A rewards credit card is a great way to earn reward points or travel miles you can put towards travel, gas or shopping at your favourite stores just by making your everyday purchases. If you use your card responsibly, a rewards card can be a great way to get discounts on your next flight, travel package or shopping spree. Keep reading to learn about how rewards credit cards work in Canada, how to compare the best rewards credit cards and how to find the right type of rewards card for your unique set of needs.
A rewards credit card lets you earn reward points or travel miles for every purchase you make on your card. While cashback is most often returned directly into your bank account or sent to you as a cheque in the mail, rewards points can typically be used a variety of ways. You might be able to use your points for travel, merchandise, statement credit, gift cards and more. Miles, on the other hand, can usually only be redeemed for travel or travel-related experiences.
Most basic cards let you earn between 0.5 and 1 point for every dollar you spend, while premium cards tend to offer between 1 and 3 points or miles per dollar. You may also earn a different number of reward points depending on what you buy and where you buy it.
For example, a travel card might let you earn a higher return on travel rewards when you book flights or stay at a hotel. An everyday card might offer a higher return on points for gas than restaurants purchases. With frequent flyer cards, you may also be able to earn a higher return on points or miles when you shop with partner stores.
When you’ve collected enough points or miles, you can redeem them for rewards like travel, merchandise or gift cards. To do this, you usually just need to sign in to your online credit card account and follow the prompts browse their online store and redeem your points.
Just be aware that you may need to book your travel rewards on a third-party site. For example, you might be redirected to the booking site for a specific airline if you want to exchange frequent flyer miles. You could also be redirected to your provider’s rewards catalogue to exchange your points for merchandise or gift cards.
"In 2022, I applied for an American Express Cobalt Card after comparing hundreds of credit cards on Finder. I was drawn to this card because I can earn accelerated rewards points in the categories I actually spend a lot of money in including groceries, restaurants and travel. Although the card has a monthly membership fee of $12.99, I’ve found that I can easily offset this with the rewards points I earn.I previously had a no fee credit card from a Big Five bank and it took months to save up enough points to use toward statement credit or travel, but with my Amex I find I can use points on an almost monthly basis."
The type of reward credit card you pick will depend on factors like your eligibility and how you want to use your reward points. Rewards credit cards in Canada generally fall into one of the following five categories.
You’ll receive your rewards in the form of cashback, which you can usually redeem for statement credit or a deposit into your bank account. Some providers let you redeem your cashback directly towards travel, gift cards and merchandise.
Travel credit cards are a popular type of reward credit card, allowing Canadians to reach their travel goals more quickly. Travel cards work the same as other rewards cards – points you earn on everyday purchases can be redeemed for things like flights, car rentals or merchandise. Travel credit cards often come with airline-specific perks like priority boarding and free checked baggage. Travel credit card rewards programs generally fall into one of three categories:
At all major gas station chains, you can use your credit card — whether it’s a Visa, Mastercard or American Express. A notable exception is Costco gas stations, where you’ll need to use a Mastercard, as this is the only credit card brand accepted at Costco.
| Credit card type | Petro-Canada | Shell | Canadian Tire | Costco | Esso |
|---|---|---|---|---|---|
| Visa | ✅ | ✅ | ✅ | ❌ | ✅ |
| Mastercard | ✅ | ✅ | ✅ | ✅ | ✅ |
| American Express | ✅ | ✅ | ✅ | ❌ | ✅ |
Retail credit cards offer benefits and rewards tied to a particular store. These retail cards allow you to earn rewards points when you pay for purchases, which you can use for in-store discounts or travel rewards. Keep in mind that sometimes you’ll only be able to use your card with the affiliated company.
You’ll receive accelerated rewards when you use your card for a certain category, such as restaurants or streaming services. For example, you might receive 3% cash back for one category instead of 1%, which is the normal rewards rate for purchases. Some cards have spending caps for the highest rewards rates. Here are some examples:
A hotel credit card offers bonus points when you spend with a certain hotel chain. You can often redeem points through the chain’s rewards portal for hotel stays, travel packages, point transfers and more. Here are a few of our favorite hotel loyalty programs on the market. Usually, this card type also includes hotel-specific perks like loyalty-program upgrades and resort credits.
Get rewarded every time you spend money on business purchases such as office supplies, Internet costs or business trips. As a business owner, you may want to look for cards offering certain benefits like free additional cards for your employees, travel insurance and easy account monitoring.
What are the benefits of rewards credit cards? Are there any drawbacks? Check out the pros and cons before deciding if a rewards credit card is right for you.
If you’ve decided that a rewards credit card is the best fit for you, you should consider these factors while deciding which specific card you want.
If you’re wondering how much your points or travel miles are worth for certain redemption options like merchandise or gift cards, you can follow these three simple steps to calculate the value of your points. Let’s use a gift card as an example:
That means your points would be worth 0.8 cents apiece if you redeemed them for this gift card. That’s less than the industry standard of 1 point = 1 cent, so redeeming your points for a gift card in this example is not such a great deal.
Once you decide to sign up for a rewards credit card, you can maximize the number of reward points or miles you earn by using these tricks:
If you’ve been steadily racking up credit card debt and have vowed to get back on track, you can likely redeem your rewards points for a statement credit and pay down some – or all – of your card balance. Credit card rewards, which include cashback, points and miles, can often be turned into statement credit that you can use to start hacking away at your debt.
How can I use reward points to pay off credit card debt?
Most rewards card providers allow you to redeem points for statement credit to your account. How this is done depends on your card but generally involves the following steps:
Once your redemption is processed, allow several business days for the credit to be added to your card account. The cash amount you redeemed should then lower your credit card balance.
Before using rewards points to pay off your credit card balance, make sure you consider the following details:
You should be able to qualify for a rewards credit card if you have a decent credit score. Just be aware that you may need to meet certain income amounts to be eligible for premium cards. Other criteria you may need to meet include the following:
You’ll also need to be willing to meet additional requirements put forth by your credit card provider to qualify in some cases. Learn more about choosing a card on the Government of Canada website.
You can follow these steps to apply for a rewards credit card in Canada:
One of the easiest ways to deploy your spending for good is to get a charity credit card. There are different ways charity credit cards work, and it will usually depend on the type of credit card you have and the provider you choose.
There are plenty of rewards credit cards on the market for you to choose from. The best rewards credit cards can be particularly useful if you travel often or you would prefer to earn points that you can redeem for merchandise or gift cards. Learn more about how rewards credit cards work and compare providers to find the best deal.
Find out how to redeem Aventura Points for flights, travel, items, gift cards, statement credit and more.
Find out how to redeem Avion Points for a wide selection of rewards including flights, merchandise and more.
