Are cashback credit cards worth it in 2021? | Finder Canada

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Are cash back credit cards worth it?

Earn cash back on everyday purchases and save money with a long intro APR period.

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If you use a credit card for everyday purchases, such as groceries, gas, dining or online shopping, you may as well get a little something back. With the right rewards credit card, you could even earn cash back on those purchases. But that’s not the only cool perk that comes with cash back credit cards: often, you’ll get a long intro APR period on balance transfers, purchases, or both, and you likely won’t pay an annual fee.

However, once the intro APR period passes, a higher APR will probably apply. You’ll need to pay off your balance on time so you don’t offset any potential cash back earnings.

What are the pros and cons of cash back credit cards?

cash back credit cards can come with many benefits, but there are also some drawbacks you need to consider.

Pros

  • High rewards rate.
    Earn up to 5% cash back when you use certain credit cards on select categories. Generally, you can find cash back rates between 1% – 5%.
  • Variety of cash back categories.
    Earn accelerated rewards on almost every category of purchases, including groceries, gas, dining, online purchases and streaming services.
  • Simple rewards structure.
    Enjoy a simple rewards structure that doesn’t require you to calculate how many points each redemption option requires. You always know how much you get from your purchases.
  • Signup bonus.
    Depending on the card, you could earn a decent signup bonus if you meet certain spend requirements.
  • Intro APR period.
    Get a long intro APR period offer on balance transfers, on purchases, or both with some cash back cards.
  • No annual fee.
    Pay a $0 annual fee for most cash back credit cards. Of course, there are exceptions, but it’s unlikely that you’ll find a cash back card with a higher annual fee than $99.

Cons

  • High APR.
    Watch out for high APR that applies after your intro APR period ends. To make the most of your card’s rewards, pay your balance in full each month before it’s due.
  • Foreign transaction fee.
    Pay foreign transaction fees between 1% and 3% on all purchases made abroad or online with foreign merchants. This makes cash back cards poor international traveling companions.
  • cash back limitations.
    Watch out for cash back caps as some cash back cards that offer high reward rates limit the amount of cash back you can earn.

Tangerine Money-Back Credit Card

Tangerine Money-Back Credit Card

19.95 % APR

Purchase interest rate

Eligibility criteria, terms and conditions, fees and charges apply

Tangerine Money-Back Credit Card

Apply today and earn 2% cash back in up to three spending categories of your choice.

  • Purchase interest rate: 19.95%
  • Cash advance rate: 19.95%
  • Balance transfer rate: 1.95% for the first 6 months, 19.95% thereafter
  • Annual fee: $0
  • Credit score: 680+
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Compare cash back credit cards

Name Product Purchase Interest Rate Cash Advance Rate Cash Back Rate Annual Fee Minimum Income Reward
SimplyCash Preferred Card from American Express
19.99%
21.99%
2%
$99
N/A
Earn 2% cash back on all eligible purchases
Earn 10% cash back on all eligible purchases (up to $400 in cash back) for the first four months of Cardmembership.
Tangerine Money-Back Credit Card
19.95%
19.95%
2%
$0
$12,000
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
SimplyCash Card from American Express
19.99%
21.99%
1.25%
$0
N/A
Earn 1.25% cash back on all eligible purchases.
Earn 2.5% cash back on all eligible purchases in your first three months (up to a maximum spend of $6,000, or $150 in cash back).
HSBC World Elite® Mastercard®
19.9%
22.9%
3%
$0 annual fee for the first year ($149 thereafter)
$80,000
Earn 3% in travel rewards on all eligible travel purchases (6 Points per $1 spent) and earn 1.5% in travel rewards on all other eligible purchases (3 Points per $1 spent).
Earn up to 40,000 Points ($200 travel value), plus a full annual fee rebate for the Primary Cardholder for the first year ($149 value). Apply by March 29, 2021. Conditions Apply. This offer is only available to residents of Canada other than the province of Quebec (Quebec residents eligible for separate offer).
BMO CashBack World Elite Mastercard
19.99%
22.99%
1.5%
$0 annual fee for the first year ($120 thereafter)
$80,000
Earn 1.5% cash back on all eligible purchases.
Get up to 10% cash back in your first 3 months and the $120 annual fee waived in the first year.
Tangerine World Mastercard
19.95%
19.95%
2%
$0
$60,000
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
Shell CashBack Mastercard from BMO
19.99%
22.99%
1.5%
$0
$15,000
Get 1.5% cash back at participating Shell locations in Canada (up to a maximum spend of $2,500 in any monthly billing period), and get 0.5% cash back everywhere else.
Get $50 in cash back bonuses once you charge your first eligible purchase to your card. Plus, earn 1% cash back for the first 6 months on all eligible purchases.
BMO Cashback Business Mastercard
19.99%
22.99%
1.75%
$0
N/A
Earn 1.5% cash back on eligible gas purchases, office supplies and on cell phone and internet recurring payments, earn 1.75% cash back at participating Shell stations, and earn 0.75% on all other eligible card purchases.
Get 10% cash back on gas, office supplies, cell phone bills and internet bills for 3 months.
BMO CashBack Mastercard
19.99%
22.99%
0.5%
$0
$15,000
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Get 5% cash back on all eligible purchases in the first three months of card membership (up to a maximum spend of $2,000, and earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases thereafter). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
BMO CashBack Mastercard For Students
19.99%
22.99%
0.5%
$0
$15,000
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Get up to 5% cash back in the first three months (up to a maximum spend of $2,000, and earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases thereafter). Plus, get a rate of 1.99% on balance transfers for 9 months, with a 1% fee for every transferred balance.
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Who are cash back credit cards best for?

cash back credit cards could be worth considering if you want to save money on interest payments with a long 0% intro APR period on purchases, balance transfers or both; or if you want to earn accelerated cash back on categories, such as:

  • Groceries
  • Dining
  • Gas
  • Entertainment
  • Online purchases
  • Streaming services
  • Department store purchases
  • Home improvements purchases
  • Drugstore purchases
  • Travel

Most credit cards let you earn accelerated cash back on multiple categories. But if you can’t pinpoint an exact category where you spend most of your money, consider a cash back credit card with unlimited cash back on all purchases. Most such cards have a flat reward rate around 1% or 2%.

How to maximize your rewards

  • Spend enough to earn the signup bonus. You may need to make purchases more aggressively to reach the spending requirement by the bonus’s expiration date. The clock starts ticking the day you open your account, which may be a few days before you receive your card in the mail. If your credit limit isn’t high enough, you may have to pay off your balance a few times to make room for additional spending.
  • Sign up for special categories in advance. If you choose a rotating-bonus-category cash back card, you may need to activate your categories before you earn elevated rewards.
  • Spend more in categories that earn more rewards. If you won’t earn elevated rewards for certain purchases, consider using a different card.
  • Pay your balance in full each month. Paying interest on a cash back credit card eats into your rewards. Avoid late fees by setting up automatic payments.
  • Use your credit card for purchases only. Cash advances and balance transfers don’t earn rewards. In fact they can cost you a lot more in interest and fees and they usually start accruing interest immediately.

Bottom line

Consider a cash back credit card if you want to earn rewards on everyday purchases and enjoy a long intro APR period on purchases or balance transfers. Several cash back cards even offer a $0 annual fee. Just be sure to pay off your balance on time each month to avoid cancelling out your cash back rewards when the higher APR kicks in after the intro period ends.

If you’re not sure whether cash back cards are the right choice for you, compare rewards credit cards until you find the right type of credit card for your needs.

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