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What Are the Best Cash Back Credit Cards? Ricky March 26, 2020

What Are the Best Cash Back Credit Cards?

I never thought I would write this article, but here we are. 

Enclosed First Class suites and onboard showers – and indeed travel of any kind – represent no more than a pipe dream at the moment, and that leaves the Miles & Points community feeling somewhat on edge. 

What happens to our tried-and-true strategy of “earn and burn” in a time when we can’t burn? What’s the best Miles & Points strategy during these times of uncertainty? And – dare I say it – could there be an argument for using cash-back credit cards as a means of diversifying your credit card strategy, and if so, which ones are the best?

In This Post

The Place for Cash Back Credit Cards in Your Strategy

For those who dream of travelling again when it’s possible and whose points balances need replenishing, now is a great time to rack up some large quantities of points for future use.

But this strategy might be an overly simplistic take, because there are several reasons why it may not be all-encompassing:

  • You might already have significant points balances that you can no longer redeem effectively in the short term. Indeed, I myself have earned 300,000+ miles over the past few weeks alone… when I had to cancel the future trips that I had booked. 😉

  • If so, earning even more miles in the same programs would amount to hoarding miles, which opens you up to the risk of devaluations in loyalty programs over time. I personally don’t believe that airlines and hotels will be recklessly devaluing their loyalty programs anytime soon, since they’ll need them to drive spending during an economic slowdown; however, ultimately I can’t deny that the risk of devaluation in any loyalty program is ever-present, which is why “earn and burn” is such a sacred tenet in the first place. 

  • The best signup bonuses on travel rewards credit card are not available right now, as banks and financial issuers across the board are understandably holding off on promoting these products for the time being. I’d only expect elevated signup bonuses to return in future months, when the prospects for travelling are starting to look up. 

  • The best travel rewards credit cards tend to come with higher minimum spending requirements, which may be challenging at a time when we’ve all chosen to limit our economic activity. With most stores across the nation, from Lululemon to Hudson’s Bay, shutting down as a result of the pandemic, it’ll be tougher to make purchases on your credit cards and hit those minimum spends. 

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Combine these with an overall downturn, in which many households will be light on cash and heavy on needs that are more pressing than travel, and there’s definitely a case to be made for incorporating cash back credit cards into your overall credit card strategy. 

Cash back may be less sexy than the potential of future trips in premium cabins, but by taking advantage of the signup bonuses (much like we do with travel rewards cards), you could end up with a definite and substantial sum of money in your pocket that can sustain you through this leaner period before travel is back on the table. 

What Are Cash Back Credit Cards?

As a quick refresher, cash back credit cards offer rewards in the form of cash, based on a percentage of your transaction.

Many consumers in the general public prefer cash back because their return is definite and easily understood, compared to travel rewards points, whose value is not realized until they are redeemed for travel, and often require a significant investment in time and energy to redeem for maximum value.  

Like the rewards cards we commonly discuss, cash back credit cards may offer different percentages depending on the category of the purchase (gas, grocery, dining, etc.) Cash back cards can also vary in terms of when the cash is withdrawn: for example, some cards only allow withdrawal of the cash back when the balance is at least $50, while others allow you to apply the cash back amount directly to your balance each month.

Unlike rewards credit cards, it’s relatively uncommon to see cash back cards offering a signup bonus in the form of their rewards currency – cash. Instead, most cash back cards entice users to sign up with a promotional elevated cash back offer during the first few months, coupled with a strong continued cash back earning rate after the welcome offer period.

What are the best such offers right now? Let’s take a look around the Canadian marketplace. 

1. Scotiabank Momentum Visa Infinite

The Scotiabank Momentum Visa Infinite is currently offering a signup bonus of 10% cash back on all spending within the first three months, up to a maximum of $2,000 in total purchases. Since there’s no restriction on the spending categories for this bonus, this represents an easy $200 in your pocket. 

Scotiabank is also currently offering First Year Free on this card, waiving the $120 annual fee for the first year. After the first three months, the Scotia Momentum earns 4% cash back on groceries and recurring payments, 2% cash back on gas and transit, and 1% on everything else, making it a pretty solid candidate for spending in those bonus categories.

The 10% promotional cash back is very strong, and makes the Scotia Momentum one of my top choices if I were to pick up a cash back card myself. Keep in mind that there’s a minimum annual income requirement of $60,000 (personal) or $100,000 (household) to qualify for this Visa Infinite product.

If you’re interested in the Scotia Momentum, I’d be grateful if you considered using the Prince of Travel affiliate link to apply, which goes a long way towards supporting the website. Alternatively, you may also check websites like Great Canadian Rebates to see if any of their separate cash back offers on this card might pique your interest.

