The best cash back credit cards in Canada for 2024

Getting perks like flights and merchandise with your credit card is great, but nothing compares to the flexibility of receiving cash back. We’ve made a list of the best cash back credit cards in Canada for 2024.

 

With a cash back credit card, you can earn a small percentage (typically 1-4%) of each purchase back in cash, helping you pay off your credit card bill or save on future purchases. Often, certain categories of purchases (e.g. restaurants, travel, recurring bills) will give you a higher percentage back, rewarding those who always use their card more frequently in those areas.

How do cash back credit cards work?

Earning process

Unlike the calculations sometimes required with a points-based system, earning cash back with a credit card is fairly straightforward. As an example, let's imagine you have a cash back card that gives you 4% back on restaurants and takeout. If you spend $100 on a dinner out, that's an automatic $4 cash back you'll receive in return.

Tracking your cash back balance is important if you want to ensure you're getting the most out of your rewards. Thankfully, most providers offer an easy way to do this through their website and mobile app, allowing you to monitor your total and cash out at the right time.

Cash back rewards can vary based on dates and purchase categories, so make sure you're very familiar with your card's rewards details before signing up. Many cash back cards offer ultra-attractive welcome bonuses with accelerated cash back in certain areas, but these are typically only for a limited time. Once the promotional period ends, you'll be dropped back down to a standard earn rate going forward, so it's more important to focus on that than the glossier sign-up offer. Likewise, many cash back cards offer higher rates for purchases in select categories such as groceries, gas, or travel, so make sure those high-earning areas are the ones where you spend the most in order to maximize savings.

 

Redemption process

Every bank has a different redemption process for its cash back cards. Scotiabank, Home Trust, and American Express will give you cash back once a year, Tangerine’s cash back is paid out monthly, and TD allows you to redeem your cash back rewards as soon as you earn at least $25.

As you probably already know, when redeeming cash back rewards, credit card companies won’t send you an envelope of literal dollar bills. Rather, your cash back will be applied as a credit on your card statement – reducing your balance and ultimately leaving you with more cash in your bank account.

Depending on the credit card, you may have additional redemption options. For instance, Tangerine Bank will deposit your cash back into a Tangerine savings account every month, where compound interest will help your rewards grow gradually over time. BMO allows you to redeem your cash back as a statement credit or directly deposit your rewards into either a BMO chequing, savings, or investment account.

 

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Types of cash back cards

Not all cashback credit cards offer rewards on the same terms.

• “Bonus category” cards are the most popular type of cash back cards and pay out more rewards on certain types of purchases (known as bonus categories) than what they offer on everything else. These bonus categories typically include groceries, gas, and recurring bill payments – though it can vary by card. By strategically picking a card whose bonus categories align with your most frequent purchases, you can earn considerably more rewards.
  
  For example: the Scotiabank Momentum Visa Infinite offers 4% on groceries and recurring bills, 2% on gas and daily transit, and 1% on everything else.
  
  
• “Flat-rate” cards will earn you the same amount of cash back no matter what you buy. These cards are for the everyday shopper who prefers simplicity and whose spending doesn’t skew toward common bonus categories like groceries or gas.
  
  
• “Flexible bonus category” cards are like bonus category cards but with a twist – you’re not locked into pre-set categories by the card issuer and can choose your own. With the ability to pick your bonus categories, you can customize your card to more closely align with your particular spending habits and earn more cash back.
  
  Currently, the Tangerine Money-Back Credit Card and the Tangerine World Mastercard are both the only personal cards to offer this flexibility.

A popular tactic used by strategic shoppers is to carry a combination of card types to earn more rewards, and involves either pairing two cards that offer bonuses in different sets of categories or using one card with bonus categories and another with flat-rate rewards. Combine the right two cards and you can earn a higher overall rate of return than you would with just one.

• Also read: The best credit card combinations in Canada

 

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Annual fees

There are a number of great cash back cards with no annual fee, such as the Home Trust Preferred Visa or the SimplyCash Card from American Express. However, cash back cards with an annual fee can be worth the cost because they offer more lucrative cash back rewards along with more perks.

If you use a credit card to pay for the majority of your everyday purchases, odds are you’ll walk away with far more value with an annual fee card (even after paying the fee). If you don’t use credit all that much or your monthly spending is below $500, a no fee card could be a better fit.

Annual fees on cash back cards are usually around $99 to $120.

 

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Cash back welcome offers

If you pick up a new cash back card, there’s a good chance it comes with some kind of promotional offer.

The welcome offers on cash back cards don’t offer a one-time surge in rewards, but instead, let you earn an accelerated cash back rate for a limited period of time or up to a certain amount of spending. For example, while the BMO CashBack Mastercard lets you earn 1% cash back on all your purchases, as part of its welcome offer, you’ll get 5% cash back on your spending for your first three months up to a maximum of $100.

