11 Best Cash Back Credit Cards In Canada (Oct 2022)

August 15, 2022
Blog
credit cards visa mastercard

There are quite a few good cash back credit cards out there, but some stand out above the rest for their impressive welcome bonuses, promotional cash back rates, and excellent rewards. I constantly keep up with the latest promo rates and policy changes and make my recommendations below based on years of experience.

I recommend the American Express Cobalt Card as the #1 cash back credit card in Canada due to its low monthly fees, very high earn rate on Eats & Drinks, and 30,000 welcome bonus points. It is one of the most flexible cards, with the option to transfer your points to other programs, and it comes with comprehensive insurance.

What Is A Cash Back Credit Card?

Cash back credit cards are a type of reward credit card that allows you to earn rewards in the form of cash back when you make purchases. Cash back rewards are usually category-bound, meaning you can earn cash back when you make purchases towards certain categories like groceries or gas, or store-bound, meaning you can only earn points when you purchase at participating stores. 

In the last couple of years, there’s been a shift towards no-fee credit cards, and some cash back credit card issuers have been quick to follow it. No-fee cards offer cash back rates of up to 3% on select categories, and most have an annual limit on how much cash back you can earn. For premium cards, you can expect cash back rates of up to 5% and annual fees ranging from $100-$150. Keep in mind premium cards come with lots of additional perks and benefits, and you can usually earn more than enough to justify the annual fee.

Without further ado, here are the best cash back credit cards Canada has to offer:

The Best Cash Back Credit Cards In Canada

  1. American Express Cobalt Credit Card: Best for exchanging MR points with other rewards program
  2. BMO CashBack MasterCard: Best for earn rate on groceries
  3. BMO CashBack World Elite Mastercard: Best for promotional earn rate for the first three months
  4. Brim Financial Mastercard: Best for milestone bonuses when you purchase at the same stores
  5. Canadian Tire Triangle Mastercard: Best for earn rate on Canadian Tire stores
  6. CIBC Dividend Visa Infinite Card: Best for earn rate on groceries and gas stations
  7. Home Trust Preferred Visa Card: Best for no foreign fees
  8. Meridian Visa Infinite Cash Back Card: Best for cash back rate on gas purchases
  9. Scotia Momentum Visa Infinite Card: Best for promotional cash back on groceries and online subscriptions
  10. Tangerine Money-Back Mastercard: Best for no annual cash back limit
  11. TD Cash Back Visa Infinite Card: Best for medical and travel insurance

American Express Cobalt Card

Great for exchanging MR points with other rewards program and high MR earn rate
  • Annual Fee
    $155 (1st year free)
  • Interest Rate
    20.99% on purchases, 21.99% on cash advances
  • Welcome Bonus
    30,000 MR points
  • Rec. Credit Score
    660+
  • Features & Benefits

    • Earn 2,500 Membership Rewards points as a welcome bonus after you spend $6,000 within a year ($500/month)
    • $300 in statement credits towards purchases charged to your card
    • $225 credit in American Express Prepaid Cards
    • Access to American Express Experiences
    • Access to American Express Front Of The Line presales
  • Pros & Cons

    Why we like it

    Great for exchanging MR points with other rewards program and high MR earn rate

    Pros

    • 30,000 MR bonus
    • Earn 5 points per $1 spent on eligible eats & drinks purchases
    • Transfer points 1:1 to other loyalty programs (Aeroplan, Marriot Bonvoy, and more)
    • Access to presale tickets and VIP seating in select events through American Express' Front Of The Line program
    • $100 Travel Credit and 4 complimentary visits to Plaza Premium Lounges
    • Comprehensive travel and medical insurance

    Cons

    • Needs a good credit score (660+)
    • High annual fee ($155)
  • More Details

    Bonuses and fees

    The American Express Cobalt Card is a premium credit card with an annual fee of $155. This card is unique because its Membership Reward points can be exchanged 1:1 with some of the best rewards programs, including the Aeroplan and the Marriot Bonvoy program.

    Rewards

    You can earn MR points at a rate of:

    • 5 MR points per $1 spent on eats & drinks
    • 3 MR points per $1 spent on streaming subscriptions
    • 2 MR points per $1 spent on travel & transit
    • 1 MR point per $1 spent on everything else

    Redeeming your points

    The American Express Cobalt Card offers plenty of options to exchange your points. You can spend them directly on categories like streaming subscriptions, various eats & drinks, movie tickets, or statements of credit.

    Additionally, you can Exchange your MR points for Aeroplan, Avianca LifeMiles, Hilton Honors, Choice Privileges, or Marriott Bonvoy points.

