Best Rewards Credit Cards Canada
Credit card issuers are constantly looking for ways to make their product relevant and appealing to new customers. One of the strategies they use is to offer rewards credit cards. These cards promise perks such as cash back, travel miles, and free merchandise to new customers or to customers who use them for purchases.
These cards offer a tangible benefit: once the customer signs up and uses the card, he or she gets credits or points, which can eventually be redeemed for something significant, such as an upgrade on an upcoming flight, a new appliance, or a dinner at a nice restaurant. Other popular reward categories include accommodation, gift cards, instant shopping discounts, fuel vouchers, fashion items, and event tickets. Customers must keep their accounts in good standing in order to redeem rewards, meaning that at least the minimum payment must be made each month on or before the due date.
Customers must keep their accounts in good standing in order to redeem rewards, meaning that at least the minimum payment must be made each month on or before the due date.
It’s important to compare your options to ensure that the benefits outweigh the costs of these cards, since rewards cards usually carry higher interest rates than regular cards. Use this guide to find out how rewards credit cards work, the advantages that come with using them, and how you can fully benefit from the rewards offered.
What are the Different Types of Rewards Credit Cards?
Some of the different types of rewards cards are more common than others. The most commonly offered are cash back cards, travel cards, and store cards.
Cash Back Credit Cards
Cash back cards offer users cash rebates by adding credit or “cash” to their account when they meet certain spending requirements. Most cash back credit cards offer a percentage of the user’s total spend as cash back, or else they give users a one-off cash back amount as an introductory offer once the credit card is approved.
For the cards offering a percentage, it’s common for users to receive between 0.75% and 2.00% cash back for every dollar spent with this type of card. The highest cash back rate you can receive on groceries, gas, entertainment, and dining out in Canada is 4.00 percent, or occasionally as much as 5.00 percent with special promotions.
The appeal of these cards is that in effect, they make your purchases somewhat cheaper. Using cash back cards is, for that purpose, more worthwhile than using cash or a debit card. Nevertheless, you need to be mindful that not all purchases will get the same cash back percentage. The Scotia Momentum VISA Infinite card, for example, offers 2 percent cash back on pharmacy purchases, but 4 percent cash back on groceries and gas.
Some credit card contracts also specify a maximum cash back rebate you can get per annum. The Scotia card mentioned in the previous example allows 4 percent cash back on the first $25,000 spent on gas and groceries, beyond that, cardholders will only receive 1 percent cash back.
You can redeem the travel points earned on this type of card for things like hotel rooms and airline tickets. They will also let you know how much the points are worth once you redeem them. Some issuers will also give you a sign-up bonus of extra travel points just for agreeing to take the card.
It’s important to know the value of your travel points and how you can redeem them. For example, some cards will only give you points if you fly with a specific airline or if you sit in a certain section of the plane. It’s also important to know when your points expire, so you won’t miss out on any of your rewards.
There are two major ways to earn travel reward credit card points. The first is Direct Earn Rewards, where the card is linked to a specific program and added directly to your loyalty account with your favorite airline. The other way is with Indirect Earn Rewards. This type of rewards card lets you transfer the points you earn to other reward programs, so you have more flexibility, especially if you fly with different airlines.
Some retailers offer their own credit cards, which offer points that you can redeem for merchandise. The interest rates on these cards tend to be very high, but they do offer considerable savings just for signing up. An alternative to store cards is a shop anywhere card that increases your benefits when you shop at a particular store.
Getting Insurance Coverage Through Rewards Credit Cards
Cash back, bonus points, and free merchandise are not the only advantages of rewards credit cards. Most of these cards also have various types of insurance products linked to them. These products, which range from travel to medical to rental car insurance coverage, come at no additional cost, and they offer significant value to cardholders.
Rewards vs. Costs – Is My Card Worth It?
Many rewards credit cards charge annual fees, and these tend to have greater benefits attached to them. The issuer expects you to pay for the privilege of using the card – it’s not just a matter of signing up and gaining rewards with each purchase. Such a card is not the best choice for someone who doesn’t use credit cards very often, or who does not need the rewards attached.
For example, a card that offers bonus points for hotel accommodation would be useless for the business traveler whose hotel stays are paid for by the company she works for. They also might not be right for people who have a lot of credit card debt, or who often carry balances on their cards. A better choice might be a no-fee credit card, even if it comes with fewer rewards.
If you commit to using all of the benefits offered by your card, however, the rewards will compensate for the annual fees.
In short, rewards cards are a function of your personality and your spending habits. They are ideal for cardholders who regularly use their credit cards when shopping and who pay off their balances in full every month.
If you want to use a rewards program, you should have a clear idea of the type of points you want to earn, and it would help if you were part of an existing reward program, which your credit card would complement (such as a frequent flyer or a hotel loyalty points program). In addition, you should be in a position where you can regularly take advantage of the rewards.
Continuing the above example, if your company buys all your plane tickets in the economy section, you can use your card for upgrades to Business Class. You should also have the means to pay the high annual fees.
If you want to decide whether a rewards card is worth it, weigh the benefits of the card against the fees. If your usage of the card does not justify the fee, ditch it for one with lower charges. When applying for new credit cards, it might be worth it to go for the ones that waive the annual fee in the first year, so you can test out the card to see whether or not you’d like to keep it.
Card issuers often do such a good job luring customers with the benefits of their product that these customers don’t pay enough attention to the annual interest rate they will be paying. It’s important to know that rewards cards tend to have higher interest rates than regular cards.
