cash back credit card

Cash Back Credit Cards Canada Guide

One of the best and lucrative reward credit cards in Canada is the Cash Back Credit Card. Cash Back Credit Cards offer substantial rewards and loyalty bonus in the form of cash rewards.

Every eligible purchase earns you a percentage of cash return, which can be accumulated and earned in multiple ways. Several credit card issuers in Canada entice their customers with Cash Back Rewards for using their cards to make purchases and earn points. These points are then returned or redeemed as cash (money) back to the cardholder.

Compared to other rewards cards, are Cash Back Credit Cards worth having? To help you make a calculated and informed decision, here’s all you need to know about the Cash Back Credit Cards.

What is Cash Back Credit Cards?

Cash Back Credit Cards are rewards credit cards that allow you to earn a certain percentage of your spending back in cash. The earned money can then be returned to you as a statement credit, a cheque in your mail, or deposit, which you can spend on whatever you like. Cash Back Credit Cards simply refund a small amount of whatever you pay back to you.

How Cash Back Credit Card Works

Cash Back Credit Cards earn you cash back rewards for your purchases. Every time you use your credit card for any eligible purchase, the credit card issuer gives you a percentage of the price back. Each Cash Back Credit Card is unique; hence all cash back cards have different benefits and perks as defined by the card issuer.

Also, cardholders earn different rates as a cash back on diverse categories, while some cards offer you flat rates on all categories. Therefore, you receive a certain percentage or amount as a cash back for every Canadian dollar you spend on purchases with your credit card.

Cash Back Credit Cards in Canada

  • Simply Cash Preferred Card from American Express
  • Tangerine Money-Back Credit Card
  • Scotia Momentum Visa Infinite Card
  • Home Trust Preferred Visa Card
  • TD Cash Back Visa Infinite Credit Card
  • Simply Cash Card from American Express
  • MBNA Smart Cash Platinum Plus MasterCard
  • BMO Cash Back Business MasterCard
  • ECHO Cash Back MasterCard
  • Triangle MasterCard
  • TD Cash Back Visa Card
  • National Bank MyCredit MasterCard
  • Meridian Visa Platinum Cash Back Card
  • Rogers Platinum MasterCard
  • Rogers World Elite MasterCard
  • Brim World Elite MasterCard
  • Scotiabank Gold American Express Card
  • CIBC Dividend Visa Infinite Card
  • CIBC Dividend Platinum Visa Card
  • BMO Cash Back World Elite MasterCard
  • BMO Cash Back MasterCard
  • Tangerine World MasterCard
  • Meridian Visa Infinite Cash Back Card
  • Walmart Rewards MasterCard
  • Meridian Visa Cash Back Card

Categories of Cash Back Credit Cards

Zero Fee Cash Back Credit Cards

This category of Cash Back Credit Cards offers cardholders the chance to save on the annual fees that usually come with credit cards. Although there are some Cash Back Credit Cards that offer a promotional annual fee rebate for the first year, the zero fee cash back cards have no annual fee on the card. An example is the Rogers World Elite MasterCard.

Referral Rewards Cash Back Credit Cards

This category of cash back cards offers you cash back rewards for referring your friends and family members to the rewards program. An example is the Simply Cash Preferred from American Express that offers $100 cash back for each approved friend you refer to the Rewards program.

Flat Rate Cash Back Credit Cards

This category offers the same rate (flat rate) or percentage of cash back on every purchase you make with your credit card. Irrespective of whatever you spend your card on, such as gas, entertainment, furniture, groceries, and more, you earn the same cash back rate on all your spending.

Bonus Cash Back Credit Cards

This category of cash back cards offers you cash back on specific categories of expenses. Most Cash Back Credit Cards in this category offer more cash back bonus on gas, groceries, and recurring bill payments than other categories. For example, the scotia momentum visa infinite card earns you the highest cash back bonus of 4 percent for your purchases on gas, groceries, and recurring bill payments.