    Insurance

    This card offers very complete coverage, including categories like:

    • Emergency Medical Insurance
    • Flight Delay Insurance
    • Lost or Stolen Baggage Insurance
    • Mobile Device Coverage
    • $250,000 Travel Accident Insurance

BMO CashBack MasterCard

Great for high earn rate on groceries and very low balance transfer fees
  • Annual Fee
    $0
  • Interest Rate
    19.99% on purchases, 22.99% on cash advances
  • Welcome Bonus
    $25
  • Rec. Credit Score
    660+
  • Features & Benefits

    • $125 in cash back as a welcome bonus after spending $2,500 within your first 3 months
    • Get a 1.99% introductory interest rate on Balance Transfers for 9 months, 1% fee applies to balance amounts transferred
    • Redeem your cash back as a direct deposit, credit on your statement, or a deposit to your BMO InvestorLine account
    • Extended Warranty and purchase protection
    • Discount on car rentals
  • Pros & Cons

    Why we like it

    Great for high earn rate on groceries and very low balance transfer fees

    Pros

    • Earn 5% cash back on all purchases for the first 3 months
    • 3% cash back on groceries
    • Very low introductory interest rate (1.99%) for the first 9 months
    • Redeem any amount of cash back instantly & set up automatic deposits
    • Extended warranty and protection on all purchases
    • 25% off at National Car Rental and Alamo Rent a Car locations

    Cons

    • Cash back capped at $500/month
    • Low base earn rate
  • More Details

    Bonuses and fees

    The BMO CashBack Mastercard is a no-fee credit card that offers very competitive cash back rates, even compared to some premium credit cards. New cardholders can enjoy a 5% cash back on all purchases for the first three months. If you’re looking to transfer your balance, this is also a great option; the BMO CashBack Mastercard charges just 1% in transfer fees and has a fixed 1.99% rate for the first 9 months.

    Rewards

    The BMO CashBack Mastercard offers cash back on all purchases and bonuses in certain categories. Here’s the breakdown:

    • 3% cash back on groceries 
    • 1% on subscriptions like streaming services and utilities
    • 0.5% on all other purchases

    Perks and Benefits

    Redeeming Your Cash Back

    After accumulating $25 in cash back, you can redeem it at any time. Here are the options you have:

    • Set up deposits directly into a BMO account (Savings, Chequing, or InvestorLine)
    • Get a credit on your monthly statement
    • Set up recurrent payments when you accumulate a certain amount of cash back
    • Get a one-time lump sum payment

    Keep in mind your cash back rewards won’t expire as long as your account is in good standing.

BMO CashBack World Elite Mastercard

Great for high promotional earn rate for the first three months and high cash back on groceries
  • Annual Fee
    $120 (1st year free)
  • Interest Rate
    20.99% on purchases, 23.99% on cash advances
  • Welcome Bonus
    $200
  • Rec. Credit Score
    760+
  • Features & Benefits

    • Earn $200 in cash back after spending $2,000 in your first 3 months
    • Complimentary Mastercard Airport Experiences membership
    • Complimentary Roadside Assistance Program
    • Mastercard Travel Rewards membership and access to cash back offers when travelling abroad
  • Pros & Cons

    Why we like it

    Great for high promotional earn rate for the first three months and high cash back on groceries

    Pros

    • Earn 10% cash back on all purchases for the first 3 months
    • 5% cash back on groceries
    • First year's fee is completely waived
    • Comprehensive travel and medical insurance
    • Access to a comlimentary road assistance program
    • Purchase ProtectionPlus insurance for stolen or damaged items

    Cons

    • Requires a minimum yearly income of $80,000
    • Relatively high annual fee
  • More Details

    Bonuses and fees

    The annual fee for the BMO CashBack World Elite Mastercard is $120 (waived for the first year). It comes with one of the best promotional cash back rates of 10% for the first three months, and you can redeem your cash back for as little as $1 at any time. You can also set up automatic deposits and get your cash back sent to your BMO chequing or savings account, your InverstorLine account, or use it directly as credit in your monthly statement.

    Perks and Benefits

    The BMO CashBack World Elite Mastercard offers many ways to earn cash back. For the first three months, you will get 10% cash back on all categories. After the promotional period, you will still earn a substantial amount of cash back on eligible categories: groceries (5% cash back), transit (4% cash back, including taxis and public transportation), gas and EV charging (3% cash back), recurring payments and subscriptions (2% cash back), and 1% on all other purchases.

    Additional benefits include a Mastercard Airport Experiences complimentary membership and access to exclusive Mastercard Travel Reward offers when travelling and shopping outside Canada.

