Search
  1. Home
  2. Credit cards
  3. Canada’s 10 Best Cash Back Credit Cards of 2021
Published September 20, 2021
Updated September 20, 2021

Canada’s 10 Best Cash Back Credit Cards of 2021

Cash back is the most flexible type of credit card reward.

ALSO CONSIDER: Best travel credit cards || Best general rewards credit cards

Cash back is a desirable and flexible type of credit card reward. Instead of earning points or miles, you get a percentage of what you spend back in cash. The amount of cash back you earn may vary depending on the card you use, its cash-back rate and the types of purchases you make with it.

NerdWallet’s picks for best cash-back cards in Canada

 

SimplyCash Card from American Express

Our pick for flat-rate cash back with a high ongoing rewards rate

Annual Fee
$99
Rewards Rate
2% - 10%
10% cash back for the first four months, then earn unlimited 2% cash rewards on purchases.
Intro Offer
$500
Receive 10% cash back during the first four months, up to $4,000 in purchases (equal to $400 cash back). Plus, a $100 statement credit after spending $4,000 in the first four months.
  • Our take

    Why we like it

    A high flat rewards rate of 2% makes it easy to earn cash back on every purchase — no need to keep track of bonus categories, spending limits or tiered and rotating structures.

    Pros

    • An unlimited 2% cash-back earn rate is among the highest we evaluated.
    • You can earn up to $500 in the first four months.

    Cons

    • Other cards on this list offer a higher cash-back rate on specific spending categories and might be a better fit if you’re comfortable keeping track of tiered rewards structures.
  • Product details
    • 2% on purchases with no spending limits.
    • Redeem cash back as a statement credit in September.
    • $99 annual fee.
    • Enjoy exclusive ticket access, virtual events, live performances and more with American Express® Experiences.
    • Refer a friend and earn a maximum annual referral bonus of $1,500 cash back.
    • Access to The American Express® Installment Program.
    • Nine types of insurance provided, including 15-day out-of-province/out-of-country emergency medical benefits — up to $5 million in coverage.
    • Preferred rates: 19.99% for purchases, 21.99% for cash advances.
    • To be eligible, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Simplii Financial Cash Back Visa Card

Our pick for a no-fee bonus category card with a low introductory APR on purchases

Annual Fee
$0
Rewards Rate
0.5% - 10%
10% intro offer. 4% at restaurants, bars and coffee shops, 1.5% on gas, groceries, drugstores and pre-authorized payments, and 0.5% on everything else.
Intro Offer
$500 + 9.99% annual interest on purchases
Earn 10% bonus cash back at restaurants and bars in your first four months (up to $500). Get 9.99% introductory annual interest on purchases for the first six months.
  • Our take

    Why we like it

    The $0-annual-fee Simplii Financial Cash Back Visa Card earns bonus cash-back on the purchases you make almost every day.

    Pros

    • New cardmembers can earn a 9.99% introductory annual interest on purchases for the first six months.
    • Newcomers to Canada can build credit with Simplii’s New to Canada Banking Program.

    Cons

    • The 0.5% base rate isn’t exactly impressive, but it only applies after you hit the annual spending limits of bonus categories.
    • It only includes purchase security and extended protection insurance.
  • Product details
    • 4% on restaurant, bar and coffee shops, up to $5,000 per year.
    • 1.5% on gas, groceries, drugstores and pre-authorized payments, up to $15,000 per year.
    • 0.5% on everything else.
    • Redeem cash back as a statement credit in December.
    • No annual fee.
    • Cash back when you send money abroad with a Simplii Financial Global Money Transfer. No transaction fees and no interest charges.
    • Newcomers to Canada can build credit with Simplii’s New to Canada Banking Program.
    • Purchase security and extended protection insurance provided.
    • Preferred rates: 20.99% for purchases, 22.99% for cash advances.
    • To be eligible, a $15,000 (individual) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident (excluding Quebec) that is the age of majority in the province or territory where you live.

