Update: We updated this post on May 24, 2019, to reflect the fact that BMO is now waiving the $120 annual fee for the first year of membership.
The BMO CashBack World Elite Mastercard caught my attention with its offer of 4% cash back on all purchases, a rate that puts it right up there with other high-end cash-back credit cards like the Scotia Momentum Visa Infinite card.
However, that 4% rate only applies for the first four months. After that, current cardholders only earn 1.75%. And even that will soon be dropping to 1.5% in September, according to BMO. As the premium credit card space becomes increasingly dominated by travel rewards cards, cash-back cards have slowly begun to lose their lustre.
Does this card have a place in the current market, especially knowing that its cash-back benefit is going to be downgraded in the near future? Let’s take a look.
A premium credit card lives and dies by the special features and perks it offers, and those perks often come with a price tag. The BMO CashBack World Elite Mastercard comes with a pretty hefty annual fee of $120. Luckily, BMO waives that fee for the first year.
So, what exactly does the card offer you with that fee? Here’s the breakdown:
- Welcome offer: Up to 10% cash back in the first 3 months and the $120 annual fee waived for the first year
- Purchase interest rate: 19.99%
Cash advance rate: 22.99%
Balance transfer rate: 22.99%
- Earn 4% cash back on all purchases (up to $250 cash back) in your first four months
- Earn 1.75% cash back on all purchases after that (Earn 1.5% after September 2017)
- Minimum income of $80,000 per individual or $150,000 per household
- Up to 25% off rentals at National Car Rental and Alamo Rent A Car
- Travel medical insurance
- Free roadside assistance Program
- Free additional cards
- Extended warranty
- Purchase protection
- 24/7 BMO Concierge Service
As is to be expected from a higher end card, this one comes with extended insurance benefits for travellers. The policy offers eight days of cover for out of province emergency medical protection as well as collision coverage on rental vehicles. Lost, damaged, or stolen baggage and personal items are also covered under its policy
Most new items bought with the card will be protected against damage or theft for up to 180 days from the date of purchase. Manufacturer’s warranties are also automatically extended up to two years, except when the manufacturer warranty exceeds five years. The overall lifetime coverage the policy offers is $60,000. If you use the card to make big purchases such as furniture, new electronics, or leisure items, you can save yourself a lot of money and a headache should anything happen to your stuff.
BMO also has a concierge service that will help you make the most of your travels by providing you with around-the-clock access to shopping suggestions, restaurant reservations, event ticket reservations, and more opportunities. Concierges are there to help you do whatever you want, wherever you are. I haven’t used the service myself, but doing a quick internet search reveals that it’s a convenient service that tends to leave people satisfied.
How it stacks up against the competition
The BMO CashBack World Elite Mastercard faces a lot of competition from other high-end premium cards. The MBNA Rewards World Elite Mastercard, which allows points to easily be cashed in for money, is the most competitive card in the category thanks to its effective flat cash back rate of 2% and $100 sign up bonus that effectively waives the first year’s annual fee of $89. With a higher rewards rate and lower fee, the card more than competes with the BMO CashBack card.
Most other high-income requirement cards all offer similar benefits for lower fees and higher cash-back rates (though they have spending categories). The Scotia Momentum Visa Infinite card is a leading example of a high-end cash back card with premium service. For $99 per year you’ll get access to 24/7 concierge service, comprehensive travel and purchase insurance, and you’ll earn 4% back on groceries and gas, 2% on bills and at pharmacies, and 1% everywhere else.
The American Express SimplyCash Preferred card also gives this card a run for its money, despite not being a premium card. It boasts a higher cash-back rate at 5% for the first 6 months and 2% afterward. Its annual fee is lower at just $99, and it comes with similar insurance coverage. It lacks concierge service, but it is also easier to qualify for since the minimum income is much lower.
The major drawback of the card is the lack of competitive benefit it actually offers its users. The 4% promo rate has a short period of only four months and it’s capped at $250 in rewards. The regular rate is nice, but non-competitive with its peers. On top of all this, the card’s annual fee will eat up much of the cash-back earned.
Who’s this card for?
This card is positioned for the high-income, frequent traveller who also does a lot of shopping. The concierge service will also come in handy for those who want high-end experiences or professional help when exploring a new place.
The minimum income requirement makes it a harder card for the average Canadian household to qualify for and the $120 annual fee is priced high enough that it isn’t competitive with other similar cards. It isn’t a card for someone that wants to stretch their dollar or get the best value.
The 4% cash back welcome rate is a good opportunity for credit card churners to take advantage of a high earning card for the first four months. However, with no signup bonus and a hefty annual fee, I don’t think this card is even good for that.
Even though it has a flat rate on purchases, which is normally a good thing, there are just way too many better cash-back cards to recommend this one no matter what you’re looking for.
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