    Insurance

    The BMO CashBack World Elite Mastercard lives up to its name and offers comprehensive travel and medical insurance, including:

    • Baggage delay and loss insurance
    • Flight delay insurance
    • Car rental insurance
    • Travel accident insurance
    • Medical emergency insurance
    • Roadside Assistance program

Brim Financial Mastercard

Great for milestone bonuses and cash back rates at partner airlines
  • Annual Fee
    $0
  • Interest Rate
    19.99% on purchases, 21.50% on cash advanes
  • Welcome Bonus
    N/A
  • Rec. Credit Score
    725+
  • Features & Benefits

    • Earn $200 in First Time Bonuses when purchasing at partner stores
    • No foreign transaction fees
    • No annual fee
    • Manage your card through the Brim app. Freeze your card, lock purchases in foreign currencies, or lock online purchases
    • Instant purchase notifications, insights into your monthly spendings, and instant card lock for all of your secondary cards
  • Pros & Cons

    Why we like it

    Great for milestone bonuses and cash back rates at partner airlines

    Pros

    • Earn up to $200 in bonuses when reaching certain milestones
    • No foreign exchange fees when purchasing abroad or online
    • Earn up to 3% cash back from partner airlines (Lufthansa, Etihad, Avianca, Emirates)
    • Complimentary access to free global Wi-Fi through the Boingo Wi-Fi network
    • Comprehensive travel and medical insurance
    • Free access to budgeting tools

    Cons

    • High credit score to qualify (at least 725)
    • Low base earn rate (1% back)
  • More Details

    Bonuses and fees 

    The Brim Financial Mastercard is a no-fee travel card that offers cash back when booking flights with one of their partner airlines. Additionally, you can earn up to $200 in first-time bonuses, for example, when you book your first flight. 

    Despite not charging an annual fee, the Brim Financial card does require a good credit score of at least 725.

    Rewards

    With this card, you can earn points on every purchase. Here are the rates:

    • 3% cash back on eligible flights (Etihad, Avianca, Emirates, and Lufthansa)
    • 1% cash back everywhere else

    Perks and benefits

    • No foreign transaction fees
    • Access to the Boingo Wi-Fi network worldwide
    • Seasonal offers and promotional cash back rates

    Insurance 

    The Brim Financial Mastercard offers insurance on certain categories, despite not charging any annual fee:

    • Common carrier accident insurance
    • Mobile device insurance
    • Extended warranty

Canadian Tire Triangle Mastercard

Great for high earn rate on Canadian Tire stores
  • Annual Fee
    $0
  • Interest Rate
    19.99% on purchases, 22.99% on cash advances
  • Welcome Bonus
    N/A
  • Rec. Credit Score
    660+
  • Features & Benefits

    • Earn 15% cash back in CT Money on your first purchase as a welcome bonus
    • Redeem your CT Money at Canadian Tire, Sport Chek, Atmosphere, Sports Rousseau, Hockey Experts, and participating Sports Experts stores
    • No annual fee
  • Pros & Cons

    Why we like it

    Great for high earn rate on Canadian Tire stores

    Pros

    • No annual fee
    • 4% back in CT money on all purchases in Canadian Tire stores
    • Earn 5 cents per litre in CT money at Gas+ service stations
    • Collect 1.5% in CT money on all grocery purchase for up to $12,000 per year
    • Get your financed for purchases over $150 at select stores (no fees and no interests)
    • Customer service available 24/7

    Cons

    • You can only redeem CT points at select partner stores (CT, Sport Chek, Atmosphere and Sports Experts stores, among others)
    • High credit score to qualify (at least 660)
  • More Details

    Bonuses and fees 

    The Canadian Tire Triangle Mastercard is no-fee cash back. One of the downsides of the Canadian Tire credit cards is that rewards are paid in CT Money, and you can only redeem them at select stores like Canadian Tire, Sport Chek, and Atmosphere. However, if you shop often at any of these stores, you will find that the cash back rates are very generous.

    Rewards 

    This card has four main cash back categories. You can earn:

    • 4% cash back when purchasing at Canadian, Tire Sport Chek, L’Équipeur, Atmosphere, and more
    • 1.5% cash back at grocery stores
    • 0.5% cash back on all other purchases

    CT Money points are roughly equivalent to $1, which is more than reasonable. Also, keep in mind that cash back on grocery purchases is capped at $12,000 per year.

