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Compare rewards credit cards in Canada for 2021
Collect points to redeem for travel, merchandise, gift cards and more with a rewards credit card.
Compare rewards credit cards in Canada for 2021
What's in this guide?
- Compare rewards credit cards in Canada for 2021
- How do rewards credit cards in Canada work?
- The 6 types of rewards credit cards in Canada
- Who should consider getting a rewards credit card?
- What are the pros and cons of using a rewards credit card?
- How to choose a rewards credit card in Canada
- How to maximize your points with a reward credit card
- Compare apps to help you earn even more rewards
- Who can qualify for a rewards credit card in Canada?
- How to apply for a rewards credit card
- Bottom line
How do rewards credit cards in Canada work?
Rewards credit cards let you earn reward points or travel miles for every purchase you make on your card. While cash back 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.
What happens when I want to redeem my points?
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.
The 6 types of rewards credit cards in Canada
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 cash back, 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.
- Here’s an example: TD Cash Back Visa Card. Earn 1% in cash back on eligible grocery and gas purchases, as well as on regularly recurring bill payments set up on your account, and earn 0.5% in cash back on all other eligible purchases.. You can redeem points for statement credit and bank deposits. Gift cards, travel and experiences are also available through TD Rewards.
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:
- Standalone programs: The AIR MILES rewards program primarily partners with BMO and Amex to offer basic and premium travel rewards credit cards to fit any budget. It’s one of the biggest travel points programs in Canada.
- Bank-affiliated programs: The two big bank-affiliated travel rewards programs in Canada are the CIBC Aventura Rewards and RBC Avion Rewards programs. Both offer a selection of basic and premium travel rewards credit cards.
- Airline-affiliated programs: Probably the most well-known airline affiliated travel program in Canada is the Aeroplan Rewards program, which is owned by Air Canada. It currently partners with CIBC, TD and Amex to offer a wide range of Aeroplan credit cards.
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.
- Here’s an example: With the Hudson’s Bay Mastercard, you’ll earn 4 points per dollar on purchases in-store and online, with an additional 2 points everywhere else, which you can redeem for discounts at Hudson’s Bay. You can use this card wherever Mastercard is accepted.
4. Category-specific — Gas, grocery, dining, etc.
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:
- Gas: Shell CashBack World Mastercard from BMO. You’ll earn 3% cash back on all Shell purchases.
- Groceries: BMO Sobeys AIR MILES Mastercard. Earn Air Miles at Sobeys supermarkets.
- Dining: The Platinum Card from American Express. Earn Membership Rewards points for every $1 spent on dining.
- Entertainment. Scotiabank SCENE Visa Card. Earn for every $1 spent at Cineplex Entertainment theatres.
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.
- Here’s an example: The Marriott Bonvoy American Express Card allows you to earn points towards the Marriott Bonvoy rewards program. Earn 5 points per $1 spent at participating Marriott properties and 2 points on all other spending. Terms apply.
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.
- Here’s an example: The American Express Business Edge Card helps you earn on your business expenses. Earn 3 Membership Rewards points for every $1 spent on eligible business essentials including office supplies, electronics, rides, gas, eats and drinks (up to an annual earn of 75,000 Membership Rewards), and earn 1 Membership Reward point for every $1 spent on all other eligible purchases.
Who should consider getting a rewards credit card?
Consider getting a rewards card if you’re…
- Frequent spenders. If you plan on using your credit card frequently, you can benefit with strong rewards.
- Loyal customers. If you do most of your shopping through a particular store, a retail card can reward you especially well versus a generic rewards card.
- Cardholders who make regular payments. Making timely payments is crucial if you wish to make the most of your rewards credit card. If you keep a balance on your card, you’ll accrue interest that will eat into your rewards.
Consider NOT getting a rewards card if you’re…
- Someone in debt. If you’re in debt, consider a balance transfer card rather than a rewards card. It may be wise to avoid the temptation of earning rewards through additional spending.
- Irregular spenders. If you don’t use your credit card regularly, it may not be worth paying the fees for a rewards card. This product type is only beneficial if the monetary value of your rewards exceeds the costs of the card.
What are the pros and cons of using a rewards credit card?
- Rewards for spending. You’ll be able to earn rewards that you can redeem for travel, merchandise, gift cards and more.
- Additional benefits. Many cards offer a number of benefits such as travel insurance, roadside assistance and mobile device protection if you pay an annual fee.
- Welcome bonus for signing up. You’ll usually receive a large amount of reward points or miles just for signing up for a rewards card.
- Cards that suit your lifestyle. You can choose a card that will give you more points for the purchases you make the most, which means you’ll earn more in the long run.
- Spending more than usual. With the incentive of a reward to look forward to, some cardholders are tempted to make purchases for the sake of earning rewards. Remember that you’ll need to repay the balance. Otherwise, the accumulated interest could outweigh the value you’ve received from your rewards.
- Annual fees. Many rewards cards charge an annual fee for membership, so you’ll need to make sure your rewards and benefits outweigh the costs.
