As promised, here’s a detailed post about what you should do to earn Air Canada elite status for 2020 and 2021 with their promo if you have the American Express Platinum Card. Should you simply transfer points or buy them?
Of course, it will depend on your own cash flow, your own existing stash of AMEX Points, and your own situation. But if you want to take advantage of the Aeroplan elite status promo, it’s arguably better to buy the Miles outright than to transfer them. You can actually save 42% this way!
So here’s another concrete example of how travel rewards can be maximized if you know the pro tricks, if you take the time to learn, and if you do the math.
It’s actually a “triple-dip”, or a promo “stacking” as they are called:
- the Platinum Card double and quadruple rewards promo
- the Aeroplan elite status shortcut promo
- the Aeroplan “Buy Miles” promo
As a reminder, the Platinum Card’s current promo doubles the value of your existing points (or quadruples the value of your newly-earned points earned from April 22 to July 20), which means they are each worth 2¢ (existing points) or 4¢ (newly-earned points) as simple statement credits. That’s an incredible return.
You can now use that to take advantage of the elite status promo. But first, this is very important: in all cases, you need to register online to enter the elite status promo.
You can earn Air Canada elite status for 2020 and 2021 by earning 50,000 Miles before May 31st. You can read everything that the status includes in that article.
But Air Canada just announced that if you act quickly, you can buy Aeroplan Miles on Thursday May 7 for as low as 1.47¢ per point. That’s an amazing price. Half of the Miles you buy will count towards the elite status promo. You can read all the promo details in that article, including who should consider it and the risks.
Now let’s look at the math specifically for Platinum Cardmembers.
Best Way To Earn Your Status
So you essentially have two options, and both can cost you absolutely nothing out-of-pocket directly (if you have a lot of AMEX Points), but they both have an opportunity cost.
The two options are:
- Option 1: transferring 50,000 existing AMEX Points to Aeroplan
- Option 2: buying 100,000 Aeroplan Miles (since half count towards the status)
You can also mix and match a bit of both based on your preference. But let’s look at each separately to better illustrate the difference.
Let’s assume you earn zero Miles in other ways, to simplify the math. Of course, you can also earn a few other Miles with Aeroplan/AMEX credit card spending or the Aeroplan shopping portal. In those cases, you won’t need to transfer or buy all of them to reach the required 50,000 Aeroplan Miles.
But option 2 is time-sensitive, as it works only on May 7 and the following days, so you have to know how many miles you’ll earn in other ways. While Option 1 can be done until the very end of May.
I’ll also use 1.47¢ per point in the math: it’s the total price with the 5% sales tax rate on the points purchases. That’s the rate that is the most common in Canada, but check at the end of this post for the tax rate Aeroplan charges in your province, and adjust the math below accordingly.
I’ll take this opportunity to go on the record and say that it’s absolutely stupid that points purchases are taxed: you’ll already pay taxes when purchasing flights with your points, so you’re paying taxes twice. There’s a reason the purchase of a gift card isn’t taxed. Anyway, at least this “Buy Miles” promo is such a good deal that you’ll still get great value.
One last assumption: for simplicity’s sake, I’ll pretend you have not earned any AMEX points at all since the Platinum promo started, and that all your points are existing points that are worth 2¢, not 4¢.
Finally, if you miss out on the first 10M miles price point, the 1.6¢ per point that is charged after they sell out is still a pretty good deal and the math still makes sense at that price (but not the 3rd price point).
It seems so much more straightforward to transfer 50,000 AMEX Points and save $1,470 right? Concepts that seem right are rarely true in the world of travel rewards, a world with so many myths, and so many facts that are contrary to conventional wisdom.
If you transfer 50,000 existing AMEX Points, it actually costs you $1,000 out-of-pocket: using the points this way “costs” you the 2¢ per point that you could have saved on current expenses by taking advantage of the Platinum promo.
In other words, you don’t pay anything directly, but those 50,000 AMEX Points could have erased $1,000 worth of spending this month or next month, so yes, you are paying $1,000 out-of-pocket for that spending. You’re paying $1,000 more by doing this compared to not doing it.