No Income Cash Back Credit Cards

This category of cash back cards has no income requirement from cardholders. Unlike other credit cards that have certain amount of personal or household income requirement, the no-income Cash Back Credit Cards only require potential cardholders to be Canadian residents and of the age of majority in their province or territory of residence. An example of this is the Simply Cash Preferred Card from American Express, and the BMO cash back MasterCard.

Flexible Rewards Cash Back Credit Cards

This category of cash back cards gives you the freedom and flexibility to choose any category of your choice to earn cash back rewards. The Tangerine Money-Back Credit Card is a fantastic example of this type of Cash Back Credit Cards.

Factors to consider in choosing Cash Back Credit Cards

Earn Rate

Before you pick your choice of Cash Back Credit Cards, it is imperative to consider the earn rate on the card, that is, what you get as a cash back for any purchase made with your credit card. You should consider your spending habit and the amount of cash back offered on each category of purchase.

In addition to this, it is essential to consider the promotional earnings on the card. Some Cash Back Credit Cards offer short term promotional cash back benefits for some time, usually between 3 to 6 months.

Annual Fee

Some credit card issuers reward their customers with no-fee cards. However, the majority of Cash Back Credit Cards come with a specific annual fee, but also with a higher earn rate. You need to consider the yearly cost on the card vis-à-vis what you will receive as a cash back bonus. If your cash back bonus is higher than the annual fee, it could be a good deal after all. If not, you should go for a no-fee Cash Back Credit Card.

Interest Rate

Before you accept any Cash Back Credit Card offer, it is vital to get the best interest rate offer.  Though some cash back cards offer reasonable interest rates of about 10 percent, there are those who charge exorbitant rates. Hence, if you are in the habit of carrying credit card balances over from one month to another, you should consider if what you are going to pay as interest rate does not surpass the cash back bonus on the card.

Payment Processor

It is equally vital to consider if the payment processor of the card is accepted at your favorite store. No matter how good and attractive the cash back rate of a card looks, if it is not accepted at the stores where you shop most, it is useless. Thus, the card accepted in the grocery or retail store you shop most should determine your choice between MasterCard, American Express, or Visa card.

Cash Back Bonus Category

Every Cash Back Credit Card in Canada offer more cash back bonus in different categories. While some offer high cash back rates on gas and groceries, others may pay more for spending your money on public transit, restaurant purchases, or entertainment. Therefore, you should consider the percentage of cash back in each category concerning your shopping interest.

Additional Perks

Furthermore, you need to scrutinize the additional perks and benefits that come with your preferred cards. Valuable benefits such as concierge services, travel insurance, lounge access, no foreign transaction fees, emergency services, and more should also be considered to determine the ones that interest you the most

Cash Back Limit

You should also consider the limit of cash back rewards on the Cash Back Credit Card of your choice. Some cash back card issuers offer unlimited cash back rewards, while others put a limit on what cardholders can earn for each month as a cash back.

Cash Back Payout

Different payouts and rules apply to the various cash back credit card issuers. While some card issuers may payout on a monthly, quarterly, or annual basis, others may pay immediately you reach a certain payment threshold. Hence, you should find out the payout period of each card issuer to ascertain if it works for your financial goals. For instance, the tangerine cards payout every month, while the Scotiabank and American Express card payout once a year.

Cash Back Redemption

Cash back bonus earned can be redeemed through several methods. In most cases, Cash Back Credit Cards automatically give you a statement credit option, but other cash back cards let you choose between bank deposit, gift cards, cheque, or travel. Likewise, some Cash Back Credit Card companies such as BMO and Rogers expect you to meet a minimum requirement before payout or redemption.

Final Thought

Picking the Cash Back Credit Card that suits you requires that you juxtapose your spending with the amount of cash back reward offered by each cash back credit card, as well as other factors outlined in this article.

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