Tangerine Money-Back Credit Card

Our pick for bonus categories tailored to your spending

Annual Fee
$0
Rewards Rate
0.5% - 10%
2% unlimited cash back on up to three categories. 0.50% unlimited cash back on everything else.
Intro Offer
$100
Earn 10% back on up to $1,000 in purchases ($100) during the first two months if you apply by October 4, 2021.
  • Our take

    Why we like it

    You can earn unlimited cash back at a 2% rate in up to three categories of your choice — all while earning 0.50% back on everything else.

    Pros

    • You can tailor the 2% rewards to your spending by choosing up to three categories from Tangerine’s list of 10, which includes basics like gas and groceries as well as unusual picks like furniture and home improvement.
    • Transfer balances within your first 30 days and pay only 1.95% interest on the transferred balance for the first six months (19.95% after that).

    Cons

    • 2% cash back is a competitive rate, but many cards offer double the rewards on specific categories.
    • Tangerine is a virtual bank with no physical bank branches.
  • Product details
    • 2% on two categories of your choice: grocery, furniture, restaurants, hotel-motel, gas, recurring bill payments, drug store, home improvement, entertainment, or public transportation and parking.
    • Get a third cash-back category by choosing to have your rewards deposited into a Tangerine Savings Account.
    • 0.50% on everything else.
    • Redeem cash back monthly as a statement credit or deposited into a Tangerine Savings Account.
    • No annual fee.
    • Transfer balances within your first 30 days and pay only 1.95% interest on the transferred balance for the first six months (19.95% after that).
    • Get free cards for any authorized users on your account.
    • It only includes purchase assurance and extended protection insurance. For more insurance, consider the Tangerine World Mastercard which requires a minimum personal income of $60,000. If you meet this requirement, you will automatically be considered for the World card if you apply for the Money-Back card.
    • Preferred rates: 19.95% for purchases and cash advances.
    • To be eligible, a $12,000 (individual) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

BMO CashBack World Elite Mastercard

Our pick for bonus rewards on groceries, transit, gas and recurring bills

Annual Fee
$0 intro for the first year, then $120
Offer available for new cardholders.
Rewards Rate
1% - 10%
10% intro offer, then 5% on groceries, 4% on transit, 3% on gas, 2% on recurring bills, 1% cash back on all other purchases with no limit on how much cash back you can earn.
Intro Offer
$380
Receive 10% cash back in the first three months, up to $2,600 in purchases (equal to $260 cash back). Plus, waive the $120 annual fee in the first year.
  • Our take

    Why we like it

    You won’t need a strategy to make the most out of this bonus-category card. The BMO CashBack World Elite Mastercard spends like a flat-rate card thanks to stellar rates on four popular daily spending categories.

    Pros

    • Score generous cash-back rates for popular spending categories: 5% on groceries, 4% on transit, 3% on gas, 2% on recurring bills, and 1% on everything else.
    • Feel protected with 13 types of insurance and fantastic travel benefits.

    Cons

    • Spending categories come with easily-hit spending caps, but the 1% base rate still earns you value once you hit your monthly bonus rate limits.
    • The $120 annual fee is pretty steep. While we think you’ll more than make up for it through cash back savings, the no-fee BMO CashBack Mastercard is a great alternative.
  • Product details
    • 5% on groceries, 4% on transit, 3% on gas and electric vehicle charging, and 2% on recurring bills, up to $500 each on every statement cycle.
    • 1% on everything else.
    • Redeem your cash back as a statement credit, or directly deposit it into a BMO Chequing, Savings or InvestorLine Account.
    • $120 annual fee.
    • Mastercard World Elite Benefits, including Mastercard Travel Rewards, Mastercard Airport Experiences provided by LoungeKey and Boingo Public Wi-Fi.
    • Cash back when you travel outside of Canada with the Mastercard Travel Rewards program.
    • 13 types of insurance provided, including eight-day out-of-province/out-of-country emergency medical benefits — up to $2 million coverage.
    • Preferred rates: 20.99% for purchases, 22.99% for cash advances.
    • To be eligible, $80,000 (individual) or $150,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Desjardins Cash Back World Elite Mastercard

Our pick for bonus rewards on groceries, restaurants, entertainment and public transportation

Annual Fee
$100
Rewards Rate
1% - 4%
4% on groceries, 3% on restaurants, entertainment and public transportation, and 1% on everything else with no cap on spending.
Intro Offer
N/A
  • Our take

    Why we like it

    You can earn cash back at impressive rates in four spending categories with no limit to how much you can collect.

