+ Rewards: Redeemed at 0.5 cents per point.

• TD Rewards: All redeemed at 1 cent per point.

• WestJet Dollars: Redeemed at 1 dollar per point.

Now, onto the adventure-seekers and aficionados of "Variable Value" points. This category is for those willing to dive deep into the world of points and emerge with a business-class ticket to Paris for the price of an economy fare to a neighboring province. It's exciting, but there's a catch – these points demand effort, research, and a pinch of good timing to unleash their potential.

🛫 Here's a glimpse of the points you want for premium experiences:

• Aeroplan: Book flights on Air Canada, Star Alliance Partner Airlines, and more!

• American Express (Canada) Membership Rewards: Transfer 1:1 to Aeroplan or other airline programs.

• RBC Avion: Transfer 1:1 (sometimes with bonuses) to British Airways Avios or Cathay Pacific Asia Miles.

While people often assign a general value to variable points (1 to 2 cents per point), the real value can be elusive.

For example, redeeming 60,000 Aeroplan points for a multi-flight business class journey valued at $4,000 turns into a value of 6.67 cents per point. This showcases that variable points can open doors to flights that cash or fixed-value points can't match.

To sum it up, fixed value points provide ease and numerous options, while variable points hold the promise of extraordinary travel savings, albeit with a learning curve. Whether you prefer the straightforward path or are ready for an adventurous journey, the world of credit card points holds amazing travels for everyone!

🛩️ Unlocking the Full Potential of Your Amex Membership Rewards with Flying Blue

Unlocking the full potential of your Amex Membership Rewards can be a challenge with so many options available. Today, we're exploring a hidden gem: Flying Blue, Air France, and KLM's loyalty program.

At first glance, the transfer ratio from Amex Membership Rewards to Flying Blue might raise questions. It's 1,000 Membership Rewards points for 750 Flying Blue points, compared to Aeroplan's 1:1 ratio. But here's the exciting twist – Flying Blue offers monthly "Promo Rewards" with 25-50% off on selected flights, often making it a better deal than Aeroplan.

Ottawa residents, you're in luck! Flying Blue currently offers a 25% discount on direct flights from Ottawa to Paris on Air France, just 15,000 Flying Blue points, or 20,000 Membership Rewards points. In comparison, Aeroplan demands 35,000 points for the same journey. Plus, no more layovers – it's a direct flight!

While this deal is fantastic for Ottawa, Flying Blue's standard rates for Toronto or Montreal to Paris or Amsterdam are equally enticing, just 15,000 points one way. And the best part? You can extend your European adventure without extra points.

However, it's essential to note that Flying Blue has higher fees for points bookings, around $150 for economy and $300 for business class. But if you find a great points deal, it can offset these costs.

Remember to weigh the pros and cons to fit your travel goals and budget. Until our next adventure, keep exploring and maximizing those miles and points!

Crunching Mortgages in Canada: Homeowners' Long-Lasting Odyssey

Having rented in Canada for the last 10 years, I think it would be hard to find anyone in similar shoes that loves renting. Buying a place was always something I aspired to but it was never within reach of feasibility and before I became a struggling founder 😆, I had some pretty good jobs in investment banking and tech.

This story is a familiar tale for many millennials & Gen Z across major cities in Canada and it’s only gotten harder. I have a friend right now, who saved over $200,000 for a down payment and makes over $100K/yr, yet the highest price of a place she would qualify for now is $600,000. She lives in Vancouver, so check out what $600,000 gets you there…

So this made me wonder yet again (as I have over the last few years)...is it even worth it to get into the market to pay an exorbitant amount not just for the place but in interest to the bank as well? My interest was further piqued by these stats from the last week: Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD), have recently unveiled some data showing 43%+ of their mortgages have a longer than 25 years amortization rate. Similarly, over 25% of their loan book have mortgage terms spanning longer than 35 years.

35 years to pay off a house 🤯…I know what you are thinking, who would go for that? But given the increasing interest rates, many homeowners who were either on variable rate or came up for renewal were recently left without choices. Let’s dig into some numbers here to illustrate!

Assume you bought a condo in Toronto in 2022 for $700,000. You are finally happy in your one-bedroom startup home! Being a responsible adult, you have saved up the coveted 20% for your down payment to avoid extra insurance fees and so you took on a $560,000 mortgage. At the time the Bank of Canada rate was hovering at about 1.5% so your mortgage payments were calculated based on a 2.5% interest rate. You are paying about $2,500/monthly for your mortgage and your cost of borrowing is about ~$200,000 to borrow $560,000 over 25 years. Ultimately you are paying close to what it would be for an equivalent rent property and you are paying away some principle, so life is pretty good!

Over the last year, the Bank of Canada has hiked up rates on a never-ending spiral 📈 and your monthly interest rate for a mortgage is now 6.5%. Your payment has suddenly shot up to $3,751/monthly (or 50% YoY 😣) and your cost of borrowing is up to $563,000 to borrow $560,000 over 25 years. Let’s say you are making $125,000 (pretty good pay), now over 50% of your after-tax pay is just your mortgage. This doesn’t include any other condo-related expenses like strata, electricity, wifi, insurance, and none of your other fixed expenses. You are stretched too thin.

So you go to your bank and get the amortization of your mortgage extended to 30 years. Your payment goes down to $3,500/monthly (still a lot but you bought yourself $250/mo) but your interest cost over 30 years goes up to over $700,000!

$700K to borrow $560K and pay it off over 30 years…I don’t know about you but homeownership just became a whole less exciting 😅 And don’t get me wrong, housing can be an incredible asset and still would make sense for a lot of people, but looking at these numbers I just can’t help but wonder. Is it really worth it?