    Perks and Benefits 

    • Purchases over $150 at participating stores qualify for no fee, no interest financing
    • 5 cents cash back per litre of gas at partner gas stations Gas+ and Essence+

CIBC Dividend Visa Infinite Card

Great for high earn rate on groceries and gas stations
  • Annual Fee
    $120
  • Interest Rate
    20.99% on purchases, 22.99% on cash advances
  • Welcome Bonus
    N/A
  • Rec. Credit Score
    725+
  • Features & Benefits

    • Redeem your cash back through CIBC Online at any time after you accumulate $25
    • Save by using your CIBC Dividend Visa Infinite Card at Pioneer, Ultramar, Fas Gas, and Chevron gas stations
  • Pros & Cons

    Why we like it

    Great for high earn rate on groceries and gas stations

    Pros

    • First year's fee is completely waived
    • 4% cash back on gas and groceries
    • 2% cash back on travel, dining, and subscriptions
    • Earn 10 cents per litre at Pioneer, Chevron, Fas Gas, and Ultramar
    • Comprehensive travel and medical insurance
    • Cash back rewards are redeemable within 5 days

    Cons

    • High credit score to qualify (at least 725)
    • Requires a minimum yearly income of $60,000
  • More Details

    Bonuses and fees

    The CIBC Dividend Visa Infinite Card has an annual fee of $120 plus $30 for each additional cardholder. The minimum income required to apply for this card is a combined $100,000 household income or $60,000 individual income and a credit score of at least 725.

    If you have a CIBC Smart Plus Account, you will get a full rebate on the annual fee.

    Rewards

    With the CIBC Dividend Visa Infinite, you get 4% cash back at grocery shops and gas stations, and if you join the Journie Rewards program, you can get a further 10 cents off per litre of gas at Fas Gas, Ultramar, Chevron, and Pioneer. For transportation, restaurants, and recurring bills, you get up to 2% cash back, and there is no limit on the amount of cash back you can earn per year. All other purchases yield 1% cash back.

    Perks and Benefits

    • Comprehensive insurance that includes travel, medical, and mobile device expenses.
    • 0.25% cash back when you send money abroad through a CIBC Global Money Transfer. There are no interest or transaction fees
    • 25% off car rentals at partner Budget and Avis stores worldwide
    • Exclusive access to dining events, hotel benefits, and concierge services

Home Trust Preferred Visa Card

Great for no foreign fees and no limit on how much cash back you can earn
  • Annual Fee
    $0
  • Interest Rate
    19.99% on purchases, 19.99% on cash advances
  • Welcome Bonus
    N/A
  • Rec. Credit Score
    660+
  • Features & Benefits

    • No foreign exchange fee
    • No limit on how much cash back you can earn
    • No annual fee
  • Pros & Cons

    Why we like it

    Great for no foreign fees and no limit on how much cash back you can earn

    Pros

    • No foreign exchange fees when purchasing abroad or online
    • No annual fee
    • 1% cash back on all purchases
    • No cap on how much cash back you can earn
    • Car rental insurance
    • Visa Zero Liability Policy

    Cons

    • No welcome bonus
    • Needs a good credit score (660+)
  • More Details

    Bonuses and fees

    The Home Trust Preferred Visa Card offers cash back on all purchases and doesn’t charge any annual or management fees. The cash back rate is low compared to other credit cards, but it makes up for it by not charging foreign exchange fees and offering no-limit cash back on all purchases.

    Perks and Benefits 

    • 1% cash back on all purchases
    • No foreign exchange fees
    • No limit on how much cash back you can earn every year
    • Zero Liability policy
    • Accepted wherever Visa is accepted

Meridian Visa Infinite Cash Back Card

Great for high cash back rate on groceries and gas
  • Annual Fee
    $99 (1st year free)
  • Interest Rate
    19.50% on purchases, 21.99% on cash advances
  • Welcome Bonus
    N/A
  • Rec. Credit Score
    725+
  • Features & Benefits

    • Access to Visa Infinite Concierge Service, Visa Infinite Luxury Hotel Collection, and Visa Infinite Dining Series
    • Dedicated Visa Infinite website
    • Redeem your cash back for statement credit, tickets, and gift cards
  • Pros & Cons

    Why we like it

    Great for high cash back rate on groceries and gas

    Pros

    • Earn 4% cash back on groceries and gas
    • No annual fee for the first year
    • Access to the Visa's Infinite luxury hotel collection & dining series
    • Comprehensive travel and medical insurance
    • Complimentary Concierge service
    • A low annual fee of just $99 (waived the first year)

    Cons

    • Cash back bonus capped at $25,000/year, then it reverts to 1% cash back
    • Requires a minimum yearly income of $60,000
  • More Details

    Bonuses and fees

    The Meridian Visa Infinite Cash Back Card waives the first year for new cardholders; after the first year, the fee is $99. This card can be restrictive because it requires a 725+ credit score and an annual income of at least $60,000.