    Pros

    • The bonus category rates have unlimited earning potential, so there’s no need to worry about annual spending caps.
    • Collect cash back when you travel outside of Canada with the Mastercard Travel Rewards program.

    Cons

    • You have to earn $100 before redeeming cash back. Even then, it only appears as an account credit.
    • Limited insurance coverage, with trip insurance only covering three days.
  • Product details
    • 4% on groceries, 3% on restaurants, entertainment and public transportation.
    • 1% on everything else.
    • Redeem cash back as a statement credit after earning $100.
    • $100 annual fee.
    • Mastercard World Elite Benefits include Mastercard Travel Rewards, Mastercard Airport Experiences provided by LoungeKey, Mastercard’s Priceless Cities program and Boingo Public Wi-Fi.
    • Cash back when you travel outside of Canada with the Mastercard Travel Rewards program.
    • Up to 25% off Hertz car rentals and up to 10% off Thrifty or Dollar rentals.
    • Access to Accord D Financing and cash advances up to $5,000 a day at a rate of 19.9%.
    • Four types of insurance provided, including three-day travel insurance — up to $5 million in emergency health care coverage.
    • Preferred rates: 19.99% for purchases and cash advances.
    • To be eligible, $80,000 (individual) or $150,000 (household) annual income is required, or $400,000 minimum assets under management. Also, you must have a Canadian credit file and be a Canadian resident that is the age of majority in the province or territory where you live.

RBC Cash Back Preferred World Elite Mastercard

Our pick for flat-rate cash back and premium perks

Annual Fee
$99
Rewards Rate
1% - 1.5%
1.5% cash back on all purchases up to $25,000. Then, unlimited 1% cash back.
Intro Offer
N/A
  • Our take

    Why we like it

    You can earn unlimited cash back at a competitive flat rate on all of your purchases.

    Pros

    • Flat-rate cash-back rewards are easy to understand and earn.
    • Save on gas and earn 20% more Petro-Points at Petro-Canada.

    Cons

    • The insurance coverage is limited when compared to similar cards.
    • There’s no welcome bonus or sign-up offer.
  • Product details
    • 1.5% on all purchases, up to $25,000 per year. Then, 1% unlimited cash back.
    • Redeem a minimum of $25 cash back as a statement credit at any time.
      $99 annual fee.
    • Mastercard World Elite Benefits, including Mastercard Travel Rewards, Mastercard Airport Experiences provided by LoungeKey and Boingo Public Wi-Fi.
    • Score $0 delivery fees for 12 months from DoorDash.
    • Save 3¢/L on fuel and earn 20% more Petro-Points at Petro-Canada.
    • Two types of insurance provided, including auto rental collision/loss damage insurance and purchase security & extended warranty insurance.
    • Preferred rates: 19.99% for purchases, 21.99% for cash advances.
    • To be eligible, $80,000 (individual) or $150,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident that is the age of majority in the province or territory where you live.

CIBC Dividend Visa Infinite Card

Our pick for bonus rewards on groceries, gas, transportation, dining and recurring payments

Annual Fee
$0 intro for the first year, then $120
Offer available for new cardholders.
Rewards Rate
1% - 4%
4% on gas and groceries, 2% on transportation, dining and recurring payments, and 1% on everything else.
Intro Offer
$210
There is no annual fee for you ($120) and three additional cardholders ($30 each) in the first year.
  • Our take

    Why we like it

    You can earn some extremely attractive rates on gas and groceries with the CIBC Dividend Visa Infinite Card — up to a $3,200 cash-back value.

    Pros

    • Flexible and easy redemption. You can redeem cash back anytime through CIBC Online and Mobile Banking.
    • Generous cash back rates on five popular spending categories.