Here’s the math:
- Miles earned: 50,000
- Out-of-pocket cost: $1,000
- Cost per point: 2¢
You get Miles worth ≈$750 based on our Flytrippers valuation AND you get elite status, so it’s a decent deal nevertheless. But your cost per point can actually be lower.
Instead, you can buy the miles… and pay with your Platinum Card so you can erase the purchase by using points as a statement credit (which we never recommend when there’s no “double rewards” promo like the current one).
So if you have a lot of AMEX Points, you still have nothing to actually pay per se, but you still have an opportunity cost of course. And it’s slightly higher—but it’s overall more rewarding too.
You’ll buy 100,000 Aeroplan Miles at 1.47¢ per point, so it’ll cost $1,470. Those are newly-earned points, so the purchase will earn you 2,940 AMEX Points (2X instead of 1X with the promo). That will erase $59 of your purchase (2¢ per point), and to cover the remaining $1,411 you will use 70,550 existing AMEX Points (2¢ per point).
So your out-of-pocket cost is therefore even lower than $1,470 at only $1,411 (those 70,550 AMEX Points at 2¢ per point—the 2,940 Points you get for the purchase are not part of the opportunity cost since you wouldn’t have them by not doing this purchase). You are sacrificing 70,550 AMEX Points that you could have used to erase other expenses worth $1,411.
Here’s the math:
- Miles earned: 100,000
- Out-of-pocket cost: $1,411
- Cost per point: 1.411¢
So option 1 is 42% more expensive than this one, in terms of cost per point. That’s a pretty sizeable difference! Savings of 42%, just like that. See how easy it can be to exponentially increase your rewards when you know how to do it?
In other words, instead of exchanging 50,000 AMEX Points to 50,000 Aeroplan Miles (1 to 1 transfer ratio), I will personally probably be exchanging 70,550 AMEX Points for 100,000 Aeroplan Miles (1 to 1.42 transfer ratio). A lot better!
Spending just 41% more AMEX Points to get 100% more Aeroplan Miles. If you’re being strategic and thinking long-term (and know you can get a good value of Aeroplan Miles), this is a pretty good deal.
Now you get Miles worth ≈$1,500 based on our Flytrippers valuation by paying less than that AND you get elite status.
Of course, the downside to this is you have 100,000 Miles invested in the Aeroplan program, instead of 50,000. But since you can book until at least September at the current rates (Aeroplan’s new rules have been pushed back to Q4 2020), you’ll be able to book travel into August 2021 (you can book one year ahead).
Option 2 also costs you 70,550 existing AMEX Points instead of just 50,000 existing AMEX Points. But I assume most of you usually transfer your AMEX Points to Aeroplan anyway, since that offers the best value a vast majority of the time. Transferring to Avios is also valuable, but to me at least, it’s worth sacrificing that flexibility for some of my points to get elite status (however I have Avios Points already).
One thing is for sure, if you usually use your AMEX Points as fixed-value points at 1¢ rate, Aeroplan Miles can be infinitely more valuable. You can check out the section about what you can do with your Aeroplan Miles and how much they can save you in yesterday’s article.
However, if you usually are able to get more value with Avios or other non-Aeroplan transfer partners than you do with Aeroplan, this promo is obviously not as interesting. Make sure to analyze both options based on your own travel preferences.
That’s why it’s important to do the math for every redemption and know how you value your points, so you can easily make decisions on the many deals and opportunities that arise all year. There are many of them, and many require you to act fast, like this one.
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Aeroplan Miles Purchase Sales Tax Rate By Province
Here’s the tax rate you’ll pay on your points purchases for each of the 3 pricing levels for Aeroplan Miles (depending on how quickly you buy them).
It’s in Canadian dollars (cents), and is based on your credit card billing address.
|Credit Card Billing Address||Tax Rate||1.4¢ (First 10M)||1.6¢ (Next 100M)||1.8¢ (Rest until May 13)|
|Prince Edward Island||15%||1.61||1.84||2.07|
If you do the math, it could make more sense to buy the Aeroplan Miles and use your existing AMEX Points to erase the purchase if you want more Miles at a lower cost per point.
Have any questions on AMEX Points or Aeroplan Miles? Ask us in the comments below.
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