TD Travel Rewards Visas to lose value in reward redemptions as of August 16th

At the start of 2015 we put out a piece that got a lot of coverage about 2015 being the year that credit card rewards come crashing down to earth here in Canada.  We predicted this based on the voluntary lowering of the average interchange rate that is charged to merchants. For the most part, this hasn't really taken place yet which is a great thing as we've seen some issuers actually release cards that have higher rewards (BMO for one) but we've seen one card that was curtailed right at the start of the year and now we have another family of cards that are being devalued. Perhaps that banks are now seeing what the effect of the new interchange rate average is doing to their numbers as it has been roughly two months of it coming to fruition.

The latest set of cards that are being devalued are the TD Travel Rewards Visas. Of course the main card in the family of three cards is the TD First Class Visa Infinite Card, a mainstay in our Canada's Top Travel Rewards Credit Card rankings and also one of the most flexible cards is affected by this change that kicks in on August 16th.

Its funny how TD markets the change as the points being even more flexible now:

The only reason they are more flexible is that you no longer have to hit that minimum 10,000 points before redeeming. Now you can redeem as little as 250 points for a $1 credit to any travel booked on the card. Previously that 10,000 point requirement was for a $50 credit which was an equivalent of 200 points for $1. So while true they are using to hide the major devaluation hitting the card.

What they don't tell you in the marketing is that for redemptions with a value of up to $1,200 your points will be worth less than they are now.

The TD First Class Visa Infinite Card and Platinum Visa Card have always been known as having a 1.5% return on your spending excluding the bonus you get at Expedia.  With these changes that rate drops to 1.2% if you redeem 300,000 points ($1,200) or less. I would gather that most of you are in this position as 300,000 points is $100,000 of spending on the cards which a lot of people don't reach or take sometime to get to. Only if you redeem over 300,000 points (over $1,200) will you achieve the old rate of return of 1.5% for the portion of the travel over $1,200. Ultimately you can never achieve the same return due to that first $1,200 being redeemed at the 1.2% level. If you use TD's example of $2,275 travel equals 515,000 points you'll be hitting a ~1.33% return.

We here at Rewards Canada are very surprised at this change from TD considering their main competitors are still providing returns of up to 2% or more on many redemptions options. This could also be the big change we predicted at the start of the year however. TD could simply be the leader here and the other card companies may follow suit. We know some banks were willing to take a loss for the first few months of the interchange rate adjustment and they may well be applauding TD for this move as they can now adjust their cards accordingly to bring them back into the black.

The only good news to come out of this change is the TD First Class Visa Infinite now sees increased Travel Medical Insurance coverage of 21 days versus the previous 15 days as well as Trip Cancellation insurance being increased to $1,500 from $1,000.

UPDATE:
Just a reminder that Expedia is still the fastest way to earn TD points (9 TD points/ $1 spent) as well that the travel redemption value when booking through Expedia does remain at the old level (10,000 TD Points = $50)

If you were considering this card you can still get it with a 40,000 point sign up bonus and First Year Free, just make sure you redeem your points before August 16th to get the full value out of them! You can apply for the card here.

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