    Cons

    • You’ll only earn 1% cash back after spending $80,000 across bonus categories. Most credit cards have specific limits for each category, but the CIBC Dividend Visa Infinite collectively caps all bonus rates with an $80,000 limit.
    • Insurance offerings are limited compared to what you might expect from a card with a $120 annual fee. However, you can avoid this cost every single year with a CIBC Smart Plus™ Account.
  • Product details
    • 4% on groceries and gas, and 2% on transportation, dining and recurring payments. Accelerated rates apply to the first $80,000 spent per year.
    • 1% on everything else, and after spending $80,000.
    • 0.25% cash back for every $1 spent on a CIBC Global Money Transfer, with no foreign transaction fees.
    • Redeem a minimum of $25 cash back at any time through CIBC Online and Mobile Banking.
    • $120 annual fee.
    • Visa Infinite benefits, including Visa Infinite Concierge, Visa Infinite Luxury Hotel Collection, Visa Infinite Dining Series, and entertainment and lifestyle offers.
    • Save up to 10 cents per litre at Chevron, Ultramar and Pioneer gas stations when you link your card with Journie Rewards.
    • Access to CIBC Pace It.
    • Five types of insurance provided, including 10-day out-of-province/out-of-country emergency medical benefits — up to $5 million in coverage.
    • Preferred rates: 20.99% for purchases, 22.99% for cash advances.
    • To be eligible, $60,000 (individual) or $100,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Meridian Visa Infinite Cash Back Card

Our pick for bonus rewards on gas, groceries, pharmacy purchases and utility bill payments

Annual Fee
$0 intro for the first year, then $120
Offer available for primary and additional cards.
Rewards Rate
1% - 4%
4% on gas and groceries, 2% on pharmacy purchases and utility bill payments, and 1% on everything else.
Intro Offer
$199
There is no annual fee during the first year for primary ($99) and additional cardholders ($30 each).
  • Our take

    Why we like it

    Not only does this card offer up to 4% cash back on popular spending categories, but the Meridian Visa Infinite Cash Back Card also comes with impressive insurance coverage.

    Pros

    • The card includes 11 different types of insurance, including $5,000,000 in emergency health care coverage for up to 48 days for up to ages 75. It even comes with Intergenerational Insurance Coverage, which covers grandchildren travelling with grandparents.
    • Price protection insurance for 60 days.

    Cons

    • There’s no welcome bonus for additional cash back.
    • Accelerated bonus rates are limited to a $25,000 annual spend.
  • Product details
    • 4% on gas and groceries, up to $25,000 per year.
    • 2% on pharmacy purchases and utility bill payments, up to $25,000 per year.
    • 1% on everything else.
    • Redeem cashback for statement credits, gift cards, merchandise and event tickets.
    • $199 annual fee.
    • Visa Infinite benefits, including Visa Infinite Concierge, Visa Infinite Luxury Hotel Collection, Visa Infinite Dining Series, and Canada’s Visa Infinite Wine Country Program.
    • 11 types of insurance provided, including 48-day emergency medical benefits — up to $5 million in coverage.
    • Intergenerational Insurance Coverage extends specific insurances to grandchildren travelling with grandparents.
    • Preferred rates: 19.50% for purchases, 21.99% for cash advances.
    • To be eligible, $60,000 (individual) or $100,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Scotia Momentum Visa Infinite Card

Our pick for bonus rewards on groceries, recurring bills, gas and daily transit

Annual Fee
$0 intro for the first year, then $120
Offer available for new cardholders.
Rewards Rate
1% - 4%
4% for groceries and recurring payments, 2% for gas and daily transit, 1% for everything else.
Intro Offer
$170
There is no annual fee for you ($120) and supplementary cardholders ($50 each) in the first year.
  • Our take

    Why we like it

    Earn up to $1,000 in cash back on grocery shopping and recurring bill payments with a 4% rewards rate in both categories.

    Pros

    • It’s rare for a credit card to offer 4% cash back on two major spending categories. It’s even rarer to set a $25,000 annual limit to that 4% —  a $1,000 value — before reverting to the healthy 1% base rate.
    • You can waive the $120 annual fee every single year by using the Scotiabank Ultimate Package.

