To Buy Points or Not?

While I typically recommend focusing first on earning Aeroplan points via your credit card selection (directly via the Aeroplan Credit cards or indirectly from Amex cards) or via the huge point multipliers on the eStore, there may be circumstances where it makes sense to buy points. I previously wrote about this for the Aeroplan 40th anniversary promotions, but have updated it for more general discussion. The same rationale also applies to BA's Point Booster, the cheapest way to buy BA Avios.

In this article we will go over the math behind buying points (either directly or as a boost) to help you determine if it makes sense for you. Disclaimers and referral links below.

New to Aeroplan?

Aeroplan is arguably the most powerful frequent flyer program for Canadians as it opens up the Star Alliance network and is a transfer partner from powerful earning cards in the Amex universe. With a bit of flexibility and some knowhow, it can supercharge your travel while leaving more money in your pocket. But before you can buy those flights, you need to have the points! An economy class flight from YYZ to western Europe (think London, Lisbon, Barcelona or Paris) can be found for as low as 35k points, and business class for as low as 60k. While you can easily accumulate those points given enough time, its logical to wonder if you should just buy some points from Air Canada to get your trip going.

Why Should I Buy?

At the time of writing on 21/Nov/2024 points are available with a limited time bonus of +80% on purchases over 15k points ($525), this of course is up from the default and on the higher end for promotional rates, however not the highest this year.

During the Aeroplan 40th Anniversary these ranged from 65-125% additional points with the highest bonus being on purchases over $2800. At that price point you would get 180k points, a cost per point (cpp) of ~1.55 pre tax, quite favourable compared to our target minimum value of ~2cpp! Depending on your jurisdiction, sales tax may impact this significantly, particularly in highly taxed provinces such as Ontario, but people in Alberta or abroad were able to snag a great deal.

So while the current bonus isn't as high, it kicks in for far smaller purchases making it much more accessible.

Lets take a look at the CPP breakdown at the default pricing and at various promotional levels historically

As you can see, to have a pretax cost at 2cpp you would need a promotion adding +75% points above the default 3.5cpp.

If you're subject to taxes this moves the needle in the wrong direction.

Note that depending on the card you use will squeeze a little more value out of this, but the 1.25x on a premium AP credit card this would only turn the 1.98cpp in ontario at +100% bonus into 1.95cpp... better than nothing but not great. In general however, you'll see that you need a 100% bonus or higher to be able to buy points for less than they're typically valued at in Ontario.

You also use this for manufactured spending to hit a sign up bonus. Lets say you were considering opening the Amex Business Platinum but you think your organic spend is coming up short. Even without a promotion, and even with Ontario sales tax, purchasing some points secure your sign up bonus could be great value. Definitely better than missing the SUB or buying something you had no use for.

Boosting your Points

Another option Aeroplan offers is to boost points you've recently earned. This is option is less flexible, but can sometimes provide a better cpp so it should also be considered.

In the above example, the 2x boost gives a 2.975 cpp, 6x gives 2.625, and 10x gives 2.1 (all pre tax). It can be more challenging to find good value unless your recent earning happens to line up conveniently as 1/10th of the points you need, but it is another option you can explore if you're coming up short.

Why Shouldn't I Buy?

It might seem like a nobrainer to buy if points are ever on sale below 2cpp, but life is seldom so straight forward, so lets consider why a company would give us "free money"

1. The value of APP is subject to a wide range of dynamic values. While 2cpp is a good minimum target you can also find redemptions at worse levels like 1.5cpp (lower than your bargain price) that can make even promo rate points a bad deal

2. Points will always be more restrictive than cash and if your ideal flight comes up on a different airline you may feel stuck in the AP ecosystem

3. Points can be devalued at any time arbitrarily, unilaterally, and potentially without warning

4. The money you're converting has some opportunity cost to consider between now and your redemption. Presumably you cant burn through 1M in APP with good redemptions in short order, but the money is due today and could have instead been invested or at least in a savings account.

5. Award flights dont have the same status elevating benefit of cash flights if you are concerned about your frequent flyer status (ie. don't count for SQD)

So does it ever make Sense/Cents?

Like most things in life there are nuances to consider, but there are circumstances where it could make sense to purchase these points, even without a promotional rate or SUB to hunt.

Firstly, if you've already identified a rock bottom redemption to your target destination on a good date, it can make sense to top up your points to secure the deal now instead of letting it go. Consider that if the majority of your points were cheaply acquired by grocery shopping with the Cobalt, the overall cost would still be cheap even if you had to buy some points at an otherwise unfavourable cost.

Secondly, even if you have no points at all, while we target a 2cpp value for our points, there are plenty of circumstances where the realized value is far higher, even without finding a perfect redemption.

While business class to TPE regularly goes for ~$5k, even without a promotion and with Ontario taxes you could buy the 110k points you'd need for the flight for $4350 saving hundreds of dollars.

You can often do even better if you look at the various redemption tiers - Aeroplan offering various mixes of points and cash. This can be viewed as another way to "purchase points", in the above example (image unfortunately went missing) if you compare the 107k + $145.27 default option to lower 64.2k + 964.67, you are spending an extra $801.40 to save 42,800 points. This is like buying those 42.8k points at 1.87cpp and there is no extra tax here. This price is not constant, but is typically 1.9-2.1cpp. As such, if you're considering buying points, it is often but not always cheaper to first select the lower points plus cash option unless there is a large promo active.

Conclusion

While it seldom makes sense to pre-emptively buy points, even during a promotion, if you have already identified a redemption for a flight you would otherwise pay cash for but are short in points it can make financial sense to top up with a point purchase or a boost even without a promotional bonus. This can especially be the case if you only need to buy a small amount of points to secure a dream redemption. Combine purchasing the points/boosting with the lower points+cash mix to optimize your savings, and if the purchase is significant, consider if it should be used towards hunting a new SUB.

Referral links

If you're considering any business labeled Amex cards, reach out to me directly as your situation may have more complexity than is represented here. Otherwise check out the aeroplan cards here.

With its best in market 5x multiplier Amex Cobalt is a powerful point earner that can get you on flying for free 5 times faster than much of the competition. And since they convert 1:1 to aeroplan it makes a natural powerhouse combo with an aeroplan visa - sign up here.

If you're on the fence, or wondering about other cards reach out to me for a free consult, and if you sign up for a card through my link, let me know and I will walk you through advanced tricks and personalized advice to help you get the maximum benefit both from earning and redeeming points - getting your travel journey going faster than you ever thought possible.

Check out my Keeper Cards series to see other cards worth exploring

Disclaimer

These posts are all made in good intentions and are to the best of my ability accurate at the time of writing. That said, the official terms and conditions and current sign up bonuses should be verified and interpreted in the context of your personal financial situation.