When it comes to maximizing your spending, you can’t go wrong with a rewards credit card. There are two main types of rewards credit cards: cash-back credit cards and travel rewards credit cards. Both help you get the most bang for your buck, but each works best in different situations.
The best travel rewards credit cards accumulate points for every dollar you spend and can be redeemed for flights, hotels, car rentals or other travel-related purchases. Some credit cards give you a high level of control over where you can redeem your points, while others require you to book your flights and hotels through their web portal.
Most travel rewards can be used to redeem part of your purchase as well, and do not need to cover the entire trip. They typically also offer additional coverage for car rental, trip cancellation, and lost baggage insurance. Finally, some travel rewards credit cards offer exclusive lounge access, a 24/7 concierge service, and exclusive access to dining events and concerts.
While travel rewards credit cards are exclusively geared towards those with the travel bug, cash-back credit cards can be a great option for savvy savers or those looking to boost their debt repayment progress.
The best cash-back credit cards rebate a percentage of every dollar you spend in the form of cash rewards usually between 1% and 4%. To redeem your cash back rewards some credit cards pay out monthly, quarterly, or whenever you hit a certain threshold. Your cash back rewards can be deposited directly into your savings account, deposited back to your credit card or mailed directly to you. Cash-back credit cards often come with a suite of additional benefits including extended warranty coverage, purchase assurance, and car rental collision insurance.
Choosing a cash-back credit card
A cash-card credit card is an excellent choice for Canadians who want to earn rewards for their spending but don’t like to travel or want to improve their financial situation. A cash-back credit card can be an excellent way to boost your savings or accelerate your debt repayment.
The Tangerine Money-Back Credit Card is a great credit card for anyone looking for a no-fee cash back credit card. This credit card offers 2% cash on up to three spending categories, and 1% cash back on everything else. There are ten categories to choose from, allowing you to customize this credit card for your needs. Being able to choose categories is a unique perk of the Tangerine Money-Back Credit Card and makes it a great option for a variety of spending profiles. There is also no limit on the amount of cash back you can earn from this credit card, so if you have a small business or frequently make large purchases, your cash back rewards can add up quickly.
Another excellent cash-back credit card is the Scotia Momentum Visa Infinite card. This credit card allows you to earn 4% cash back on gas and groceries, 2% on pharmacy and bills, and 1% cash back on everything else. The four top-earning categories (gas, groceries, pharmacy, and bills) are subject to a $25,000 limit, after that, you earn 1% cash back. The cash back reward on gas and groceries makes this credit card an excellent option for families or those with a long commute. There is an annual fee of $99 for this credit card, so you should give RateHub’s handy credit card rewards calculator a spin to determine if you’ll earn enough rewards to offset the annual fee.
Choosing a travel rewards credit card
A travel rewards credit cards are a great choice for a committed traveler who wants to make their hobby of jetting off to faraway destinations more affordable. They often offer traveler-friendly perks like airport lounge access and concierge services, and you can often earn bonus points for travel-related spending.
The MBNA Rewards World Elite Mastercard lets you earn two points for every dollar you spend, there are no bonus categories or spending limits, and your points never expire. There is an $89 annual fee for this credit card, and for a limited time, you’ll earn 10,000 bonus points after your first purchase. This credit card also comes with a veritable suite of insurance coverages and extra perks including price protection and concierge services.
The BMO World Elite MasterCard also lets you earn two points for every dollar spent in all categories with no upper spending limit. You’ll receive 20,000 bonus points after your first purchase (value: $200). There are no blackout dates, and you can fly on any airline of your choosing. You’ll also enjoy VIP airport lounge access, trip cancellation and interruption insurance, extended warranty and purchase protection.
While these four credit cards are great options, choosing between a travel rewards credit card and a cash-back credit card ultimately comes down to finding a card that gives you the best return for your everyday spending.
You may also be interested in: 5 Ways to Maximize Credit Card Rewards
RateHub.ca is an independent financial product comparison site that empowers Canadians to make smart financial decisions by comparing rates on mortgages, credit cards, chequing accounts, savings accounts and insurance.
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