    Cons

    • The cash back earned is hands-off. You have to wait until November, and then it’s only redeemable as a statement credit. If you have a Scotiabank account, that annual payout can be deposited into your bank account.
    • The 4% rate won’t mean much to you if you don’t buy a lot of groceries or often buy your food at somewhere that Visa doesn’t classify as a grocery store or supermarket, such as Canadian Tire, FreshCo, London Drugs, Walmart and No Frills.
  • Product details
    • 4% on groceries, recurring bills and subscription payments, up to $25,000 per year.
    • 2% on gas, rideshare, taxis and other forms of daily transit, up to $25,000 per year.
    • 1% on everything else.
    • Redeem cash back as a statement credit in November.
    • $120 annual fee.
    • Visa Infinite benefits, including Visa Infinite Concierge, Visa Infinite Luxury Hotel Collection, Visa Infinite Dining Series, and entertainment and lifestyle offers.
    • Save up to 25% off base rates at participating AVIS locations and at participating Budget locations in Canada and the U.S.
    • Access to Scotia SelectPay.
    • 10 types of insurance provided, including 15-day out-of-province/out-of-country emergency medical benefits — up to $1 million in coverage.
    • Preferred rates: 20.99% for purchases, 22.99% for cash advances.
    • To be eligible, $60,000 (individual) or $100,000 (household) annual income is required, or $250,000 minimum assets under management. Also, you must have a Canadian credit file and be a Canadian resident that is the age of majority in the province or territory where you live.

TD Cash Back Visa Infinite Card

Our pick for bonus rewards on groceries, gas and recurring bill payments

Annual Fee
$0 intro for the first year, then $120
Offer available for primary and additional cardholders.
Rewards Rate
1% - 6%
3% on grocery, gas and regularly recurring bill payments. 1% on everything else.
Intro Offer
$290
Earn 6% on all purchases for the first three months, up to a total spend of $2,000 (a $120 value). There is no annual fee for primary ($120) and one additional cardholder ($50) during the first year.
  • Our take

    Why we like it

    The TD Cash Back Visa Infinite Card is a smart card for families who spend a lot on gas, groceries and automatic monthly purchases.

    Pros

    • Fantastic welcome offer with a $290 value.
    • Up to $2 million of Travel Medical Insurance coverage for the first 10 days of your trip (four days if you or your spouse are over the age of 65).

    Cons

    • A $120 annual fee often comes with more perks and insurance. However, you can waive this cost every year if you’re a TD member with an All-Inclusive Chequing Account holding a minimum balance of $5,000.
    • There’s a $15,000 annual spending cap on bonus rewards, which means the most you can earn in any category is $450.
  • Product details
    • 3% on gas, groceries and pre-authorized payments, up to $15,000 per year each.
    • 1% on everything else.
    • Redeem a minimum of $25 cash back as a statement credit at any time.
    • $120 annual fee.
    • Visa Infinite benefits, including Visa Infinite Concierge, Visa Infinite Luxury Hotel Collection, Visa Infinite Food and Wine Experiences.
      Free Deluxe TD Auto Club Membership with 24/7 emergency road services.
    • Save with Avis Rent A Car and Budget Rent A Car
    • Emergency cash advances up to $5,000.
    • Five types of insurance provided, including 10-day (or 4-day for aged 65 and older) travel medical insurance — up to $2 million in coverage.
    • Preferred rates: 20.99% for purchases, 22.99% for cash advances.
    • To be eligible, $60,000 (individual) or $100,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Methodology

NerdWallet Canada selects the best cash-back credit cards based on overall consumer value as well as their suitability for specific kinds of consumers. Factors in our evaluation include each card’s cash-back earning rates, rewards structure (such as flat-rate or bonus categories), annual fee, redemption options, promotional APR period for purchases, bonus offers for new cardholders, and noteworthy features such as insurance, loyalty bonuses or the ability to choose one’s own rewards categories.

How does cash back work?

By Barry Choi

 

The concept of cash back is simple, but navigating the ins and outs of Canada’s best cash-back credit cards — and choosing the right one for you — requires a bit more knowledge. There are different earn rates, payout dates and benefits to consider.

What are the types of cash-back credit cards?

All cash-back credit cards work similarly, but even minor differences are worth noting as they can affect your earn rate.

