Reward Credit Cards in Canada

Engaged in cutthroat competition with each other, banks fight for customers’ attention by issuing new credit and debit cards. To make their cards look more attractive in users’ eyes, banks also create different incentive programs to accompany them. These programs offer to customers either points, or flyer miles, or cash. Banks expect that, excited by promised rewards, customers will start using their credit or debit cards more frequently and, in so doing, will bring more money to them. In the space below, we are elaborating on the differences between the rewards that banks offer to their customers who use their credit or debit cards.

But note that our explanation is rather general, since we are not comparing specific cards and rewards available in Canada or any other country. We are just explaining what Cashback Reward Cards are and how they differ from Travel Rewards Cards and Points Reward Cards. If you want to receive more specific information about Travel Rewards Cards, for example, and learn which particular Travel Reward Cards are  considered the best this year in Canada, you can read about the best Aeroplan Credit Card in another article. There you will learn not only why Aeroplan Credit Cards are useful but also which of them gives the most generous rewards to card-holders.

Cashback Reward Cards

One of the rewards that banks promise to their card-holders is monetary. This reward is known as cashback. The credit cards that return cash to their users are accordingly called cashback cards. Cashback cards pay a small percentage in cash rewards for each transaction or a purchase that is larger than a specific amount. People receive their cash returns every time they make a transaction. As mentioned, by returning money to card-holders while they are shopping, banks invite them to use their cards more frequently. Banks also hope that, after receiving their rewards, people will discontinue using any other cards they might hold and will start swiping their reward card alone.

Note that the cash rewards that bank give to card-holders are not large. They are never more generous than 5 percent of the transaction. Nor are these rewards distributed equally between all products and services for which customers pay. The problem is that banks have different kinds of partnership with other companies. Depending on the type of their relationship, banks allocate different percentage of cash return to their partners.

When you shop, you will never receive more than 2 percent of the amount you spent on your goods. Sometimes, the return in retail is even lower, dropping to 1 percent. Banks’ partnership with gas stations yields more profits to card-holders. Every time you fill in your car with fuel, you will receive 5 percent back on each transaction you make at a gas station. There are also some special merchant partnerships between banks and companies that will give you double rewards on your purchases. Analysts say that, according to these criteria, the best cashback cards in Canada is the Scotia Momentum Visa Infinite and Meridian Visa Infinite Cash Back. These cards offer as much as 4 percent of cash back on gas and grocery spending, 2 percent on purchases made in a drugstore, and 1 percent on all other purchases.

Travel Rewards Cards

Monetary rewards are not the only type of the incentive programs that banks offer to their customers. To those card-holders who frequently fly, credit card issuers give travel rewards credit cards. There are two types of such credit cards. Customers can obtain general purpose credit cards that pay rewards on all travel purchases. They can also have brand-specific travel credit cards that pay rewards on purchases with a specific airline or hotel.   

Those people who often fly and have preferences for certain airlines are advised to choose the brand-specific travel credit card. Lovers of particular hotels where they always stay on their vacations should also order this type of the travel credit card. After they have specified what airlines and hotels they prefer, customers will start earning more travel rewards, if they continuously prove their loyalty to these airlines and hotels. People who always search for the cheapest airlines, whatever they may be, and select hotels not because of their brands but because of various discounts they offer should opt for the general-purpose travel rewards credit cards. They will still earn rewards when they travel but will not be tied to a specific airlines and hotels to be rewarded.

If you are interested in ordering a travel rewards credit card, you may consider TD® Aeroplan® Visa Infinite, Scotiabank Gold American Express® Card, and Scotiabank Passport™ Visa Infinite Card. They are considered to be the three most popular Canadian travel rewards cards in 2019.       

Points Reward Cards

Some credit cards issuers encourage customers to collect points. Every time card-holders swipe their cards, they gain points. What is particularly convenient about this type of cards is that you can redeem your collected points for cash, gift cards, travel, or other merchandise. Note, however, that different banks distribute their points differently. Some banks give equal points for all purchases. Whatever you buy, be it books, fuel, food, or furniture, you will receive the same points for these goods. Other banks will give you extra points for specific items or services. You may receive more points for paying for dinner in a restaurant or for buying fuel at a gas station.

The best points reward cards in Canada now are Scotiabank Gold American Express and American Express Cobalt. The first gives 5 points for every dollar spent on groceries, dining, and entertainment. Card-holders also receive 3 points per every dollar, when they pay for gas, public transit, and some eligible streaming services. For other purchases, they receive 1 point. Annual fee paid for Scotiabank Gold American Express is $120, though new members do not pay anything during the first year of their membership.

American Express Cobalt offers 5 points for every dollar spent on eligible food delivery, groceries, and restaurants. Customers also receive 2 points for every dollar which they spend on gas and transit purchases, which include taxis, public transit, and some flight tickets. On all other purchases, customers earn 1 point. Annual fee that card-holders pay for American Express Cobalt is $120. This amount is charged at a rate of $10 a month.

There are more rewards that banks offer to their customers. If you often use your credit card, it is perhaps worth considering switching to those ones that offer rewards for your purchases. No extra money you receive as a gift from your bank will be unwelcome.  

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