- Rewards caps. Some providers put a cap on how many reward points you can earn at an accelerated rate, which means you’ll miss out on getting the maximum return.
- Points can expire. In some cases, your reward points or miles may expire unexpectedly before you’ve had a chance to redeem them.
- Low points value. Some cards offer a lower value for points than others, so you should be sure to look up average returns for the program you’re interested in before signing up.
How to choose a rewards credit card in Canada
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.
- Return on rewards. Think about how many reward points or miles you’ll earn for every purchase and multiply this number by how much your points are worth on average. Choose the card that gives you the highest return and the highest value for your points.
- Welcome offers. Look for a card that offers a large welcome bonus since this can often give you enough points to get hundreds of dollars’ worth of rewards.
- Benefits. Search for a card that offers a solid mix of benefits and perks that you’ll actually use for a price you can afford. Benefits can include travel insurance, mobile device insurance, rental car insurance, roadside assistance and more.
- Annual fee. Find a low-fee card if you don’t need many benefits, or search for a premium card that waives your first annual fee if you want extra perks and a higher return on points.
- Interest rates. Try to pick a card that has a maximum interest rate of 19.99% for purchases and 21.99% for cash advances. If possible, aim to find a lower interest rate so that you can save money if you intend to keep an outstanding balance on your card.
- Other fees. Make sure to read your contract fully and pay attention to fees for services like cash advances, foreign transactions and any other fees. Look for the card that doesn’t charge for the services you use regularly.
- Provider. When deciding on a rewards credit card, you can choose from many providers. These include big banks, digital banks and private companies. Look for a card from an establishment you trust and make sure the rewards are tailored to your lifestyle.
Purchase interest rate
American Express Cobalt Card
Apply today and earn up to 30,000 Membership Rewards points in your first year.
- Purchase interest rate: 19.99%
- Cash advance rate: 21.99%
- Annual fee: $120
- Credit rating: 700
How to calculate how much rewards points are worth
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 3 simple steps to calculate your points’ value. Let’s use a gift card as an example:
- Check how much the redemption option is worth. For this example we’ll use a gift card worth $25.
- Check how many points or miles you must trade for it. Let’s say you’ll have to redeem 3,000 points to get the gift card.
- Divide the redemption’s monetary value by the number of points you must redeem. In this case you would divide $25 gift card value by the 3,000 points needed to get it: $25 / 3,000 = 0.008.
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.
How to maximize your points with a reward credit card
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:
- Pay an annual fee for a premium card. You’ll get a higher return on rewards and a better mix of benefits when you pay an annual fee for a premium card.
- Spend more in your bonus-reward categories. Your card might offer accelerated rewards for certain purchase categories. If you have the option to choose those categories, make sure to choose ones for purchases you tend to make the most. For example, if your card pays 5% cash back on groceries, it’s a no-brainer to use your card at the grocery store as much as you can.
- Avoid rewards caps. Avoid rewards caps on your monthly or annual spending limits to earn more reward points or miles if you intend to spend a lot of money on your card.
- Sign up for targeted rewards. Find rewards programs targeted towards the types of purchases you make the most (e.g. travel rewards for frequent flyers).
- Look for a welcome bonus. Load up the points in your account right from the get-go by searching for a card with a generous welcome bonus or a special promotional offer.
- Keep an eye on expiration dates. Your points may expire if you don’t use them within a certain time period, so make sure you know how long they’ll be good for.
- Be mindful of excluded purchases. Some purchases aren’t eligible for rewards, so you should look into your rewards program to find out where you stand to earn the most.
Compare apps to help you earn even more rewards
Who can qualify for a rewards credit card in Canada?
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:
- Be 18 years old or the age of majority in your province or territory.
- Be a Canadian citizen or a permanent resident with a valid Canadian address.
- Have a working bank account (this is sometimes not a requirement – it varies between providers).
- Have an average credit score and not be struggling with a bankruptcy or consumer proposal.
You’ll also need to be willing to meet additional requirements put forth by your credit card provider to qualify in some cases.
How to apply for a rewards credit card
You can follow these steps to apply for a rewards credit card in Canada:
- Compare rewards credit cards. Compare the rewards credit cards on offer in Canada from a number of providers to find the best fit for your budget and lifestyle.
- Apply for the card of your choice. Visit the main site of the provider you’re interested in to apply for the credit card of your choice.
- Fill out application details. Fill out personal details such as your full name, address, email and phone number to start your application.
- Submit to a credit check. Submit to a personal credit check to get approved for the rewards credit card of your choice.
- Review final details. Look at the details of your contract and make sure you understand what type of reward points and benefits you’ll get with your card.
- Click submit. Once you’re ready to apply, click submit on your application or call your credit card provider directly to apply over the phone.
- Wait for your card to arrive. When your application is approved, your provider should send your card out in the mail or allow you to pick it up at a branch location.
There are plenty of rewards credit cards on the market for you to choose from. These 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.
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