  • Flat rate. These types of cash-back credit cards earn you the same cash back rate for all purchases made.
  • Bonus categories. Some cash-back credit cards offer an increased earn rate on select spending categories, such as groceries and restaurants.
  • Rewards cash back. A few store credit cards earn you rewards points that you can redeem for discounts on your purchases.

What are cash-back categories?

Every merchant is assigned a category by the credit card processing network. These categories are essential since many cash-back credit cards offer bonus cash back on purchases in select categories. Therefore, knowing the different cash-back categories will allow you to maximize your earnings.

Some of the most popular merchant categories, and what they typically include, are as follows:

  • Grocery. Any purchase made within a grocery store.
  • Restaurants. This usually includes takeout and food delivery services.
  • Travel. Airline tickets, hotels, car rentals, etc.
  • Gas. Includes any purchase made within a gas station or service station.
  • Transportation. Uber, taxis, public transportation.
  • Streaming services. Netflix, Disney+, Spotify, etc.
  • Drug stores. Includes any purchase made within a drug store.
  • Entertainment. Movies, theatres, ticket agencies, etc.
  • Recurring bills. Pre-authorized payments of wireless phone, internet, utilities, etc. (Learn how to pay bills with your credit card.)

The key thing to understand is that each credit card defines its categories differently. For example, some cards may group gas and transportation. Some cards lump groceries and restaurants into a “food and drink” category.

To further complicate things, some merchants don’t fall into the categories you would think they would. For example, Costco is not considered a grocery store. As far as the credit card processors are concerned, Costco is a wholesale store.

Credit card providers do not typically reveal all of the stores associated with a merchant category publicly. Still, you should be able to contact your credit card provider’s customer service to ask about a specific store. Overall, it’s pretty easy to figure out what category your purchases will fall under, but you may need to do a little bit of trial and error.

How do bonus categories work?

Bonus categories are pretty straightforward. When making purchases in specific merchant categories, you’ll earn cash back at an increased rate. For example, let’s say your credit card gives you 4% cash back on gas. If the card has a flat rate of 1%, this means you’ll earn cash back on gas with a bonus rate of 3%, making it so all your gas purchases would give you 4% cash back. Since many gas stations sell other things such as snacks, and gift cards, you’d also earn 4% cash back on any of those items.

Generally speaking, Canada’s best cash-back credit cards offer multiple bonus categories, which can be pretty lucrative if you get a cash-back card that lines up with your spending patterns. For example, if you spend a lot on groceries, getting a cash-back credit card with an increased earn rate on groceries can significantly benefit you.

You’ll still earn the base earn rate when you make purchases that don’t fall under a bonus category or after you have reached the bonus category cash-back limit.

The base earn rate is different for each cash-back credit card, but it typically ranges between 0.5% – 2%.

How to redeem cash back earned

Every credit card provider has different rules when it comes to redeeming your cash back. Some allow monthly redemption, while others pay out annually. Other providers allow redemption only after you’ve hit a certain threshold.

The following are the payout requirements for the major cash-back credit card providers:

  • American Express. All cash back earned is paid out annually on your September statement.
  • BMO. Redeem as little as $1 in cash back as a statement credit. You can also set up automatic direct deposits to your BMO chequing or savings account starting at $25.
  • CIBC. Cash-back redemptions start at $25. Any unredeemed cash back will appear on your January statement annually.
  • RBC. Once you earn $25 in cash back, you can have the balance credited to your account at any time by calling in. Alternatively, all accumulated cash back will be credited to your account every January.
  • Scotiabank. All cash back earned appears as a credit on your November statement.
  • Tangerine. Paid monthly to your savings account or applied to your credit card balance.
  • TD. You can redeem your cash back when you have a minimum amount of $25. Another option is to take your cash back annually every January where there is no minimum amount required.

How to compare cash-back cards

With dozens of cash-back credit cards available, comparing them all can be time-consuming. That said, there are a few things you should look at when considering any cash-back card.

Annual fee

Decide if you want to pay an annual fee or not. In most cases, paying a yearly fee means you’ll earn more cash back and get better benefits. On the other hand, no-fee cash-back cards may have a lower earn rate, but if you don’t charge much to your card, you could come out ahead compared to a card with a fee.

