One of the best reasons to consider applying for a credit card is the potential to earn rewards, such as cashback on purchases or travel miles that can be used towards your next vacation.
Almost three-quarters of Canadians have at least one rewards credit card, according to a study from the Canadian Bankers Association.
If you want to join them and apply for your first (or next) rewards card, you’re in the right place. Below, I’ll share some credit cards with the best rewards for Canadians, so you can start earning when you spend!
Top credit cards with the best rewards for Canadians
Here are some of my favourite rewards credit cards available in Canada. Note that APY stands for the annual percentage yield, which is how much interest you’ll need to pay per year on the balance of the credit card.
AMEX Cobalt Card
- Best for: Eating out, subscriptions, travel
- Rewards: 5x on food/delivery, 3x on streaming, 2x on travel
- Annual fee: $155.88 ($12.99/month)
- Interest: 20.99% APY
The American Express Cobalt Card is a great all-around rewards credit card tailored for frequent travellers and those who enjoy eating out. Cardholders can earn 5x points (5% cashback) for every dollar spent on restaurants or food delivery, 3x points on their streaming subscriptions, and 2x points on travel and transit expenses.
Additionally, you can earn 2,500 points (equivalent to $25) every month that you spend at least $500 on the card, which more than covers the monthly/annual fee.
The only downside of AMEX cards is that not all merchants accept the cards, and transaction fees may be slightly higher.
Tangerine Money-Back Credit Card
- Best for: Great for lower credit scores
- Rewards: 2% cashback
- Annual fee: None
- Interest: 19.95% APY
If you have a low credit score or don’t have much credit history, the Tangerine Money-Back card is a great rewards card to start with. You only need a score of 600 and an annual income of $12,000 to apply. There’s also no annual fee.
Cardholders can earn 2% cashback on three chosen categories (which you can change at any time) and will earn 0.50% cashback on all other purchases.
AMEX Aeroplan Reserve Card
- Best for: Travel rewards
- Rewards: 3x points on Air Canada flights and with Aeroplan affiliates
- Annual fee: $599
- Interest: 20.99%
If you spend a lot of time and money on flights, the American Express Aeroplan Reserve card can help you save a lot. While the annual fee is quite high, you’ll earn 3x points for every dollar spent on Air Canada flights and vacation packages or with Aeroplan’s 150+ partner brands.
New members can earn 45,000 bonus points when they spend $6,000 in the first three months.
Simplii Financial Cash Back Visa
- Best for: Restaurants and eating out
- Rewards: 4% cash back on restaurants, 1.5% on groceries, gas, bills, and drugstores, 0.50% on everything else
- Annual fee: None
- Interest: 19.99% APY
The Simplii Financial Cash Back Visa card has no annual fee and offers a generous 4% cashback rate on all restaurant expenses, whether you’re eating out or taking your lunch to-go. To qualify, you only need an annual income of $15,000.
You’ll also earn 1.5% cash back on groceries, gas, drugstores, and recurring bills (such as your Netflix subscription). During your first three months, you can earn up to 20% cashback on these categories, up to $500 in rewards.
You’ll earn 0.50% cash back on all other purchases.
Suradech Prapairat/Shutterstock
What to consider before you apply
The best rewards credit card for one person may not be the best choice for another. Consider these questions before you apply for your next card:
What type of rewards do you want?
How do you plan on using your credit card? What type of rewards would you find the most useful for your lifestyle?
There are several types of rewards and bonuses that credit cards offer, including:
- Cash back rewards: you’ll earn a small percentage of your spending back as “points” or cash rewards
- Travel rewards: travel credit cards often offer “air miles” that can be redeemed for flights, hotels, and other travel expenses
- Spending bonuses: many cards offer a large upfront bonus if you spend a certain amount within the first few months of owning the card
- Referral bonuses: many cards offer a bonus when you refer a friend or family member to apply for the same card you have
Regarding cashback rewards, some cards offer a flat rate, such as 1.5% cash back on all purchases. Others offer higher rewards for individual categories, such as 4% cash back on groceries or 3% cash back on fuel. Cards offered by retailers typically offer higher cashback bonuses when you shop at their stores.
Credit score icons / Shutterstock
How is your credit score?
If you have poor or fair credit, you may not be eligible for some of the higher-end rewards credit cards. However, you may be able to apply for introductory cards that offer smaller cashback rewards.
The most accurate way to check your credit score is to visit TransUnion or Equifax Canada, the country’s two major credit bureaus. You can subscribe to their credit monitoring services for real-time updates on your credit score or request a free copy of your credit report online.
Do you understand how credit card interest works?
Credit card companies make their money by charging interest on balances that are carried over. Seventy per cent of Canadians pay their credit cards off each month, so they don’t have to pay interest. The other 30% carry a balance over each month, which they must pay additional interest on.
Do you understand how annual fees work?
Many credit cards charge no annual or monthly fee. However, some of the cards that offer higher rewards may charge an annual fee that can range anywhere from $50 to $500 or more. You must pay this fee for the duration that the card remains open, so make sure that you can afford it.
Cash back credit card / Shutterstock
How to get the most out of your rewards credit card
If you want to get the most out of your card, I suggest you primarily use it to make purchases in the category that makes the most rewards. With this in mind, it can be helpful to have multiple rewards cards that you use for different purchases.
Taking advantage of sign-up and spending bonuses is also a great way to collect free money.
Just remember to manage your balance wisely and try to pay your card off every month to avoid interest fees and keep your credit score healthy.
Written for Daily Hive by Christopher Liew, a CFA Charterholder, former financial advisor, and the creator of Wealth Awesome.
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