    Perks and Benefits

    The Meridian Visa Infinite Card offers good earn rates on two of the most common categories, and it also offers a 1% base earn rate on all other purchases. Here’s the breakdown:

    • 4% cash back on groceries & gas purchases
    • 2% cash back on pharmacy purchases, utility bills & subscriptions
    • 1% cash back on all other categories

    Insurance

    This card comes with comprehensive insurance, and some of the categories include are:

    • Auto rental collision insurance
    • Trip delay or cancellation insurance
    • Lost or stolen baggage insurance
    • Emergency health care insurance
    • Common carrier accident protection

    Keep in mind that Emergency Health Care insurance offers coverage for up to $5 million per insured person aged 75 or under. The Common carrier accident protection covers you while you’re travelling by commercial airplane, train, or taxi (among many others), for up to $1 million.

Scotia Momentum Visa Infinite Card

Great for promotional cash back rate and high earn rates on groceries and online subscriptions
  • Annual Fee
    $120 (1st year free)
  • Interest Rate
    20.99% on purchases, 22.99% on cash advances
  • Welcome Bonus
    $200
  • Rec. Credit Score
    660+
  • Features & Benefits

    • Earn $200 cash back as a welcome bonus after spending $2,000 within 3 months
    • Annual fee waived in the first year
  • Pros & Cons

    Why we like it

    Great for promotional cash back rate and high earn rates on groceries and online subscriptions

    Pros

    • $200 bonus
    • Earn 10% cash back on all purchases for the first 3 months
    • Comprehensive travel and medical insurance
    • 4% cash back on groceries and subscription purchases
    • Extended warranty and protection on all purchases
    • No fees when requesting additional cards

    Cons

    • Requires a minimum yearly income of $60,000
    • Rewards can only be redeemed yearly
  • More Details

    Bonuses and fees

    The Scotia Momentum Visa Infinite Card is one of the best promotional cash back cards. It has an annual fee of $120, which is completely waived for the first year. For the first three month, you will have a 10% cash back rate on all purchases, up to a maximum of $2,000 spent ($200 cash back).

    Rewards

    After the promotional period, the cash back rates are still very generous, and you will earn:

    • 4% cash back on groceries, subscriptions, and recurring bills
    • 2% cash back on all gas and transit spending
    • 1% cash back on all other purchases

    There are no limits on how much cash back you can earn every year.

    Perks and Benefits 

    Some additional benefits of this card include:

    • Complimentary Visa Concierge services
    • Access to the Visa Infinite Hotel Collection and the Visa Infinite Dining and Wine program
    • 25% off car rentals at Budget and Avis stores worldwide

    Insurance

    This card comes with comprehensive insurance; some of the insured categories include:

    • Auto rental collision insurance
    • Trip delay or cancellation insurance
    • Flight delay and lost or stolen baggage insurance
    • New Mobile Device Insurance
    • Travel Emergency Medical Insurance
    • Travel accident protection

Tangerine Money-Back Credit Card

Great for no annual cash back limit and a low interest rate on balance transfers
  • Annual Fee
    $0
  • Interest Rate
    19.95% on purchases
  • Welcome Bonus
    $100
  • Rec. Credit Score
    660+
  • Features & Benefits

    • Earn $100 cash back welcome bonus after spending $1,000 within your first 2 months
    • Earn bonus cash back on 2 categories plus an additional category when you link your Tangerine Savings Account
    • No limit on how much cash back you can earn
  • Pros & Cons

    Why we like it

    Great for no annual cash back limit and a low interest rate on balance transfers

    Pros

    • $100 bonus
    • Select 2 Money-Back categories and start earning 2% cash back (0.50% cash back on all others)
    • There's no annual limit to how much cash back you can earn
    • Cash back earnings are paid out monthly
    • Customizable cash back spending categories
    • Low 1.95% interest on balance transfers

    Cons

    • Very limited features
    • Low cash back rate compared to other cash back cards
  • More Details

    Bonuses and fees

    The Tangerine Money-Back Credit Card is a no-fee cash back card that can be customized to match your spending. With this card, you can choose your favorite cash back categories and earn bonus cash back. It comes with a promotional cash back rate of 15% on all purchases for the first 2 months, capped at $1,000, so you can earn up to $150 in cash back.

    Perks and Benefits

    The Tangerine Money-Back Credit Card brings a lot of flexibility compared to other cash back cards out there. For starters, cardholders can choose their preferred cash back categories and earn 2% cash back in two categories – three if you create a Tangerine Savings Account – and 0.5% cash back on all others. Here are the eligible categories:

    • Gas
    • Groceries
    • Pharmacies & drug stores
    • Entertainment
    • Hotels & motels
    • Home Improvement
    • Restaurants
    • Transportation

    Keep in mind you can change your chosen categories at any time, but it might take some time for it to take effect.