Welcome bonus or intro offer

It’s always worth checking to see if any cash-back credit cards offer a sign-up bonus for new applicants. The welcome bonus usually comes in the form of a higher cash-back rate for a set period. For example, you might get 10% cash back on all purchases up to $3,000 in spending. If the earn rates are similar with two cards, but one has an excellent welcome bonus, then you might as well take advantage of the promotion.

Bonus categories

The increased earn rate on bonus categories is arguably the most critical factor when comparing cash-back cards. Ideally, you want to choose a card that gives you increased cash back on the categories where you do the most spending. The amount you spend on those categories every year could potentially earn you more than any welcome bonus offered. Although the bonus categories are fixed, there are cash-back credit cards that allow you to pick your bonus categories.

Additional benefits

Many cash-back credit cards come with additional benefits that may appeal to you.

Some perks to look out for include

Some of these benefits are worth more than the annual fee charged by the card, which can help with your decision-making.

» MORE: Types of credit card insurance you should know

Qualification requirements

Some cash-back credit cards have specific eligibility requirements to be approved.

In most cases, a good credit score is required.

If you do not have a good credit score, consider a suitable alternative, such as a credit card designed for bad or no credit, a prepaid card, or a secured credit card.

In addition, if you want a higher-tier cash-back credit card, you’ll need a higher income. For example, World Elite cards require a personal income of $80,000 or a household income of $150,000.

If you don’t meet the income requirement, look for a lower-tier card with fewer benefits and a lower earn rate.

» MORE: How to check your credit score

Are there ways to maximize your cash-back credit card?

There are plenty of tricks to help you get the most out of your cash-back credit cards. The more tips you adopt, the more cash back you’ll earn. That said, it’s best to only follow the advice that you’re comfortable with.

Apply for a new card when you have major expenses coming up

Since many of the best cash-back credit cards in Canada have a generous welcome bonus, it’s often worth your trouble to apply for a new card before you make a major purchase.

For example, let’s say you need to renew your home and auto insurance, which will cost you about $2,000. You could apply for a cash-back credit card that offers you 10% cash back as the welcome bonus. Then, when you charge your insurance to your card, you’d get $200 back.

Keep in mind that many cash-back credit cards have a limit on their sign up offer. If you have a substantial purchase, you could apply for more than one card and split up your purchase to maximize your cash back. However, if you need to pay an annual fee for the new card, it may negate a fair amount of cash back you’re earning, so pay attention to the details.

» MORE: How long should I wait between credit card applications?

Pay attention to the sign-up bonuses

Welcome offers are constantly changing, so watch for any current promotions. Getting 10% cash back for a set period is generous, but if the card is also waiving the annual fee for the first year, then they’re practically paying you to sign up. When you get close to 12 months of card membership, you might cancel the card before your annual fee posts. You could then apply for a new cash-back credit card with a good sign up bonus.

Get multiple cards

Many people focus on a single cash-back credit card, but there’s nothing wrong with having multiple credit cards. In fact, having more than one card is the easiest way to maximize your cash back. Start off with a primary card that gives you an increased earn rate where you do most of your spending. You could then complement that card with a no-fee card that gives you bonus categories where your primary card doesn’t. Whenever you shop, just use the credit card that gives you the most cash back.

» MORE: How to stack credit card rewards

Buy gift cards in bonus categories

Groceries and gas are two of the most popular merchant categories where you’ll earn additional cash back. Here’s the thing: both grocery stores and gas stations sell gift cards that can be used at many retailers. That essentially allows you to earn extra cash back.

For example, let’s say your credit card gives you 5% cash back at grocery stores. You could purchase gift cards at a grocery store for restaurants, Amazon, streaming services, drug stores and gas. That would guarantee you 5% cash back. When you need to make purchases at those merchants, use the gift cards you already purchased.

Add supplementary users

Most credit cards allow you to add supplementary users. The advantage here is that all authorized cardholders also earn cash back on their purchases, including any bonus. Best of all, the cash back gets combined into a single pool, so you’ll be racking up that cash back in no time.

