Canada’s 8 Best Cash Back Credit Cards

Cash Back Credit Cards: What You Need to Know

When choosing a cash back credit card, you should familiarize yourself with what benefits a cash back credit card can offer, what features to look out for, and how cash back credit cards can fit into an optimized overall credit card strategy.

Why earn cash back rewards?

Cash back cards are great for one simple reason: cash is king. You’re not locked into using your rewards at one particular store or brand, and you can get immediate value for your rewards rather than waiting several months to take a trip you just booked on points.

Plus, cash is easy to understand, and the value of your rewards is plain as day. You may prefer to use cash back credit cards if you’d rather not spend time learning the rules of a complicated loyalty program just to reap the benefits of your credit card.

Even for frequent travellers, cash gives you unparalleled flexibility as you book your travel arrangements. You can use it for airlines that aren’t part of an alliance, offbeat accommodations, or car rentals. In fact, you can subsidize your trips however you like, using cash rewards for anything like public transportation, excursions and experiences, dining, or souvenirs.

What should you look for in a cash back credit card?

One major advantage of premium cash back cards is that they tend to have significant bonus rewards for spending in specific categories. For example, many Visa Infinite cards offer 1% cash back on most purchases, but 4% cash back at grocery stores.

Other cards instead offer the same cash back rate on all purchases. These cards are simple, and it’s easier to stay organized with them. They’re good for miscellaneous purchases, as they usually have a higher flat rate than non-bonused spending on cards with bonus rates.

It’s rare to find a one-size-fits-all cash back card. If you care about maximizing your rewards on everyday spending, you’ll likely want at least two or three of these cards, where each one covers the others’ weaknesses. That way, you’ll get high cash back rates on as many categories as you can.

On the other hand, if you’d prefer the simplicity of only managing one card at a time, the best cash back card will depend on your spending habits.

Cash back cards also offer some premium benefits, even though they aren’t travel cards with a full-fledged suite of travel perks. Indeed, cash back cards are often still useful for travellers:

• Cash Back Visa Infinite cardholders still get all of the same benefits as Visa Infinite travel cards, including Concierge services and the Luxury Hotel Collection.
• Cash Back World Elite Mastercard members still get all of the same benefits as World Elite travel cards, including a DragonPass membership and a FlexiRoam eSIM for international data roaming.
• Many cash back cards provide purchase protection insurance, and some even provide various types of travel insurance.
• Some cash back cards waive foreign transaction fees.
• Some cash back cards have unique services that aren’t found on travel cards, such as roadside assistance.

What’s the optimal strategy for cash back credit cards?

When it comes to maximizing credit cards as a whole, cash back credit cards typically play a more supplementary role in a savvy credit card user’s wallet compared to travel rewards credit cards.

That’s because the main appeal of a cash back credit card is its simplicity and ease of use: you get a certain percentage of cash back as a reward for your spending.

In exchange, however, the overall upside of your rewards is limited: you’ll be able to get 1.5–2% back on your spend, but the potential outsized return of travel rewards (5%, 10%, or even more!) isn’t accessible to you.

If you’d like to get the best of both worlds, consider a travel credit card that earns “cash equivalent” points rewards. For example, the American Express Cobalt Card and the Scotiabank Gold American Express® Card both offer sky-high 5% earning rates on groceries, food, and drinks – you’ll never get these types of rewards on a regular cash back credit card.

Technically, these two credit cards earn points rather than cash back: Amex Membership Rewards points and Scene+ points, respectively. However, both can be redeemed at 1 cent per point against travel purchases.

Since a statement credit is basically as good as cash in your pocket, these two credit cards (and others that can be used the same way) can be thought of as more powerful versions of a traditional cash back credit card.

And who knows, since Amex MR points can also be transferred to flight and hotel programs and redeemed for some awesome experiences, you may even find yourself swayed by the power of travel rewards once you start dabbling with these cards!

Overall, traditional cash back credit cards are best suited to credit card users who prefer to keep things as simple as possible. If you’d like to “set it and forget it” in terms of your credit card strategy, you might go with a simple cash back card and call it a day.

But for credit card users who are looking to optimize, cash back credit cards alone probably won’t cut it in terms of the welcome bonus or the regular return on spending.

Frequently Asked Questions

Below are some questions we frequently hear from readers about the best cash back credit cards in Canada.

When can I redeem my cash back rewards?

Many cards let you request cash back to be issued as a statement credit any time you’ve accumulated enough rewards. Depending on the card, you can do this online or over the phone, or rewards may be paid automatically.

Some cards only pay out monthly, quarterly, or yearly. If you have one of those cards, make sure you’re never counting on your cash back urgently, and don’t be alarmed if it isn’t credited immediately after each purchase.

I prefer the earn rates and perks of travel credit cards more than cash back credit cards. Can I redeem travel rewards for cash back?

Some travel cards let you redeem points for statement credit to cover any travel expense, including refundable bookings. Examples include credit cards that earn Scene+ points , MBNA Rewards points, or American Express Membership Rewards points.

By making a refundable booking, covering the expense with your points, and then refunding the booking, you can therefore “cash out” your points. If you can use your points this way, they’re effectively as good as cash back.

Other types of travel rewards may let you redeem for cash back, but often at a very poor rate when compared to flights or hotels. In these cases, it’s better to redeem points directly towards your travel plans.

Whichever type of credit card you apply for, make sure you think about the value you expect to redeem the points for, before you submit your application.

How do I know if my purchase counts as a recurring bill payment?

Recurring bill payments are unlike other purchases. To get the bonus rate, they have to be set up as an automatic charge to your credit card, with a pre-authorization on file with the biller.

If you make a manual payment every time you receive your monthly utility bill, you likely won’t receive the recurring bonus rate, even if it’s the same amount every time.

Some banks, like Scotiabank, also have partnerships with specific merchants. If you have any questions about what qualifies as a recurring payment, it’s best to contact the credit card issuer for clarification.