Cash back credit cards

Save money using credit cards with cashback on everything from groceries to petrol.

By   |   Verified by Yvonne Taylor   |   Updated 21st October 2020

Comparing cashback credit cards

Tangerine Money-Back Credit Card

Tangerine Money-Back Credit Card

Highlights

  • 1.95% p.a. for 6 months on balance transfers (3% balance transfer fee applies). Reverts to cash advance rate of 19.95% p.a.
  • Earn 2% Money-Back Rewards on your everyday purchases in two 2% Money-Back Categories of your choice, and 0.50% Money-Back Rewards on all your other everyday purchases.
  • Get your Rewards deposited into your Tangerine Savings Account and get a 3rd 2% Money-Back Category.
  • No limit on the amount of Money-Back Rewards you can earn on your everyday purchases. Conditions apply.
Scotia Momentum Visa Infinite Card

Scotia Momentum Visa Infinite Card

Highlights

  • No annual fee for the first year, including supplementary cards ($120 and $50 p.a. respectively thereafter).
  • Earn cashback on groceries, recurring payments, gas and everything else.
  • Enjoy Visa Infinite Concierge Service.
SimplyCash Card from American Express

SimplyCash Card from American Express

Highlights

  • Earn 2.5% cashback on purchases (up to $150) for the first 3 months of card membership.
  • Earn 1.25% cashback on purchases when your Welcome Rate ends.
  • Enjoy Travel-Related and Shopping Insurance Coverage.

Bank promo

  • Earn 2.5% cashback in your first 3 months (up to $150 cashback)

Overview

With rewards that are easy to understand and can be used towards almost anything, cash back credit cards are among the most popular in Canadian households. When spending wisely, a cash back credit card can help you reduce your living costs, or save up for a big trip abroad.

This category of credit cards is valued for its simplicity. Instead of trying to figure out how to maximize travel rewards or where to transfer points, these credit cards give straightforward rewards every time they are used. Cash back rewards also have no expiry date. You can use them to lower your balance every month, or save them up towards a major purchase.

Are cash back credit cards right for your lifestyle? Can you get better rewards from a cash back credit card than an airline miles or points earning credit card? By understanding all the benefits that these cards can offer, you can get the biggest return on your spending. Finty can help you find the best cash back cards for your lifestyle.

How cash back credit cards work

As the name would suggest, cash back credit cards help you earn rebates on all your spending. For example: if a cash back rewards card offers 2% back everywhere, you will earn $0.02 for every $1 you spend with the card. But instead of getting a cheque in the mail, the cash back will be credited to your card account. From there, you can use it to pay off any (or all) of your credit card balance.

So if you use your credit card to buy $100 of groceries, and it offers 2% rewards on purchases, you would earn $2 cash back. Four similar trips to the grocery store every month would earn $8, able to be used on your credit card to offset your balance.

But if the credit card offers 5% cash back for groceries as a bonus category, that $100 would earn you $5 in cash back. Four monthly trips to the store, and you would earn $20 in rewards.

All credit cards offer different bonus categories and ways to pick up additional rewards for your spending. To get the best cash back, be sure to understand the bonus categories on each card, and compare them to your own spending pattern. By aligning the two, you are well on your way to maximizing your bonuses every year.

Many cash back credit cards offer a sign up bonus, which is typically an elevated percentage rate for a period of time after approval.

Monthly and annual cash back cap

While cash back rewards cards offer a lot of upside, there are limitations to your earnings. Some cards will come with a monthly cap on how much you can earn, and an annual cap on certain bonus categories.

Although a monthly cap may not sound like a problem, it can create issues for major spenders in specific categories. If a credit card offers 3% cash back on groceries and 1% cash back on recurring bills with a $500 monthly spending cap in each category, the maximum you can earn between both categories is $20. That's $15 from groceries and $5 from recurring bills. If you plan on spending more per month in each of these categories, you could gain more value from a card with a higher monthly cap.