If you maintain a balance, this can be quite expensive, but it won’t be a concern if you conscientiously pay off your balance in full on or before the due date each month. As mentioned earlier, the rewards usually compensate for the higher rates attached to the card.
Best Rewards Credit Cards Canada
With so many credit card providers in the Canadian market, card issuers are constantly finding ways to offer consumers with greater rewards and points.
While some rewards credit cards focus their offer around certain retailers or services, others decide to attract frequent travelers by exchanging the money spent on flights and hotels in points. Basically, customers can choose their rewards credit cards considering their spending habits, preferences, and lifestyle.
Rewards credit cards let consumers earn points at a certain interval of times or each time the consumers use their cards. Consumers can then redeem the rewards either online or by phone. If you opt for a cash back rewards credit card, you will receive your award either as cheque or credit to your account. Rewards credit cards work on a pretty simple principle – spend more to earn more.
Compare Rewards Credit Cards
The number one criteria you should take into consideration when choosing a rewards credit card is the number of points or amount of cash you are going to receive for every dollar spent.
Rewards Credit Cards generally offer anywhere between 1% to 4% back in rewards. This applies to points, cash back or any other type of benefits. Many rewards cards charge an annual fee. Sometimes the annual fee is waived off for the 1st year but is exorbitant thereafter. Assess your spending habits before applying for a credit card with rewards, and see if it’s worth paying an annual fee.
Is a Credit Card with Rewards the right choice for you?
Apart from having a good credit score, most rewards cards require an average gross income of $40,000 per year.
Also rewards credit cards usually charge annual fees and interest rates, so you need to make sure you can repay your credit card balance monthly and, at the same time, spend enough money to justify paying the annual fee.
Here is a great example for your understanding:
To make things easier to understand and assimilate, we decided to explain everything you need to know about Scotia Momentum Visa Infinite, one of our most popular rewards credit card.
At a glance: Scotia Momentum Visa Infinite offers:
- Earn 5% cash back on grocery & gas purchases for the first 3 months
- Continue to earn 4% cash back on grocery & gas purchases after 3 months
- 2% cash back on drugstore purchases & recurring payments
- 1% cash back on everything else charged to the card
- Introductory 1.99% Balance Transfers for the first 6 months
- $99 Annual Fee
How to choose the best rewards credit card?
As with any credit card, start by checking the terms and conditions before applying. Some rewards credit cards only work to your advantage if you spend substantially because only then they return substantial rewards. So it is important to choose a reward credit card according to your spending power and make sure it is worthwhile.
Many rewards credit cards lure customers with an impressive number of rewards, but only for a limited time, and then significantly decrease the rewards rate. Also, don’t forget to look for caps that set a limit beyond which you will not receive any rewards, regardless of the amount of money you are going to spend.
Also, choose the rewards credit cards considering your spending habits and preferences. Basically, if you are a person who travels a lot, you should choose a rewards credit card that encourages you to travel by offering rewards, according to the money invested in plane tickets, hotels, car rentals. Check and see the categories and products that return rewards with various rewards credit cards, and choose the one that represents your interests and lifestyle.
Best Rewards Credit Cards
To attract more customers, banks offer their customers bonuses or rewards for transactions made using their credit cards. Usually called membership rewards, these perks for new and existing customers come in many forms including cash backs, mileage accumulation points, travel rewards, discount incentives, free groceries, free meals in restaurants, free gas, and much more.
Chase Bank offers a long list of rewards for its members including an introductory APR of 0% for more than a year and automatic cash back for every transaction made using their Freedom Card. Capital One Venture, on the other hand, focuses on giving their members mileage and travel incentives including earning points for access to airlines and hotels of their choice, waived foreign transaction fees, no travel date blackouts, and much more.
There are many ways to obtain rewards from credit card providers. The customers just have to make sure they review their benefits so they don't pass up on the opportunities to get these fabulous extras for their credit card transactions.
Rewards credit cards Canada
Credit card offers instant cash to the card holders. It also provides the security by allowing them to do purchases without carrying money. There are some rewards programs associated with credit cards. Different banks provide rewards credit cards for the account holders to make their rewarding features available.
If you are a credit card holder, you already know how these cards charge too much interest on the loans that they provide. These interests are calculated by the total usage of the card per month. If you use your cards too often, the interests might be decreased. But do you feel that it's not enough? Especially when you are using your card for such a long time and the same bank is making a profit by your usage ever since.
Reward Credit Cards are offered just to give you some outstanding privileges and benefits that will reward you for your excessive usage. You can earn travel rewards, merchandise, gift cards/certificates and some more standard rewards that can be very useful for your business purpose or even your personal interests.
The rewards cards vary as they provide 'earn rewards per day' or 'earn rewards per month' services. The default form of these rewards is the cash back offers that range from 1% to 5% cash back on an average depending on the total monthly usage. The eligible purchases and limits are defined by the respective banks or credit unions. The amount of cash back is also fixed by the type of purchase. Usually, gas and grocery purchases are on top of others to generate cash backs.
The associative partners of the banks providing Reward Credit Cards offer discounts based on the points gained by a credit card. The reward programs include these points along with cash backs. These points can be obtained from the purchase of products of some limited brands only. In some cases, you will get some additional points for your charitable donations also. There are usually no limits on the points you can earn in a year.
More importantly, these points carry great redemption values and they don't expire. There are some variations in Reward Credit Cards. Some of them don't apply annual fees.
Before choosing a rewards credit card, you should always match your needs and criteria with the options available. If you travel a lot, there are specific cards that are only eligible for rewards if you use them for traveling purposes. Choose what's best for you and enjoy the rewards along with the credit service.