Five things to know about Aeroplan’s switch to TD

It looks like Aeroplan will swap bank partners and join Toronto-Dominion Bank in January. The move will end a 22-year-long partnership with CIBC, which has used the rewards program to attract a big credit-card customer base.

What does the deal, which still has a few legal kinks to be ironed out before it comes into effect early next year, mean for loyalty program users at Aeroplan and elsewhere? Just maybe bigger and better rewards across the loyalty landscape, experts say, as the switch opens a new chapter among banks and credit-card companies to win over rival customers. Just don’t expect annual fees to come down.

What does the Aeroplan-TD partnership mean for Aeroplan cardholders?

CIBC Aeroplan account holders will have to make a choice. “They’re going to have make a decision whether they want to stay loyal to CIBC, or if they want to stay loyal to the Aeroplan program,” Patrick Sojka, principal and founder at Rewards Canada, which tracks programs across the country.

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Sojka said CIBC customers who elect to stick with the bank – customers who likely have multiple accounts with CIBC and aren’t interested in severing their credit-card off from the rest of their banking activity – will keep their points, but will cease collecting them on their new CIBC cards. The siliver lining: the bank is said to be developing its own rewards program akin to RBC’s Avion card.

To continue collecting Aeroplan points, CIBC Aeroplan account holders could also elect to join American Express, which is the loyalty program’s other major partner.

Are there changes to the current Aeroplan rewards?

You bet. To make sure the switch (which as the above suggests will be disruptive for some) goes off smoothly, Aimia, the parent of Aeroplan, has beefed up the value of the rewards program on several levels. First, it has axed a contentious seven-year ‘use them or lose them’ expiry policy on accumulated points.

Aeroplan is also lowering the number of points required on certain flights, like one-way fares. Aimia execs say they’re using the transition to refresh the program, which has seen others, like Capital One, enter the fray in recent years with more competitive offerings. Tiers within the Aeroplan program have been rejigged (and renamed) and require fewer points to redeem rewards, as well.

Will the new partnership have an impact on other rewards programs?

Yes. To start, we can expect to see, hear and read a lot more advertising around the litany of rival loyalty programs in the market place as a result of Montreal-based Aeroplan’s switch to TD as its chief credit-card partner.

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“This market turmoil creates opportunities, it wakes people up,” Linda Mantia, executive vice-president of cards and payment solutions at RBC told Bloomberg last week. “There’s a great opportunity for us to continue the growth momentum that we have” with our reward cards.

“The CIBC card member might not be sure what’s happening here, weighing their options. What we’ll be doing is ramping up our marketing activity to present the option of American Express,” David Barnes, vice president of marketing for Amex’s Canadian operations told Global News last month.

Yet Aeroplan’s move to enhance value for their existing customers and to attract new ones will have to be at least matched by CIBC’s new yet-to-be named in-house program, Sojka said, something that will pressure programs across the board to look at their own offerings.

Does this mean annual fees will go down?

Probably not, according to Sojka. That said, for some frequent users and customers of TD’s existing rewards program who hold multiple accounts, TD waives annual fees – which can cost upwards of $120 a year, he said. “I’m wondering if they’ll do it for the Aeroplan cards, as well,” he said. “Chances are they will.” Waiving fees for high-balance holders is an established industry practice.

It’s not over till it’s over

CIBC isn’t letting Aeroplan cardholders slip away without a fight. It has elected to let the plan get away by not matching TD’s offer, which would have retained Aeroplan’s portfolio, but it said Monday it still wants to keep CIBC cardholders who hold other accounts at the bank, like mortgages and savings. The two banks have set an Aug. 26 deadline to work out a deal, but stressed there were “no assurances an agreement will be reached.”

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For a ranking of loyalty programs from Rewards Canada visit here.

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