    Redeeming Your Rewards

    Cash back rewards are deposited directly into your Tangerine Savings Account, if you have one (highly recommended, to unlock the third bonus category), or applied to your credit card balance. Cash back rewards are paid out monthly, and there is no limit to how much cash back you can earn.

TD Cash Back Visa Infinite Card

Great for promotional cash back rate, plus medical and travel insurance
  • Annual Fee
    $120 (1st year free)
  • Interest Rate
    20.99% on purchases, 22.99% on cash advances
  • Welcome Bonus
    $200
  • Rec. Credit Score
    725+
  • Features & Benefits

    • Earn $200 cash back bonus as a welcome bonus after spending $2,000 within the first 3 months
    • Earn $210 cash back bonus as a welcome bonus after spending $3,500 on groceries and gas within the first 3 months
    • No annual fee for the first year
    • Emergency Road Services plus complimentary TD Auto Club membership
    • Access to Visa Infinite Concierge service
  • Pros & Cons

    Why we like it

    Great for promotional cash back rate, plus medical and travel insurance

    Pros

    • $200 bonus
    • Earn 10% cash back on all purchases for the first 3 months
    • 3% cash back on grocery, gas, and bill payments
    • Comprehensive travel and medical insurance
    • Link your TD card to your Starbucks account and earn 50% more Stars on all purchases
    • Complimentary Concierge service

    Cons

    • Requires a minimum yearly income of $60,000
    • High annual fee ($120)
  • More Details

    Bonuses and fees

    The TD Cash Back Visa Infinite Card lives up to its name and is tied with some of Canada's best cash back cards in terms of rewards. It offers a 10% promotional cash back bonus on all purchases for the first three months, and it completely waives the first-year $120 fee. You can spend a maximum of $2,000 during the promotional period for a total of $200 cash back.

    Rewards

    After the three-month period or whenever you reach the $2,000 cap, you will start earning:

    • 3% cash back on groceries, gas, and recurring bill payments like subscriptions
    • 1% cash back on all other purchases

    Your points will never expire as long as your account is in good standing..

    Perks and Benefits 

    Some additional benefits of this card include:

    • Complimentary Visa Infinite Concierge services
    • Access to the Visa Infinite Luxury Hotel Collection
    • Access to the Visa Infinite Dining and Wine program

    Insurance

    This card includes comprehensive medical and travel insurance. Here are the categories:

    • Auto rental collision insurance
    • Trip delay or cancellation insurance
    • Flight delay and lost or stolen baggage insurance
    • Travel Emergency Medical Insurance
    • Travel accident protection

How Do Cash Back Credit Cards Work?

When you make a purchase with a credit card, the credit card company charges the merchants a fee. Cash back and other credit card rewards are funded by merchant fees, annual management fees, and interests. Usually, the amount you can earn in cash is capped yearly.

Credit cards pay out rewards mainly in points and cash back. The main difference between the two is how flexible they are. Cash back credit cards earn a fixed amount of cash and can help you save on most everyday purchases. Additionally, cash back rewards are very easy to redeem and can be added automatically to your card’s statement balance.

Other types of rewards cards that earn you points (like travel cards) can be more difficult to navigate. The value per point is variable and can be higher than what you’d earn from cash back. However, they’re usually tied to select stores or categories, like travelling or hotels.

Depending on your goals, a cash back card may be more beneficial than another type of reward credit card, and even if you think another card might be more beneficial, getting a cash back card for everyday purchases is still worth considering.

How To Earn Cash Back

Cash back credit cards earn you rewards when you make purchases at select stores partnered with your particular card or when you make purchases toward select categories, like groceries or gas stations. Some cards offer cash back on recurring purchases, like subscriptions and phone plans.

Pros & Cons Of A Cash Back Credit Card

Pros: Why A Cash Back Credit Card May Be Worth It

  • Little-to-no annual fee
  • Offer the chance to earn rewards on spending
  • Flexible and easy-to-understand rewards system
  • Pick and choose select categories and enjoy higher cash back rates
  • Access to shopping perks like extended warranties, return guarantees, and more

Cons: Why A Cash Back May Not Be Worth It

  • Cash back cards are not free money – you need cash to earn cash
  • If you end up overspending just to get some cash back,
  • Most cash back credit cards have caps on how much you can earn per year

Types Of Cash Back In Canada

#1 Flat-Rate Cash Back Cards

A flat-rate cash back credit card offers the same cash back percentage for all spending categories. It’s the most basic type of cash back card and one of the most used as a catch-all solution. Reasonable earn rates for this type of card are between 1.5% and 2% in all categories.

