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
- American Express Cobalt Credit Card: Best for exchanging MR points with other rewards program
- BMO CashBack MasterCard: Best for earn rate on groceries
- BMO CashBack World Elite Mastercard: Best for promotional earn rate for the first three months
- Brim Financial Mastercard: Best for milestone bonuses when you purchase at the same stores
- Canadian Tire Triangle Mastercard: Best for earn rate on Canadian Tire stores
- CIBC Dividend Visa Infinite Card: Best for earn rate on groceries and gas stations
- Home Trust Preferred Visa Card: Best for no foreign fees
- Meridian Visa Infinite Cash Back Card: Best for cash back rate on gas purchases
- Scotia Momentum Visa Infinite Card: Best for promotional cash back on groceries and online subscriptions
- Tangerine Money-Back Mastercard: Best for no annual cash back limit
- TD Cash Back Visa Infinite Card: Best for medical and travel insurance
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 SimplyCash||1.25% cash back on all categories|
|American Express SimplyCash Preferred||2% 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 Mastercard||3% on groceries, 1% on recurring bills, 0.5% on all other purchases|
|TD Cash Back Visa Infinite||3% 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-Back||2% 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
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 annual 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.
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 Mastercard||10% promotional cash back rate for the first 3 months|
|Scotia Momentum Visa Infinite Card||10% promotional cash back rate for the first 3 months|
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:
- Gas stations
- Grocery stores
- 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
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
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.
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.
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 a simpler, more flexible solution, a cash back card might be for you.