When comparing cash back welcome offers, it’s important to not only look at the accelerated cash back percentage but to dig deeper into the terms and conditions to see how long the offer lasts for and what it maxes out at.

As part of their offer, some cards with an annual fee will often waive it for the first year.

One of our favourite things about cash back welcome offers is they’re easy to take advantage of – you’ll just earn more cash per dollar on your everyday spending. In contrast, sign up bonuses on most travel credit cards come with minimum spending requirements (i.e. spending $3,000 within your first three months), which means you might not qualify for the offer if you don’t spend enough on the card fast enough.

One final note: While bonuses may be enticing, it shouldn’t be the only reason why you choose a cash back card. You should do the math to find which card works best based on your spending habits in the long haul.

 

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What’s better – cash back or points?

The reality is there’s no clear cut answer.

The biggest advantage of cash back is the rewards are simple, flexible, and consistent. The value of 1% in cash back always equals $0.01 – no matter what. Cash back rewards will help you save on all your everyday purchases charged to your card – not just on travel or merchandise and gift cards from specific retailers. Finally, redemptions are easy and often applied to your card’s statement balance automatically.

Points – on the other hand – are less straightforward but are potentially more lucrative, particularly if you’re a traveller.

Unlike cash back, the value of points isn’t consistent and vary depending on the loyalty program and what you’re redeeming. For example, 1 Scotia Rewards point is worth $0.01 when redeemed for travel rewards like flights, but that same point will be worth around 25% less when redeemed for a gift card and around 30% less for cash credits. With other points programs, like Air Miles and Aeroplan, the value of your points will even vary when redeeming for travel based on factors like your destination or whether you’re travelling during low or high seasons.

The key benefit of travel cards is they typically come with more bonus categories and perks, as well as larger welcome offers. Plus, depending on the travel card, you can redeem strategically and get well above the standard $0.01 per point, stretching the value of your rewards even further.

In short, travel points can offer great value, specifically when redeemed for travel rewards like flights and hotel stays. But if you want simple rewards, don’t travel frequently, and want the flexibility to use your credit card rewards to save on all your everyday spending, then a cash back card is a better fit for you.

 

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Credit card insurance

Most cash back credit cards do come with a handful of insurance perks like rental car insurance, as well as purchase and extended warranty protection. Depending on the card, you may also get access to more niche perks like a complimentary roadside assistance membership or mobile device insurance.

When it comes to travel insurance, however, coverage usually isn’t as extensive on cash back cards when compared to their travel card equivalents.

For instance, while the TD Cash Back Visa Infinite comes with complimentary out of province medical emergency coverage, it only lasts for 10 days not 21 days like on most travel cards. The card also lacks certain types of travel coverage like trip interruption and common carrier accident insurance. Similarly, the Scotiabank Momentum Visa Infinite offers travel medical emergency for 15 days, not 25 days like on Scotia’s comparable travel cards. So if you’re looking for more travel coverage, you may want to consider a travel card instead of a cash back card.

• Also read: Cash back vs travel cards: Which is right for you?

 

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Bonus categories

As we’ve touched on earlier, bonus categories are types of purchases that’ll earn you higher rewards per dollar and play a huge role in deciding which cash back credit card is right for you. For example, the Scotiabank Momentum Visa Infinite has groceries as a bonus category and earns 4% cash back on groceries versus the standard 1% it offers for most other purchases – making it an ideal match if you spend a lot at your local supermarket.

Whether or not a purchase falls under a specific bonus category has less to do with what you’re buying and more with who you’re buying from. That’s because the three big credit card companies (Visa, Mastercard, and American Express) categorize retailers and not the specific items they sell.

Below are some common bonus categories found on cash back credit cards.

Groceries encompass purchases from most grocery stores and supermarket chains – including food items (both groceries and pre-prepared meals), toiletries, cleaning supplies, and more. Virtually any grocery store that comes to mind falls under this category – like Loblaws, Metro, Sobeys, Wholefoods, and countless more. That said, some corner stores, discount groceries, and warehouse retailers may not count as groceries according to your credit card (and that includes Costco and most Walmart locations).

Gas is arguably the most straightforward bonus category and includes virtually all gas service stations including Shell, Esso, Petro-Canada and more.

Recurring bills covers recurring payments that are set to automatically charge your credit card every month – including cable, smartphone bills, streaming services, and even insurance payments. Certain recurring payments may not fall under this category however – monthly gym memberships and certain insurance payments may not, for example. It all really depends on whether the company or service provider charging your credit card sets the monthly payment as a pre-authorized charge (PAC).

Dining generally covers most dining establishments (including restaurants, fast food chains, cafes, and delivery services). That said, with so many restaurants and cafes (several of which are independently run), not every location will have the correct designation. It’s also worth noting only a tiny handful of cash back credit cards – primarily Tangerine and Simplii Financial – have dining as a bonus category.