One major drawback is that if you’re not taking advantage of most categories and instead have higher spending on a particular one, you’re potentially missing out on the full benefit of the card. In that case, you’d be better off with a Bonus category or a Customizable category cash back card.

Here are two examples of flat-rate cash back cards in Canada:

American Express SimplyCash1.25% cash back on all categories
American Express SimplyCash Preferred2% cashback on all categories

#2 Bonus Category Cash Back Cards

A bonus category cash-back credit card offers different cash back rates depending on the category type. This type of card requires more planning than a flat-rate card, and you need to make sure you’re taking advantage of the higher-rate categories. Reasonable rates for this type of card are 3% on select categories and 1% on all other categories.

Here are two examples of bonus category cash back cards in Canada:

BMO CashBack Mastercard3% on groceries, 1% on recurring bills, 0.5% on all other purchases
TD Cash Back Visa Infinite3% on groceries, gas & recurring bills, 1% on all other purchases

#3 Rotating Bonus Category Cash Back Cards

A rotating bonus cash back card is similar to a bonus category card, the only difference is that the categories that offer the bonus change quarterly. Usually, you can earn 5% on those categories, but they usually have a yearly limit on the spending of $1,500-$2,000. If you’re using one of these, it’s usually a good idea to pair it up with another card so you don’t miss out on cash back on your everyday purchases.

Some of the categories that tend to get the bonus are grocery, gas, and online shopping. Here’s an example of a rotating bonus credit card:

Discover it® Cash Back (limited support in Canada)5% on bonus categories (up to $1,500) 1% after that

#4 Customizable Category Cash Back Card

A customizable category cash back credit card offers its users the ability to pick and choose specific categories and earn an increased rate. These cards may have lower rates than regular bonus category cards, but if you choose your categories smartly, you may earn more. Make sure to choose the categories based on your specific spending habits.

One drawback of these cards is that there’s usually a waiting period if you want to change your preferred categories.

Tangerine Money-Back2% in up to 3 categories of your choice (including groceries, gas & more), 0.5% on everything else

How To Choose A Cash Back Card In Canada

Annual Fee

The first thing you should look at when shopping for a cash back card is the annual fee. The yearly fee may eat at your earnings based on your spending habits. Generally, paying a higher yearly fee means higher cash back rates, but you still have to spend money to earn money. Zero-fee cash back cards aren’t as generous with their rates, but if you pay them on time, they’re guaranteed to make you a profit.

It's important to note that if you’re making purchases just to earn cash back, you’re doing it wrong. The perfect cash back card will fit your spending habits, not increase them.

Some of the best cash back cards in Canada with no annual fees include the BMO CashBack MasterCard and the Tangerine Money-Back credit card.

Interest Rates

Another important factor is the interest rates; if you find yourself falling behind often on credit card payments, a cash back card might not be for you. The standard interest rate for cash back cards is 19.99%, and it can easily outweigh the cash back benefits if you miss payments. Alternatively, you could consider low-interest credit cards.

Welcome Bonus And Promotional Rates

Some cash back cards in Canada come with a welcome bonus or promotional rate. Welcome bonuses are one-time rewards for new card-holders, which can take the form of higher cash back rates for fixed periods (usually no more than 3 months and with a built-in spending limit).

BMO CashBack World Elite Mastercard10% promotional cash back rate for the first 3 months
Scotia Momentum Visa Infinite Card10% promotional cash back rate for the first 3 months

Bonus Categories

Different cards offer different bonus categories. When you pick a card, make sure you choose one that fits your spending habits. For reference, here are some of the most common spending categories in cash back credit cards:

  • Restaurants
  • Gas stations
  • Grocery stores
  • Travel
  • Drugstores
  • Home improvement stores

Credit Card Insurance & Purchase Warranties

Some cash back credit cards offer purchase warranties and insurance. This type of card usually has a hefty yearly fee and includes travel, rental, and medical insurance. Here are some of the usual categories included:

  • Baggage loss insurance
  • Baggage delay insurance
  • Car rental insurance
  • Extended warranty
  • Mobile Insurance
  • Flight delay insurance
  • Purchase assurance
  • Travel emergency medical
  • Travel accident insurance
  • Trip cancellation
  • Trip interruption

How To Redeem Your Cash Back Rewards

Depending on the card you choose, you will have different options to redeem your rewards. Some of the most common options include:

  • A direct deposit to your checking or savings account
  • A check sent to your mail
  • A statement credit
  • Gift cards
  • Merchandise

Some cash back cards pay back rewards monthly, like the Tangerine Money-Back Card, while others like the Scotia Momentum Visa Infinite Card pay rewards on a year-to-year basis.

