Cash back earned is usually paid out as:
Some cash back cards may be linked to the issuer’s rewards program. This allows cardholders to convert their cash back into points. Commonly, points can be used towards:
One of the most appealing benefits of a cash back credit card is that you can spend the cash you earn on almost anything.
Cash back credit cards in Canada fall into different categories. How they are categorized depends on the amount of cash back they offer for different purchases.
Three of the most common cash back credit card categories include:
To choose the best cash back credit card in Canada, consider your spending habits. Then, select a card that will offer you the best value.
For example, if you drive hundreds of kilometres for work every month and spend a lot on gas, you’ll want a card that pays a high percentage of cash back on gas.
One common tactic among cash back cardholders is to have multiple cash back credit cards. This way, they can use the card that provides the most cash back for each purchase.
To determine the best cash back credit cards in Canada, we examine several features including:
Each cash back credit card will offer different percentages of cash back on different types of purchases.
For example, one card may offer:
Cash back percentages can range anywhere from 0.5% to over 10%.
To choose the best cash back credit card, consider which offers the:
Keep in mind - cash back percentages and categories may be changed from time to time by the card issuer. Stay updated on these changes so you can ensure your card provides the most cash back based on your spending habits.
Cash back credit cards offer different cash back categories.
The most common cash back categories in Canada include:
The best cash back credit cards in Canada will offer numerous cash back categories.
Be sure to choose a credit card that offers cash back categories that align with your common purchases.
Cash back bonuses are often used by credit card issuers as a promotional tool.
Typically, these signup bonuses will offer a higher cash back percentage for a certain period. This period is often 3 or 6 months but may vary by card.
For example, as a bonus when signing up, your new cash back credit card might offer 10% cash back on all purchases. However, this high rate will be limited to just a few months.
When the bonus period ends, this cash back percentage will be reduced considerably.
Pay attention to the fine print. Some credit cards will also put a limit on the amount of cash back that can be earned during a bonus period.
For example, you may receive 10% cash back for three months but with a limit of $200.
If you spent $2,000 in three months you would reach this limit. For some people, the limit might be reached very quickly. Therefore, the bonus may not be as beneficial as it appears. However, this will depend on your spending habits.
You might also see limits placed on the monthly or yearly cash back you can earn in general.
For instance, a credit card may offer 3% cash back on gas purchases. However, it might have a cash back limit of $100 per month. For those who spend a lot on gas (have multiple vehicles, or use the card for a fleet), this cap will be easily met.
When comparing cards, look for cash back credit cards that have no limits (or high limits). Although monthly and yearly cash back limits may not affect you, it’s always good to know about any limitations that a card may have.
Look for these restrictions in the terms and conditions.
Different cards have different rules when it comes to redeeming cash back.
Some cards will pay out cash back earnings monthly and others annually. As well, different cash back credit cards will offer different forms of payment.
Be sure that the card you choose offers a redemption option that works for you.
Please Note: if you choose to redeem your cash back as a credit on your credit card, you may be required to have a minimum amount before it can be used. Cash back credits cannot be applied to your minimum monthly payment.
Some cash back credit cards have an annual fee.
The benefit - these cards often offer a higher cash back percentage than cards with no fee.
In some cases, the annual fee is waived in the first year as part of a signup bonus. Some financial institutions will also waive this yearly fee if a certain balance is maintained in your bank account.
Before choosing a cash back card that has an annual fee, be sure the cash back rewards will outweigh the cost of the card.
Cash back cards may have a personal or household annual income requirement.
Income requirements vary significantly. Some cards may request an annual income of only $12,000 while others will require $100,000 per year or more.
The higher the required income, the more perks the card will come with. For example:
Even if a cash back credit card doesn’t have an income requirement, the card issuer will ask you how much you earn per year during the application process. This is because, in Canada, issuers can only legally lend money to someone if they are confident that they can make their payments.
All cash back credit cards charge interest on unpaid balances. However, the rate that they charge will differ. These rates are comparable to most other credit cards in Canada.
Choose a card that offers the lowest interest rate if you intend to hold a balance on your card or anticipate withdrawing cash advances.
Cash back cards can also come with other benefits and perks.
Each card will offer something slightly different. Some of the most common additional benefits include:
Also known as “the fine print”, it’s always important to read the terms and conditions of a cash back credit card.
You will find a lot of information in the fine print, including:
Emma is responsible for all content on Creditcards360.ca. She has a college degree in economics and a keen interest in personal finance. Get in touch with her by email.Last updated Dec 30, 2021