2. Tangerine Cash Back MasterCard

If you’re looking for a cash back credit card with no annual fee, it’ll have to be one of Tangerine’s cash back MasterCards. 

There are two separate products here: the Tangerine Money-Back Credit Card and the Tangerine World MasterCard. Both cards come with no annual fee, and offer the same signup bonus until March 31: a $250 credit in your account once you spend $5,000 in the first three months, which essentially amounts to 5% cash back on the first $5,000.

The only notable difference is the annual income requirements, which is $12,000 for the Money-Back Credit Card and $60,000 (or $100,000 in household income) for the World MasterCard.

Meanwhile, the World MasterCard also comes with a few extra benefits such as MasterCard Loungekey at $32 per lounge visit and exclusive access to MasterCard events. But let’s be real – nobody is getting this card in order to visit airport lounges for $32, so for all intents and purposes, the two cards are essentially the same.

After you’ve earned the signup bonus, Tangerine is unique in allowing you to pick your two preferred spending categories to earn 2% cash back, with remaining categories earning 0.5% cash back. For example, those of us who are under self-quarantine for the foreseeable future might choose groceries and recurring bill payments (Netflix, etc.) as our 2% cash back categories. 

You may change your chosen categories once every 90 days, and furthermore, if you opt to deposit the cash back directly into a Tangerine savings account, then you can pick a third category in which to earn 2% cash back. This level of customization makes the Tangerine a popular card to keep around forever among many consumers out there.

3. TD Cash Back Visa Infinite

Another cash back worth considering is the TD Cash Back Visa Infinite. TD is currently offering 6% cash back on the first $2,000 of spending within the first three months, which works out to $120 in cash back.

For everyday spending beyond that, this card offers 3% cash back in groceries, gas, and recurring bill payments, and 1% back on everything else, providing a strong return on those 3% categories that outstrips what you’d earn with Tangerine (but isn’t quite as good as the Scotia Momentum’s 4% on groceries and recurring bills). 

While the annual fee is normally $120, TD is also offering First Year Free on this card for the primary cardholder, as well as one supplementary card.

I’d say one of the best ways to get this card is through the TD product switching strategy, although you do have the meet the minimum annual income requirement of $60,000 (personal) or $100,000 (household) to qualify for this Visa Infinite product. 

4. American Express SimplyCash Preferred

Simplicity is the name of the game with the American Express SimplyCash Preferred Card.

The signup bonus is a very respectable 5% back in the first six months (up to $300 in cash back, which is equivalent to $6,000 in spending), but even the subsequent flat rate of 2% cash back on everything is simple to use for individuals who’d prefer not to carry around five credit cards at once and keep a spreadsheet of which card to use at which retailers.

The annual fee on this card is $99, with Great Canadian Rebates offering $100 in cash back to offset the fee for the first year. 

5. KOHO Card

The KOHO Card is not a credit card, but rather a reloadable prepaid Visa that offers cash back as an incentive to use it for your spending, along with a host of useful features for those who’d like to track their spending and budgeting more closely. 

There’s no fee for getting the card, and you’ll earn 1.5% cash back on all purchases in the first 90 days upon signing up with the referral code PRINCEOFTRAVEL, followed by 0.5% cash-back on all purchases after those 90 days.

You can also earn even more cash back by referring friends to their own KOHO Cards as well – both of you will earn a further 1% in cash back for 90 days, and since you can refer a maximum of 10 friends, you could potentially end up with a stunning 11.5% cash back (10% from referring your friends, plus the 1.5% from signing up initially) for a 90-day period. 

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KOHO also offers a Premium version of their card, which comes with a fee of either $9 per month or $84 per year, but elevates your earnings to 2% cash back on groceries, eating & drinking, and transportation purchases, as well as a valuable No FX Fee feature that puts KOHO on par with the Stack Prepaid MasterCard

KOHO markets itself as a personal finance-oriented spending tool, and allows you to round up your purchases to the nearest 1%, 5%, or 10% and automatically credit the difference to your next savings goal. Moreover, the Premium version comes with a very useful price-matching feature, which credits you the difference if KOHO can find a lower price to your purchase at an alternate retailer and can save you hundreds of dollars per year.

If the KOHO Card interests you, feel free to sign up with the referral code PRINCEOFTRAVEL to earn 1.5% cash back, with no spending caps, on the first 90 days.

Conclusion

Most of us are in a travel lull at the moment, whether we want to be or not. 

It’s a great time to focus on building up our points balances for future trips, but whether it’s because you already have significant points balances or you find minimum spending requirements challenging to meet right now, there’s definitely room to diversify your credit card strategy and grab a few cash back credit cards, which can net you an easy few hundred dollars in your pocket for very little effort without having to deal with burdensome minimum spends or high annual fees.

