Cash rewards credit cards
When it comes to rewards credit cards, cash back is king. Consumers love cash back credit cards because they're easy to understand, gimmick-free, and who doesn't love getting cash? At LowestRates.ca, you'll find all the tools and information you need to help you compare the top cash back credit cards available in Canada.
About cash back credit cards
With so many credit cards now offering competitive perks and points, it's easy to get overwhelmed or to sign up for the wrong card — one that turns out to be different from what you thought or one that's not the right fit. But when it comes to credit card rewards, cash back is the most popular.
Cash back credit cards are simple: as you spend money on your card, you earn cash. With most cash back rewards cards, you can earn anywhere from 0.5% to 5% on your purchases. The rewards rate is the amount of cash back rewards you earn per dollar spent, and it's a key measure of any cash back card.
Comparing cash back credit cards
When you compare cash back credit cards, look at the rewards rates they offer relative to their annual fees. Some cards have great rewards rates that let you earn at least 2% cash back, but then charge a big annual fee. You'd have to spend a lot of money on a card like that to make the premium rewards rate worthwhile.
Savvy shoppers should estimate how much money they'll spend with their cash back credit card each year and choose a card accordingly. Big spenders will benefit from premium cash back cards offering high rewards rates. Lower to middle income consumers will find that standard cash back cards make more sense.
You should also think about the kind of items you spend money on each month. Many cash back cards offer higher rewards rates for certain categories of purchases, like gas, groceries, and recurring bills. If you spend a lot of money on one type of item, look for a cash back card that gives you an optimal rewards rate on it.
Check out our table below to see the rewards rates and benefits on some of our most popular cash back cards:
- 1% on gas/grocery/drug store purchases and on recurring bills
- 0.5% on all other eligible purchases
- Interest rate
- 7.99%
- 19.99% after 6 months
- Annual fee
- $0
- 2% on gas/grocery/drug store purchases
- 1% on all other eligible purchases and after annual $25,000 limit
- Interest rate
- 19.99 %
- 21.99% after first 6 months
- Annual fee
- $39
- 1% on all eligible purchases
- Interest rate
- 19.99%
- Annual fee
- $0
- 4% on gas/grocery purchases
- 2% on drug store purchases and recurring bills
- 1% on other purchases and after annual $25,000 limit
- Interest rate
- 19.99%
- Annual fee
- $99
We put these cards head-to-head in the graph below so you can see which one comes out ahead based on the amount of money you spend annually.
A note on methodology: Because cash back rewards rates vary based on what you're buying, we used a weighted basket to represent the average cardholder's monthly spending:
- 13% on gas
- 27% on groceries
- 13% on drug store purchases
- 13% on recurring bills
- 34% on other purchases.
This basket represents up to $60,000 of spending, beyond which all purchases are categorized as 'other'. After all, most families only spend so much money per year on gas, groceries, and recurring bills, no matter how big their budget is. We also included the annual fees on each card and stripped out introductory or promotional offers. Now you can get a better idea of how each card will reward you over the long term.
The graph is clear: premium cash back offerings come out ahead if you spend more than $20,000 per year on your card. If you spend less, lower-tier cards with no annual fee are a better option.
Compare cash back rewards cards today
The appeal of a cash back rewards card is easy to understand. Who doesn't like earning cash as they spend money on their credit card? With better cash back credit cards available today than ever before, it's easy to find the perfect card — especially if you compare your options right here at LowestRates.ca.
