Reward cards: Burn rates

After all your efforts at being a loyal customer and earning rewards points at your favorite retailer, what are you doing with them? In this blog we explore the redeeming side of the rewards equation.

The other day I decided to clean out my wallet and I found a Tim Horton’s coffee card. Is it still worth anything? 

In our previous blog, we talked about how earning points or miles with your favorite bank or retailer can vary depending on the type of program. “Burning” or redeeming those points for value can be equally complex and frustrating. For example, miles that you have earned with a travel reward program may be subject to “blackout” periods, limiting when you can use your free flight to less popular travel times, i.e. 5:00 a.m. on a Wednesday during school term.


The burn rate on a reward program, like the earn rate, is like the rate charged when exchanging your money for a foreign currency – the provider or issuer decides on a rate. Usually, you get the best bang for your buck redeeming your points for the currency that the provider holds. For example, if you had 10,000 miles on XYZ Airline’s credit card and you opted to travel with them, you might get a free flight from Toronto to Vancouver. Whereas if you opted to use the same XYZ miles with one of their partners, your free flight might only go as far as Calgary.  Even worse, if you were to choose goods from the catalogue instead of travel, you might end up with something as invaluable as a toaster!

Cash-back reward cards tend to have the lowest redemption value. For example, a cashback one per cent card will give you a penny back for every dollar you spend. So, for every $10,000 you spend, you get $100 back. (A top-notch travel card would give you a flight worth $200 for the same $10,000 in spend). However, cashback cards offer the most basic, flexible and hassle-free redemption currency, which is why they are gaining popularity.

A few “burn” questions to ask yourself when considering a new rewards program:

  • Do the rewards expire? Also, do you lose points if you do not make regular card payments?
  • Over time, does the exchange or redemption rate in a rewards scheme go down? I.e. Are your points today worth the same in the future or will they decrease in value?
  • If it is a travel reward program, are there any blackout dates?
  • How transferable are the miles/points? Can you use them to buy items for another family member? Or on another program?

In these last two posts, I have tried to provide the highlights of rewards programs as they can provide great added value to a business and to you as their customer. Earning and burning points is a bit of a science – if you want to find out more on how to maximize your points, search online for “points,” “best reward programs,” etc. and you will find a lot of information that can help you optimize the value locked in your wallet.


What points do you have that you didn’t know about?  Post a comment below.


The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

About the Author

Wendy Braithwaite, CPA, CA

CFO at Sodexo Canada
Wendy was the head of Finance for MasterCard Canada and is currently CFO at Sodexo Canada. As a coach, mentor, public speaker and blogger on financial empowerment, she is committed to promoting financial awareness and education. She is a lead volunteer at Wood Green’s Community Tax Clinic.