Best Cashback Cards

Top 7 Cash Back Credit Cards in Canada

Cash back stands out as an appealing credit rewards option due to its flexibility—you can spend it however you prefer without any restrictions. However, with numerous cashback credit cards available, choosing the best one for your needs can be overwhelming. To simplify the process, we’ve thoroughly compared all the options to help you select the perfect cash back credit card aligned with your spending habits and preferences.

How we compared and chose the best cash back cards in Canada

When evaluating the merit of each cash back credit card, we considered several key factors:

Cash back earn rate: We assessed how much cash back each card offers, considering spending patterns and whether a tiered rewards or flat-rate earnings structure is more beneficial.
Promotional bonuses: We took into account any sign-up bonuses or promotional offers that provide additional cash back or accelerated earning rates for a limited time.
Annual fee: We compared the annual fees of each card against the value it provides in cash back and other perks, ensuring that the benefits outweigh the cost.
Redemption structure: We analyzed how cash back rewards are dispersed, whether monthly, annually, or upon reaching a minimum balance threshold. We also considered the flexibility of redemption options, such as statement credits or direct deposits.
Overall value relative to cost: We evaluated the overall value of each card, considering features like welcome bonuses, redemption value, and earn rates in relation to the annual fee.
Other fees: We factored in additional charges like foreign transaction fees and balance transfer fees to provide a comprehensive comparison of each card’s cost.
Special features and perks: We scrutinized the added benefits of each card, such as extended warranties, discounts, insurance packages, and exclusive invites, ensuring their relevance and value to the cardholder.

By carefully considering these criteria, we identified the best cash back credit cards in Canada to help consumers make informed decisions based on their spending habits and preferences.

How to choose the best cash back credit card

When comparing cash back cards, it’s crucial to assess how much cash back they will realistically deliver to your budget. Your spending habits play a significant role in determining the value of the card. Additionally, factors such as your banking preferences, frequency of cash back disbursement, redemption options, and desire for additional perks should also be considered. Here are the key factors to prioritize when applying for a cash back credit card:

Promotional earn rate

Several cash-back credit cards offer short-term promotional earn rates, allowing you to earn a higher amount of cash back on specific purchases for a limited time, typically up to three months. This promotional period can significantly enhance the card’s benefits for you. If you’re planning significant purchases, such as booking a vacation, taking advantage of a generous cash back promotion can yield substantial rewards.

Earn rate by spending category

Cash back credit cards typically provide either a flat rate of cash back or tiered rates, offering higher returns in certain spending categories. Understanding your personal budget and spending habits will help you identify where you spend the most money, maximizing your rewards. While many cards offer higher cash back rates on groceries and gas purchases, they may offer lower rates on other spending categories. Reviewing your spending patterns will help determine whether you’ll benefit more from a flat-rate cash back card or one that rewards specific purchase categories.

Cash back caps

One frustrating aspect of certain cash back credit cards is the imposition of a cap on the amount of cash back you can earn. These caps may apply solely during promotional periods at a higher earn rate or extend to specific spending categories or overall card usage. While many cash back caps are relatively high, some are surprisingly low, which can diminish the card’s overall value. However, numerous cash back credit cards offer unlimited cash back earning potential. It’s essential to calculate your planned credit card charges before applying to determine if you’ll reach a cash back limit, ensuring that the card aligns with your spending needs and goals.

Redemption frequency and flexibility

Most cash back cards offer flexible redemption options, typically allowing you to use your cash back for statement credits or deposit it into a checking or savings account. Some cards require you to reach a minimum cash back balance of $25 or $50 to redeem, while others disperse any earned amount automatically. Redemption schedules vary, with some cards paying out monthly and others annually. Choosing the redemption schedule and threshold that aligns with your spending habits is a personal decision, ensuring that you can access your cash back comfortably.

Annual fee

Paying an annual fee for a cash back credit card may initially seem counter-intuitive, but it can be worthwhile if the card offers a high cash back rate and valuable perks. Rather than dismissing a card with a fee outright, it’s essential to assess whether the rewards offset the cost. Doing the math to determine if your planned card spending will generate enough cash back to justify the fee is crucial.

Processor

The choice of a card’s payment processor, such as Visa, Mastercard, or American Express, significantly influences its cash back value to you. It’s essential to consider whether your primary shopping locations accept the card’s payment network. For instance, if your favorite grocery store doesn’t accept American Express, the cash back rate becomes irrelevant. Before applying for a credit card, ensure that it’s accepted at the places where you frequently shop to maximize your cash back earnings.

What are the types of cash back cards?

Cash-back credit cards come in three main categories:

Flat Percentage: These cash-back cards offer a straightforward earning structure, providing cash back at a consistent rate for all purchases. Ideal for those seeking simplicity, they eliminate the need for complex calculations. However, the trade-off is that the cash back rate typically ranges from 1% to 2% per transaction.

Tiered Rewards: Suited for individuals with specific spending patterns, tiered rewards cards offer higher cash back rates for certain categories, such as groceries or gasoline. If you frequently spend in these categories, you can maximize your rewards. However, other purchases typically yield lower returns.

Bonus Category: Designed for avid rewards earners, these cards offer elevated cash back rates, often up to 5%, in specific spending categories like restaurants. However, bonus categories may change quarterly, requiring registration each time. Additionally, there may be caps on bonus category spending, usually around $1,500 per quarter, with other purchases earning a standard 1% cash back.

How do you master cash back rewards?

Select a card that aligns with your lifestyle and spending habits without enticing you to overspend for rewards.

Avoid unnecessary purchases and base your card choice on your existing spending patterns. Track your expenses for a month to identify the best fit.

Always strive to pay off your balance monthly to avoid accruing interest, especially considering high average interest rates ranging from 19-21%.

Remember, carrying a balance can diminish your rewards returns significantly, making it crucial to prioritize responsible spending.

The bottom line on cash back credit cards

Cash back stands out as one of the most appealing credit card rewards due to its flexibility. Unlike other redemption options tied to specific categories, cash back allows you to utilize the funds as you see fit. The optimal cash back card varies based on individual spending habits and earning preferences, but rest assured, our curated list offers options to suit your needs.