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5 smart ways to use cashback credit card rewards

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Learn how cashback rewards work, plus use these five super-smart strategies to maximize your credit card money-back rewards.

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Sponsored by Tangerine. Unlock credit card rewards with Tangerine credit cards. Earn unlimited Money-Back Rewards with either the Tangerine Money-Back Credit Card or the Tangerine World Mastercard. T&Cs apply.

If you’re shopping around for a cashback credit card, the first thing to do is to consider your spending habits. Think about the categories where you regularly make purchases with your credit card, and then look for a money-back card that lets you accumulate maximum rewards across those categories.

Next, look for a card that offers unlimited cashback and no annual fee, as this will allow you to avoid paying a fee to maximize cashback rewards.

Finally, keep an eye out for any welcome bonuses or other special offers for new customers that can add an extra boost to your cashback earnings.

For instance, if you plan to spend a bit over the summer months, check out the Tangerine Money-Back Credit Card that currently offers 10% cash back on up to $1,000 for the first two months of spending. Even after this promo ends, you get an easy 2% on your three chosen spending categories and 0.5% on all other purchases. There’s no limit to the amount of cashback you can earn and no annual fee to eat into your savings. For more information, check out Finder’s full review on this cashback, no annual fee credit card.

Remember, a good credit card rewards program will give you plenty of opportunities to earn perks while helping you stretch your budget. But to get the most out of these rewards, it’s best to learn a few smart strategies.

5 smart ways to use cashback credit card rewards

While it’s great to get rewarded for paying bills and buying groceries, it’s even better to maximize credit card rewards by getting this money to work for you. To help, here are five smart strategies for using your cashback rewards.

Tip #1: Start (or grow) an emergency fund

One of the smartest strategies for using cashback rewards is to use the funds to start — or grow — an emergency fund.

According to the Finder: Impact of Inflation report, the biggest reason Canadians take on debt is to cover living expenses pre- and post-job loss (36% and 19%, respectively).

Use your credit card rewards to start and build your emergency fund to avoid the need to take on expensive debt.

Tip #2: Pay off high-interest-rate debt

The less you owe, the less interest you pay and the more choice you have on where to spend your money. To help, use your cashback rewards to make extra payments against high-interest debt.

Making extra payments lowers your total debt and the total amount of interest you pay. Do this often, and you can knock down or even eliminate high-interest debt and reclaim some of your hard-earned spending money.

Tip #3: Use it as a travel fund

When trying to prioritize and make responsible spending decisions, we can neglect the need for milestone rewards — breaks in the day-to-day to remind ourselves why we work hard and spend wisely. To help, consider using your credit card rewards as your travel fund. Putting aside cashback rewards earned on your day-to-day spending helps build up a travel fund that can help pay for flights, travel insurance or even accommodation.

For instance, spend $2,500 each month in your three chosen spending categories using your Tangerine World Credit Card and after a year you would have $600 in cashback rewards to use towards future travel plans.(1) Better still, pair this strategy with a credit card that offers travel rewards, and you’re that much closer to an annual vacation with a few more money-saving perks!

For instance, the Tangerine World Credit Card not only offers 2% cashback in up to three spending categories, along with 0.5 Money-Back Rewards on everyday spending, but the card also comes with additional travel perks and rewards offered through Mastercard Travel Pass.(2) For instance, get special cashback offers at a wide range of partner merchants through Mastercard Travel Rewards. The Tangerine World Credit Card also gets you access to more than 650 airport lounges worldwide through DragonPass. Plus, you can stay in touch while on the go through access to more than one million Wi-Fi hotspots around the world using Boingo Wi-Fi. Get up-to-date travel offers, along with relevant terms and conditions, through Mastercard Travel Pass.(3)

Tip #4: Use it to offset holiday spending

The holiday season is typically considered a joyful time of year, but for more and more Canadians, holidays are stressful and expensive.

Last year, more than a third of Canadians (35%) took on debt to pay for holiday expenses, according to the Finder: Cash for Christmas report. To offset these seasonal costs, consider using your credit card rewards. By using the extra cash earned throughout the year on everyday spending, you can alleviate holiday spending stress.

Combine this strategy with a money-back card that allows you to pick the spending categories where you earn most and you can also maximize cashback rewards throughout the year and during the holidays, as well.

For instance, using the Tangerine Money-Back Credit Card, you can choose your 2% Money-Back categories to suit your spending. This means you can earn more in categories where you spend the most, such as groceries, gas stations and recurring bill payments. As you get closer to the holiday season, you can change your 2% categories for other options, such as restaurants and electronics, where you know you’ll spend more during the holiday season.

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Sponsored: Get 10% Money-Back rewards in the first two months when you open a Tangerine Money-Back Credit Card or a Tangerine World Mastercard. Sign-up today to take advantage of this offer.

Tip #5: Save for your future

If you don’t carry debt and you don’t struggle to save, one of the best ways to use your cashback earnings is to save these earnings.

By applying your credit card rewards to your savings, you are helping to leverage the power of compound interest. For instance, keep the $500 earned in cashback rewards in a high-interest account, such as the Tangerine Savings Account, and earn 5.75% in the first five months and 0.7% thereafter. Do this every year for five years, and the total value of your savings will grow to well over $2,500.

Bottom line

If you can stay disciplined and only use your card for essential purchases, a cashback credit card makes it easy to save money on your regular spending. There are dozens of options to choose from, so compare a range of rewards credit cards in Canada to find a competitive cashback rate, no or low annual fees, and a card that rewards you for the type of spending you normally do.

Explore Tangerine’s Money-Back Credit Cards

1 - 2 of 2
Name Product Welcome Offer Rewards Purchase Interest Rate Annual Fee Min. Credit Score Description
Tangerine World Mastercard
10% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn 10% cash back (up to $100) when you spend $1,000 in the first 2 months. Valid until April 30, 2024. Plus, get a 1.95% interest rate on balance transfers for the first 6 months.
Tangerine Money-Back Credit Card
10% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn 10% cash back (up to $100) when you spend $1,000 in the first 2 months. Valid until April 30, 2024. Plus, get a 1.95% interest rate on balance transfers for the first 6 months.
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