The Best Rewards Credit Cards Canada: for 2021
We work hard to pay off our credit cards, so isn’t it about time that we expect our credit cards to do some of the heavy lifting for us? And we don’t mean making our lattes or doing our laundry (though that would be nice). We mean repaying us through some sweet, sweet rewards.
However, these days, it seems like credit card reward systems abound, so it can be hard to track down the ones that are worth signing up for.
In this Wealth Rocket article, we'll examine the rewards credit cards in Canada, so that you know that you’re making the right choice before signing on the dotted line.
Table of Contents
Types of Rewards Credit Cards
Although every rewards card is going to theoretically do the same thing — give you rewards for spending — deciding which one is the best for you is a personal matter.
In general, rewards credit cards fall into one of the following categories: miles (usually travel-related programs like Aeroplan or Air Miles), cashback (money returned to the cardholder with each purchase), or points (such as Scotia points or BMO points).
Here is an overview of some of the most popular rewards credit cards in Canada, with samples taken across all three major categories.
1. Scotiabank Gold American Express
- Annual Fee: $120
- APR: 19.99%
- Income requirement: $12,000
The Scotiabank Gold American Express is often one of the first suggestions when the idea of a rewards credit card comes up. While a travel card at heart, the Scotiabank Gold American Express has unique perks on its surface and stands out for its unique perks.
The most notable of which is a lack of foreign transaction fees. This is hard enough to find among Canadian credit cards, but there are other things to write home about regarding this card.
Another attribute is how easy this card’s point system is to understand. You will receive 5 Scotia points for every $1 that you spend on everyday purchases such as grocery stores, and fast food. Other common categories such as gas or public transportation will give you 3 points.
Furthermore, jet setters will rejoice with this card’s travel insurance, which includes medical coverage as well as car rental and trip cancellation protection.
This no-nonsense rewards system and robust travel insurance package are enough to make this a runner for the best rewards credit card in Canada, especially when it’s paired with the card’s vetoing of foreign transaction fees.
One potential downside — American Express is still not as unanimously accepted across Canada as its counterparts, though this is changing.
2. Tangerine Money Back
- Annual Fee: $0
- APR: 19.95% (1.95% for the first 6 months)
- Income requirement: $60,000
The Tangerine Money-Back is the no-fuss cash back card that we have been desperately waiting for in Canada. This card is especially what you would expect from Canada’s favorite online banking system, with an intuitive system that tracks your spending habits and allocates them to the appropriate categories. Additionally, cardholders have the choice of two 2% categories and can earn 0.50% cashback on everything else.
This may not seem like a large reward potential, but when you consider the fact that this card has no annual fee it comes across as a total bargain. Even if you do not use it as your primary credit card, there is no downside to having this in your wallet.
This card is also a great place to throw your balance transfers, as it offers an interest rate of only 1.95% as a promotion for the first six months.
3. BMO World Elite Mastercard
- Annual Fee: $150
- APR: 19.99%
- Income requirement: $80,000 ($150,000 household)
The BMO World Elite Mastercard has everything that you could wish for in a travel rewards credit card: complete insurance protection for all travel-related purchases made with the card, a fair rewards system, and even access to airport lounges. Cardholders can even benefit from free access to WiFi hotspots across the planet.
The rewards structure for this card is as follows: for every $1 spent on dining, travel, or entertainment, cardholders receive 3 points. Every other purchase earns 1 point. These points are redeemable through BMO’s rewards portal.
Although this card is predominantly useful for frequent travelers, there are benefits for the non-traveler too. The points collected on this card do not need to be spent on travel-related causes—they can also be used to pay down a credit card balance or for shopping or investing.
4. Scotia Momentum Visa Infinite Card
- Annual Fee: $120
- APR: 20.99%
- Income requirement: $60,000
In terms of cashback credit cards, the Scotia Momentum Visa Infinite is somewhat of a holy grail. And the magic is in the numbers: cardholders receive a whopping 4% cashback on spending in their most popular categories, including groceries and bills. Other common purchases, such as gas and transportation, are eligible for 2% back. Everything else earns 1%.
This three-tiered system is rather unusual for a cash back credit card, which is the main reason why this card earns such high accolades.
There are other bonuses to this particular card as well, such as new mobile device insurance and travel insurance. Cardholders also have access to a 24/7 concierge service as well as discounts on car rentals.
What is a Rewards Credit Card?
A rewards credit card, loosely defined, is any credit card that offers its user a return on their purchases, whether it’s in the form of points, miles, or cold, hard cash.
How Do Rewards Credit Cards Work?
The motivation of a rewards credit card is simple: the rewards system is designed to incentivize credit card use over alternative methods. The card not only does this by offering enticing rewards but also by specific which spending categories are eligible for rewards — you’ll notice that the most common categories are the ones that most households spend the most on, like gas, groceries, or bills.
Credit card companies can offer these rewards through annual fees, interest payments, and what is known as interchange (the fee that merchants pay to the credit card issuer to accept credit card payments).
As a spender, you will see credit card rewards work like so: your credit card will offer you a set amount of rewards for every dollar spent (1 point per 1 dollar is a popular example).
These points are redeemable in various ways depending on the carrier (usually in an online marketplace or online through specific vendors).
Depending on your particular program, you may also be able to exchange your points for a balance payment, trade them for gift cards, or donate them to charity.
Our Final Thoughts
If you’re a consumer who uses your credit card often, having a rewards credit card is a no-brainer. Determining whether or not you should have one that offers cashback rewards, air miles, or redeemable points is a personal choice that will largely depend on your financial goals. There is no wrong answer!
Frequently Asked Questions
In the world of reward credit cards, cashback cards and reward cards are not competitors, but much more like colleagues.
What we mean by this is the matter of which one is “better” is going to be entirely based on personal preferences.
While some spenders may find it completely worth it to seek out a card that can reward them with experiences, others may simply be looking for a rewards system that will help them pay off their credit card balance.
It is best to shop around and make a choice based on your spending habits, as well as the promotions that are currently available.
Based on their popularity, there are certainly many Canadians who think that reward credit cards are worth it!
If you are somebody who does the majority of your spending via credit card, chances are that it makes sense to have at least one rewards card, whether it be for travel points or cashback.
This is especially true when you consider that some cards have a $0 annual fee or one that's waivable.
If your credit score is in the average range, don’t despair — there are still several rewards credit cards available to you.
One standout option comes in the form of the BMO CashBack Mastercard, which requires a credit score of about 670 in order to qualify.
Cardholders receive a minimum cashback earning rate of 0.5%, though this percentage goes up to 3% for grocery purchases.
It also comes with no annual fee and a balance transfer opportunity of 1.9% interest for the first nine months.