While on the topic of bonus categories:

• Other common bonus categories include pharmacies, entertainment, and public transit.
• You should always aim to find a credit card that offers bonus categories on the purchases you make the most often.
• Credit card companies organize retailers based on four-digit merchant codes. Each card company has its own merchant codes system. For example, retailers with the code MCC 5411 are recognized as groceries by Mastercard. Your bank has no control over the merchant code system.

 

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Credit card company

Generally speaking, you should choose a card based on its rewards and perks – not whether it’s issued by Visa, Mastercard, or American Express. If you regularly shop at Costco or No Frills, however, you’ll have to factor the card company into the equation since those retailers only accept Mastercard credit cards. The same holds true if you regularly shop at boutiques, small local eateries, or mom and pop shops, since many independently-run establishments don’t accept American Express as widely as Visa or Mastercard.

One popular strategy is to get two cards: One with an annual fee and one without. For instance, you can get a premium Visa or American Express card with a fee along with a no-fee Mastercard as a back-up. Then you can maximize the amount of cash back you earn by using cards at different stores or in other categories.

 

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Interest rates

Like all rewards credit cards, cash back credit cards have annual interest rates in the double digits – usually 19.99%. These interest charges can be completely avoided as long as you pay off your balance in full every month. But if you don’t, the interest you rack up will outweigh any cash back rewards you earn. If you anticipate you’ll regularly carry a balance month to month, consider a low interest credit card over a cash back rewards card – it could help your bottom line in a big way.

Tips for using a cash back credit card

Keep an eye on welcome offers

Credit card providers are always updating and replacing their sign up bonuses and incentives, and keep a watchful eye on any offers you can take advantage of. Pay extra close attention to those which advertise an accelerated cash back or point value and a waived/rebated annual fee. Because these deals can net you huge savings without charging you anything for the first year, they’re the most lucrative. If you’re responsible enough to handle it, you can even try “churning” - that is, signing up for a card, using its welcome offer to your advantage, then closing it before its annual fee kicks in. While there are plenty of risks associated with this practice, it’s still an effective way for savvy users to get the most out of rewards cards.

Make major purchases in the first three months

While welcome offers look attractive on paper, there is one major caveat: they typically require you to spend a certain amount within a specific time frame after getting the card (usually three months). While this can be a pain, you can use it to your advantage by planning to make major purchases just after you sign up. For instance, if you got approved for a card with a welcome bonus offering 12% cash back on all purchases for the first three months (providing you spend at least $2000), think about what big-ticket items you’ve had on your wish list and use the card to purchase them. If you’re able to hit the minimum $2000 mark, you’ve just saved yourself $240.

Purchase gift cards

If you’re carrying a cash back card that offers big rewards on groceries and gas, you’ve got a ready-made way to earn even more in other categories. Because grocery stores and gas stations usually sell gift cards to movie theatres, restaurants, and other retailers, you can purchase them and get the immediate cash back, then use the cards instead of cash whenever you patronize these specific places, effectively saving even more.

Keep more than one card

Plenty of rewards-card enthusiasts carry multiple cards for different purposes as a way to maximize their earnings. As an example, you could keep one card for everyday purchases that gives you a solid cash back rate on things like groceries, gas, and recurring bills. When you're out on the town, you can use another card that offers excellent rates on entertainment and dining out. Even further, many users keep a cash back card with no foreign transaction fees that they strictly use for travel. Because different cards have unique strengths, its wise to use them together for maximum earning potential.

Add extra cardholders

If your provider allows you free supplementary cards/users, take advantage of this by adding other members of your household onto your account and getting them their own cards. With multiple users making purchases on your account, you’ll be getting way more cash back than you would alone. Just make sure you trust anyone you’ll be adding, as any spending they do on your account will ultimately be your responsibility.

Cash back credit cards: pros and cons

Still unsure about whether a cash back credit card is right for you? Let’s take a look at some quick pros and cons.

Pros

• Accelerated spending categories offer higher-than-normal rates for purchases like gas, groceries, travel, and more
• Compared to points-based rewards cards, cash back cards offer a more streamlined and easy-to-understand method of reward calculation
• Cash back rewards can be used for statement credits, helping you pay off a credit card bill
• Welcome bonuses can offer big savings if used strategically

Cons

• Cash back cards with an annual fee may not be worth it for less-frequent users
• Interest charges from late or partial payments may end up cancelling out any rewards earned
• Many sign up offers contain spending minimums which some users may find challenging to meet

Also read

• The best credit cards in Canada
• The best travel credit cards in Canada
• Best credit cards for groceries in Canada – by grocery store
• The best no fee credit cards in Canada