Best Rewards Credit Card in Canada

A rewards credit card allows you to earn points, cashback, or miles when you use it to pay for eligible purchases.

4 Best Rewards Credit Cards for Canadians

1. American Express Cobalt Card

Overall, the best rewards credit card on the market right now.
 

2. TD Aeroplan Visa Infinite Card

The best travel oriented rewards card – also features a bonus 50,000 points if you signup before January 2023.
 

3. BMO CashBack World Elite Mastercard

A great cash back reward card offering generous cash back rates that can range from 1% – 10%.
 

4. CIBC U.S. Dollar Aventura Gold Visa Card

Ideal rewards card for those who make frequent purchases in USD as this card allows you to skip currency conversion fees for USD purchases.
 

What is a Rewards Credit Card?

A rewards credit card refers to any credit card that enables you to collect points, cashback, or miles from everyday purchases you make using the card.

You can then redeem these points for various items, including merchandise, gift cards, entertainment events, travel-oriented discounts, or just plain cash.

Various rewards cards are available to consumers today, and each is designed to appeal to different consumer spending habits.

Some are well-suited for frugal shoppers who are adamant about saving money on everyday items, like groceries.

Others cater to avid globetrotters who wish to keep their travel expenses in check by earning discounts on flights and accommodation.

Using a rewards card is straightforward and convenient.

Each time you make an eligible purchase, you’ll automatically collect points on your account.

You can track and redeem your points through your card issuer’s online banking portal or mobile app.

You can classify rewards cards in three categories:

General Rewards Credit Cards

These cards earn you points that you can redeem for a wide array of rewards, such as merchandise, gifts cards, or discounts on trips.

Because they offer a general-purpose rewards program, you won’t receive the most lucrative deals compared with cards geared toward a specific niche, like travel.

Travel Rewards Credit Cards

These cards enable you to earn points or miles to convert to travel-oriented rewards.

Depending on the rewards program structure, you can receive valuable discounts on airfare, car rentals, accommodation, cruises, and vacation packages.

Some travel credit cards offer loyalty programs tied to a particular airline and hotel brand.

The former type is referred to as a frequent-flyer program.

For example, Aeroplan is a loyalty program owned by Air Canada.

TD, CIBC and American Express all offer Aeroplan earning cards.

You can convert your points to obtain discounts on flights connected with the Air Canada brand or any carrier that’s part of the Star Alliance network.

Marriot Bonvoy and Best Western Rewards are well-known loyalty programs focusing on rewards related to accommodation.

Cash Back Credit Cards

These cards offer the most convenient, transparent, and straightforward rewards program: you earn a cash rebate on a specific percentage of your spending each month.

Don’t Forget!

To extract the most value out of your credit card points, look for redemption deals where each point earns you at least one cent worth of rewards measured in Canadian dollars.

Choosing the Right Rewards Credit Card

There’s a wide assortment of rewards cards to choose from, with each geared toward a specific budget and lifestyle.

As a result, it can be overwhelming to sift through what’s available to find the one that’s right for you.
Here are some criteria you can use to help narrow your search before you apply for a new credit card:

1. Review your Spending Habits

Your primary goal should be to find the card that most closely aligns with your spending habits.

That way, you’ll be able to maximize the number of points you collect through your everyday purchases.

First, create a list of the goods and services that make up the bulk of your spending.

These could be things like gas, groceries, restaurants, clothes, electronics, and vacations.

Break down your list into clear categories to determine the ones that will score you the most points.

Second, ask yourself how you’d like to spend your points.

Are you primarily interested in acquiring free household items? Do you prefer receiving straight cash in your bank account periodically? Or are you keen on getting a deep discount at a luxury hotel on your overseas excursions?

Each card specializes in a different set of rewards, so be sure to focus on those that enable you to convert points to things that matter to you the most.

2. Analyze the Earn Rate of the Card

A rewards card earn rate refers to the number of points you earn with each eligible purchase.

Most cards operate under a flat-rate or bonus rate model.

With a flat-rate structure, you accumulate points based on a fixed percentage on every eligible purchase.

For example, you may earn a 2% rate per dollar on a cashback card, which translates to a rebate of $2 for every $100 you spend.

For a general-purpose rewards card, you collect a certain number of points for every dollar you spend.

Each point has a specific cash conversion value set by your card issuer.

For example, under a model where you earn 1 point for each cent you spend, you’d garner $1 worth of points if you charge $100 to your card.

Under a bonus-rate model, your earn rate varies according to which spending category purchases fall into based on your card’s rewards program policy.

For example, your card may allow you to collect a 3% cashback rate for each dollar you spend on gas, 2% on food and dining, and 1% on everything else.

3. Flexibility of the Rewards

The ability to transfer your points is a nice perk as there are times when your points provide more value if used through an alternative rewards program.

Certain card brands allow you to transfer rewards points to hotel and frequent-flyer programs, allowing for the possibility of superior redemption deals.

For example, if you use the CIBC Aventura card, you can send your points over to the Aeroplan loyalty program.

In addition to transferability options, you’ll want to examine the number of redemption options available, whether blackout dates apply, and if earned points have an expiry date.

Fact

In general, credit card points and miles don’t expire, but those earned through a frequent flyer or hotel program may expire after an extended period of inactivity.

Benefits of a Rewards Credit Card

Before you sign up for a rewards card, it’s wise to get acquainted with both the benefits and drawbacks you may experience when using one.

Here are a few benefits.

1. A Great Way to Save Money

Suppose you’re looking to trim your household expenses.

In that case, a rewards card can help you achieve this goal if you use it routinely and responsibly.

Rewards cards can net you great savings, especially when it comes to travel-oriented costs.

2. Access to Valuable Perks

Many rewards cards offer a wide range of perks that can come in handy.

These may include airport lounge access, enhanced security features, roadside assistance, travel insurance, zero foreign transaction fees, and an extended purchase warranty.

3. Opportunity to Earn a Sign-up Bonus

Rewards cards routinely offer lucrative sign-up bonuses to entice customers.

You can earn a large amount of points from the get-go, giving you a head start in amassing the levels needed to redeem for your favourite rewards.

Guy smiling earning rewards on his credit card purchase

Drawbacks of a Rewards Credit Card

1. Rewards Programs Can Be Complex

Navigating your way around rewards programs can be challenging and frustrating.

They can be pretty complex, with numerous rules governing how you can acquire, redeem, transfer, and value your points.

2. High Annual Fees

If you’re looking to get the most out of a rewards card, be prepared to pay a steep fee for the privilege of doing so.

The high annual fees that accompany certain cards are enough to dissuade some consumers.

3. Numerous Restrictions

While a particular rewards program may seem like a solid deal at first glance, onerous restrictions may be embedded in the fine print:

  • There may be a monthly or yearly ceiling on the number of points you can earn
  • Your card issuer can arbitrarily alter the cash conversion value of points
  • There may be minimum redemption requirements
  • You may be limited to how frequently you can redeem points

Frequently Asked Questions

  • Is a rewards credit card the same as a credit card?
  • Do all credit cards give you rewards?

Mark is a freelance writer who specializes in covering personal finance topics related to investing, mortgages, credit cards, and more.

He is passionate about educating people on how the financial markets work and providing tips to help them better manage their money. Mark holds a bachelor’s degree in finance from the Northern Alberta Institute of Technology and has more than a decade of experience as an accountant.

Outside of writing and finance, he enjoys playing poker, going to the gym, composing music, and learning about digital marketing.