Rewards programs require you to reach a minimum before withdrawing your earnings – usually at or around $25. Some rewards programs only allow users to redeem at select partner stores, like the Canadian Tire Triangle Mastercard.

In general, cash & gift card rewards allow a lot more flexibility than store-locked rewards. When choosing a card, confirm that the redeem options match your goals – and read the reward program's fine print.

How To Apply For A Cash Back Card In Canada

Age

In Canada, the minimum age to request a credit card is the age of the majority. Teens under that age can’t get approved for credit cards but can be added as authorized users to one of their parent’s credit cards. For reference, the age of the majority in Alberta, Manitoba, Ontario, Quebec, Prince Edward Island, and Saskatchewan is 18 years old. In all other provinces, the age of majority is 19.

Residency Status

Canadian credit cards are available to residents and non-permanent residents. However, most cash back cards require you to be a Canadian resident. For other card types like prepaid, store, and secured credit cards, you don’t even need a credit history. At the end of the day, residency requirements will depend on the specific credit card issuer.

Credit score

Most cash back credit cards in Canada require a good credit score, ranging from 670 to 740. Keep in mind that the higher your credit score, the more likely your application will be accepted, and the cards with the higher requirements usually have the best intro bonuses, rewards, and general benefits.

Personal Or Household Income Requirements

Some premium cash back credit cards come with an income requirement, usually ranging from $60,000-$80,000 or $100-$150 household income. These cards tend to require a higher credit score and come with the best benefits. However, this is not the norm: most cash back credit cards have no-or-very-little income requirements.

Cash Back Credit Cards FAQs

Are Cash Back Credit Cards worth it?

When cash back cards might be worth it for you:

  • If you find yourself making a lot of purchases and spending a lot of money every year at eligible stores like restaurants, gas stations, and grocery stores, cash back cards are for you
  • If you have no trouble keeping up with your monthly credit card payments and are very unlikely to fall behind on payments, cash back cards can be a great addition to your credit cards collection.
  • If you did the math and calculated how much you spend at eligible stores and concluded you’d earn more from cash backs than the yearly fee (if applicable) of the cash back card, a cash back card might be for you.
  • If you have a high credit score and access to the best cash back credit cards with the best benefits.

When cash back cards might not be worth it for you

  • If you often fall behind on payments, a cash back credit card is not for you. The additional interest you will incur will offset any potential benefit of the cash back card
  • If you don’t make enough purchases to pay off the yearly fee (if applicable) and are forced to spend more to earn more, a cash back card is not for you. A cash back card should complement your spendings habits, not increase them

What Is The Best Free Cash Back Card In Canada?

The best free Cash Back card in Canada is the BMO CashBack Mastercard. It comes with a 5% promotional cash back purchase for the first 3 months, extremely low introductory interest rates (1.99%) for the first 9 months, and an extended warranty on all purchases.

How Many Cash Back Cards Should I Have?

A common strategy for cash back cards is to have two cards; one with a flat rate of 1.5% or more across several categories and a specialized card that offers 5% back on select purchases like groceries or gas. That way, you earn money on all purchases and keep a manageable number of cards. Usually, it’s a good idea to have cards from the same issuer to keep things as simple as possible, but that’s not always an option.

The major drawback of having too many cards are the fees and interest charges on each; it’s also harder to keep track of all payments (which can be very time-consuming), and you may not reach the spending minimum to start redeeming rewards.

Is There A Downside To Cash Back Cards?

One of the biggest downsides is that some users end up over-spending to earn cash back. Another drawback is that cash back rewards, in general, are not redeemable instantly; instead, you may have to wait for months or even yearly payments.

Is It Better To Get A Cash Back Credit Card Or A Rewards Card?

There is no right answer to this question. It will depend on your particular situation, long-term goals, and spending patterns. Cash back cards are easier to use and have a very straightforward rewards system. Reward cards with point systems like travel cards can give you more value per dollar spent, but annual fees are higher, and they’re a lot harder to navigate. Additionally, you will lose out on most benefits if you aren't a frequent traveller. If you want the simpler, more flexible solution, a cash back card might be for you.

Want to earn $50 in the next 6 minutes?

CoinSmart is a highly-rated, fully regulated Canadian crypto platform that’s giving new users $50 for depositing $200 or more. Trade with low fees and withdraw your money at any time.

Click below to claim your $50 bonus today. Offer ends October 4, 2022.
CLAIM MY $50 BONUS
Offer ends October 4, 2022.