Annual caps can also limit the amount of rewards you can earn through regular spending. For instance, a card may offer 5% cash back for spending on groceries, up to $6,000 every year – meaning you'll get 5% in rewards for the first $6,000 of groceries, and the default earning rate (usually 1%) for all purchases at the grocery store afterwards.

Doing the math, the maximum cash back you would earn with that bonus on groceries every year is $300. If you spend $12,000 in groceries every year, you would earn $360: $300 on the first $6,000, and $60 on the second $6,000. To maximize your rewards, be sure to align your spending with cards that offer high monthly and annual caps.

Cash back bonuses in spending categories

In addition to offering a steady stream of cash back when you spend, the best cash back credit cards usually offer bonus categories for certain kinds of spending. One might offer a rotating 5% cash back in different categories quarterly (like spending at restaurants), or have a year-long bonus when you spend at one shop. One card even offers you 2% cash back for purchases at Tim Horton's.

As an example: let's say a good credit card offers 3% cash back on eligible groceries, gas and recurring bills, and 1% on everything else. Every month, if you spend $500 on groceries, $175 on gas, and $325 in recurring bills, your total monthly rewards would come to $30 – $15 from groceries, $9.75 from bills and $5.25 from gas.

Another credit card offers 4% back on gas and groceries, 2% back at TELUS and 1% everywhere else. Again, if your monthly spend includes $500 on groceries, $175 in gas and $125 at TELUS, you would earn $$29.25 in rewards – $20 from groceries, $7 from gas and $2.50 from TELUS. The best cash back card is the first one, because you earn slightly more every month in the categories where you spend the most.

To get the best cash back from credit cards, be sure to understand all the bonus categories and how they work in your budget. By using one card with big rewards on groceries, and another with a bonus category for subscription services, you can be sure to earn the best rewards towards your goals.

Cash back vs points and air miles

While airline miles and flexible points earning credit cards can offer you rewards towards your travel ambitions, understanding the programs and how to get the most rewards can be difficult. Some airlines no longer publish how many miles you need for a free ticket, while flexible points cards require you to transfer them from one program to another, without giving you a complete view of your overall rewards.

The best cash back card advantage is in the simplicity. No matter where you spend, you are earning easy-to-use rewards that you can apply to your everyday lifestyle. There's no need to memorize award trends, or calculate how much you gain from moving points around. Simply use your favourite card on all your purchases, and watch your rewards grow. And instead of trying to redeem points for maximum value, you have full control of where your rewards get used, and how much to use on your purchase.

Learn about cashback credit cards

What is credit card cashback and is it really worth it?

  • Pros & cons

  • Tips

  • FAQs

Actual cash vs. confusing points and miles systems

While airline reward prices can change overnight, and hotel points programs require you to earn a lot of points for free nights, cash back can be used for nearly any purchase on your card. Simply select the purchase, the amount of reward money you want to use, and watch the charges get erased instantly.

Cash back cards come with other benefits

As well as giving you cash rewards on your purchases, many cash back cards come with additional free benefits, such as travel insurance, a concierge service and auto club membership.

Cash back cards often come with an annual fee

Because you are earning rewards, cash back cards will sometime come with an annual fee. Although there are some cards that have $0 annual fee to earn cash back, others may charge an annual fee of $99 or more, just for keeping the account open. When shopping for a credit card, be sure to understand how much the annual fee costs, and determine how much you would need to spend to get rewards beyond that cost.

Easy to understand rewards

There's no need to do complicated math to determine how much you are earning from your credit cards. Credit card cash back is simple to earn, and even easier to use. Simply use your credit card for everyday spending, and watch the rewards add up. When you want to redeem them, your earnings can be used to erase charges instantly. You can use them every month to pay down your balance, or save them up towards a goal.

Interest charges can negate savings

Like with other rewards-earning credit cards, cash back credit cards usually have higher interest rates to offset the rewards you are earning. If you keep a balance from purchases on your card, you could ultimately be spending more on interest charges than you are earning in rewards.