There are quite a few more topics to explore in terms of the best Miles & Points strategy during this challenging time – such as how you might choose to “cash out” any of your existing points balances if necessary, or how you can go about meeting minimum spends on cards you’ve already received – and I’ll be covering these in future articles. 

Top Offers

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  • Marriott Gold Elite status
Signup bonus
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17 Comments
  1. Avatar
    Kyrie English

    The utility of cash back cards is that those w/o big spending or don’t MS and have little desires to travel can actualise the benefits in the form of reduced expenditures. After all, most people who cannot or do not want to afford the lifestyle of spend big to earn big travel rewards can benefit from investing the extra cash for financial instruments to get their compounded returns.

    My recommended cash back strategy is to use Scotia Momentum VI/TD Cashback VI as the grocery/bill payment/gas mastercard (BMO’s no fee 3% on gas and bills could work if one does not want to keep 2 separate $4000-$5000 emergency funds at both TD and Scotia), and Tangerine or AmEx SimplyCash Preferred (First year AF rebate with GCR) to supplement the other categories.

    Side note: The TD Cash Back Visa Infinite occasionally provides promotional bonus of 10% cash back on all spending up to $2000.

  2. Avatar
    Richard

    One caveat: the merchant codes are not as you might expect and if the cash back varies with the type of purchase, you have to be vigilant. For example, anything you buy at a Walmart SuperCentre, even a snowblower, counts as “groceries”. Anything you buy at a regular Walmart, even food, does not count as Groceries. Food purchased at Costco is not Groceries but Gas at the Costco pump is Gas! Food like tourtière at Bakeries Like Premier Moisson might be coded as a Fast Food Restaurant. And Gas at the closest gas station at Trudeau Airport codes in as “Airport Services” not Gas.
    This can be very frustrating!
    I use the cash back cards to return merchandise to stores with codes that produce a low cash back hit (0.5%) and keep the travel bonus I earned when I originally charged the purchase to another credit card.

    1. Avatar
      Ricky

      Thanks for this Richard, this is important to note. I’d also add that 7/11 seems to count as a grocery store on Amex purchases too 😉

  3. Avatar
    Luk

    Amex Simply Cash Prefered is 300$ bonus (5k in 6 months). Your link is for the regular Simply Cash.

    1. Avatar
      Ricky

      Thanks for the correction. Goes to show how much I still need to familiarize myself with the cash back cards on the market.

  4. Avatar
    Jason

    Manulife bank has cashback cc, currently FYF, and promotional 10% cb for up to first $2500:
    Meridian also has one for FYF but no promotional cashback boost.
    One advantage of the Tangerine World MC over the regular one would be being able to use the World MC to sign up for Boingo and get free in-flight WiFi

    1. Avatar
      grant

      10% applies to grocery store purchases up to $2500 for first 3 months.

  5. Avatar
    Jean-Francois Racine

    Desjardins (Quebec and Ontario) are offering a World Mastercard with 2% cashback when using paypass with the physical card. There is also 2% on recurring payments, mobile device insurance and an annual fee of 50$ for one card + 10 for an extra card. So if you compare to Rogers WE, you need only 2500$ extra spending to cover the annual fee. But the big caveat is every online transaction is 1%.

  6. Avatar
    Eric

    I’m quite confused about whether this is a route I should proceed down. The other option might be to keep accumulating travel points so there’s LOTs of dry powder ready. But as you mention devaluations happen…and one suspects that large spends might get more attention these days. If you are into the MS thing that is.

    A third option is to give my credit rating a rest from all of the inquiries. I think that might be my choice for the moment.

    1. Avatar
      Ricky

      Whether you choose to continue with travel rewards or diversify into cash back a little, there’s definitely no need to go too aggressively. It’s only natural to take things a bit slower during this leaner period.

  7. Avatar
    DM

    Ricky,

    One other card everyone could consider is the Rogers Bank World Elite MasterCard. It offer flat 1.75% cash back in all CAD purchases, 2% cash back on Rogers purchases (including Chatr, Fido) and 4% cash back on foreign transactions (effectively 1.5% cash back after FX markup of 2.5%). It also doesn’t have any annual fee but comes with some interesting insurance products.

    1. Avatar
      Ricky

      As Matt mentioned, the June 2020 devaluation is why I’ve left it off the list.

    2. Avatar
      Matt

      Unfortunately, they recently devalued this card so this information is outdated…too bad because it was a good card.

        1. Avatar
          Marty

          It’s losing its foreign exchange rate and you need to spend 15,000$ to get the benefits.

  8. Avatar
    Jean-François Raynaud

    Ricky, the links on the Scotiabank Momentum Visa Infinite seem to be broken, I can’t access the pages when I click on them.

    Thank you for this great article !

    JF from Montreal

    1. Avatar
      Ricky

      That’s my bad – should be working now. 🙂

Ricky

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