Spending requirements for bonuses

In some cases, cash back cards require you to spend a certain amount to get a certain reward, like welcome bonuses. Unless you have a plan to pay off the purchases required to hit the target, it might not be worth chasing the reward because of interest charges.

Choose the right cash back card for your spending habits

Every cash back card offers different bonus category rewards. While some reward you for spending on groceries, others will give you more rewards for travel, recurring bills, daily transit, or even subscription purchases. Before you apply, be sure to do the research to find the best cash back balance for your everyday spending and the annual fee.

Get rewarded twice for your spending

Cash back cards offer the opportunity to "double dip" at stores. For example: you can use your credit card to spend at the Aeroplan eStore to earn miles, and cash rewards. With a little creativity, there's no limit to the bonuses you could earn on top of cash back on a credit card.

Know what 'up to' means for your cash back

The term 'up to' describes the rewards limit on your credit cards. If a card says you will earn 5% on groceries 'up to $6,000,' it means you will get the bonus rewards until you have spent $6,000 at grocery stores during the year. After that, purchases will only earn the default rewards rate, which is usually between 1% and 2%.

Make sure you're getting value in excess of your annual fee

Because cash back cards usually come with an annual fee, it's important to make sure the rewards you earn are in excess of those charges. If you can't earn enough rewards to offset the annual fee, it may not be worth while to apply for the card.

For example: One card offers 2% in rewards for all spending, but comes with a $99 annual fee. To earn back the fee in rewards, you would have to spend $4,950 on the card every year. To earn double the fee in rewards, you would have to spend $9,400. The best cash back cards offer you the opportunity to easily gain value beyond the credit card fee.

Understand minimum spends and cash back caps

Many cash back cards offer a welcome bonus when you spend a certain amount in the first three months. Others will limit the rewards you can earn in a certain category. Be sure to understand how much the bonus offer is, and where it ends on categories like groceries. To maximize your rewards, it could make sense to diversify spending based on bonuses.

Can I get a welcome bonus with a cash back card?

Yes. Many of the best cash back credit cards offer welcome bonuses for first-time applicants. Before you apply, be sure to understand how much you need to spend in a specified amount of time to earn the welcome bonus.

Can I get cash back on all my spending?

Cash back credit cards offer rewards on most of your spending. Some categories – like balance transfers and cash advances – don't qualify for rewards. Before using your card in those areas, be sure to understand if you qualify for rewards, and under what circumstances.

Can I get more than one cash back card?

There's no limit to how many cash back credit cards you can get – but it's important to understand all of the bonus categories they offer and the annual fee you'll need to pay for each one. When deciding on how many to get, be sure to look closely at the bonus category and annual fee for each to make sure you are maximizing all your benefits for minimum cost.

Do I also get cash back for spending abroad?

Yes. In many situations, you can earn rewards on all of your spending, including international purchases. In addition, some cards offer spending in the United States or on other international purchases as a bonus category. If you live near the border, or plan to travel regularly, be sure to check if your card offers extra rewards for spending outside Canada.

Do I need to spend a minimum amount to get cash back?

With most cards, you won't have to spend a minimum amount to get rewarded. Simply use your card for all your purchases, and the rewards will start to add up.

How much do cash back credit cards charge in annual fees?

The annual fee will vary, depending on the card. While some cards have a $0 annual fee, others can charge $99 or more. Before applying, be sure to understand how much the annual fee is, and how much you would have to spend to offset that fee.

What other benefits do cash back cards offer?

There are several ways beyond earning cash to offset the annual fee. Some cards can offer travel accident insurance, protection plans for your purchases, and more. Your explanation of benefits will show all the benefits that come with your card.

Why should I choose a cash back credit card?

Cash back cards are best for those who simply want to use rewards for their everyday spending options. Use your card to earn rewards, and redeem them on whatever purchase you desire. If you want to get straightforward bonuses for purchases, a credit card in this category may give you the best overall return for your spending.