Use cash-back websites

Various online sites allow you to earn additional cash back whenever you shop online. First, you need to create an account. After that, you would just select the partner retailers through their online portal. When you do your shopping, eligible purchases will earn you cash back. If you pay with your cash-back credit card, you’d be earning cash back twice. That’s right, you can double dip without much work.

Are there other credit cards worth considering?

Although cash-back cards are easy to understand, they shouldn’t be the default card you apply for. Depending on your situation, you may want to consider one of the following types of credit cards instead.

  • Travel rewards card. For those who want to use their rewards for travel.
  • General rewards card. For those who want to earn flexible points that can be redeemed for cash, travel and more.
  • Low-interest card. The best choice for anyone who typically carries a balance.
  • No-fee card. A credit card that doesn’t charge an annual or monthly fee.
  • Student card. A smart choice for university students who are building credit.
  • Secured card. Ideal for people who are looking to rebuild their credit.
  • Prepaid card. A good option for anyone who wants to keep their spending under control.

Every person’s personal circumstances can change at any time, so you should choose a credit card that best suits your current needs. For example, if your goal is to take a glamorous trip or honeymoon in the future, it’s probably worth switching to a travel rewards card now so you can rack up those points.

Alternatively, if you find yourself in a tough financial situation, dropping your cash-back card for a low-interest or prepaid credit card can help until you get your finances sorted out. There’s nothing wrong with switching credit cards. There’s a credit card designed for every situation, so it often makes sense to consider other options.

  • FAQs

    • Are there cash back limits?

      Most cash-back credit cards have limits on the cash back you can earn. That said, it usually only applies to the increased rate of bonus categories. For example, some cash-back credit cards cap your bonus category earn rate at $25,000 of spending per category. Once you reach the spending cap, you will earn the base rate.

      Look at the terms and conditions of your card to find out the rates and limits. Most cash-back credit cards set the limit per category, but they may also lump some categories together. Additionally, the limit would factor in any purchases made by supplementary users on the account.

      Some cards give you unlimited cash back, even on bonus categories. That means you would get the full earn rate, regardless of how many purchases you put on your card. Shopping around and reviewing the terms and conditions of cards you’re interested in, will help you pick the right card.

    • Do cash-back credit cards have fees

      Yes. The first fee to look out for is the annual fee. Cash-back credit cards with an annual fee typically have a higher earn rate and come with more benefits. That said, many low and no-fee credit cards offer decent cash back.

      The other fee to pay attention to is the interest rate. Generally speaking, credit cards charge an average interest rate of 19.99% – 21.99%. If you’re always paying your bills in full and on time, then this interest rate won’t matter. However, if you typically carry a balance, you’d be paying more interest than what you’d earn in cash back.

    • When is a cash-back credit card worth it?

      Cash-back credit cards are worth it if you’ll earn more cash back than the annual fee you’re paying. If your cash-back credit card has no annual fee, then you’re always going to come out ahead.

      It’s also worth noting that it doesn’t hurt to shop around. You can apply for a cash-back credit card from any financial institution, not just the one you have accounts with. Cash-back credit cards can also go through benefit changes, so it’s worth seeing what other cards are offering, even if you’re happy with your current card.

    • When is a cash-back card not worth it?

      There are two situations where a cash-back card isn’t worth it. The obvious case is when the cash back you earn is less than what you’re paying in annual fees. That said, you could easily switch to a no-fee card to avoid that issue.

      The other time when a cash-back card might not be worth it is if you can get a better return with a rewards credit card instead. For example, let’s say you got a travel rewards credit card and did the same spending. Would the points you earn be worth more than the cash back? If so, it makes more sense to get a travel credit card.

    • Is cash back from credit cards taxable income?

      Cash back rewards are considered a rebate/discount by the Canada Revenue Agency, so you won’t be taxed. Cash back is really no different from a coupon, which is obviously not taxable.

      That said, if you earn cash as part of your employment, it may be taxable. For example, let’s say you have a company cash-back credit card. Your employer allows you to deposit the cash back earned directly into your bank account. In this case, the cash back would be taxable since it’s a form of income.

About the Author

Barry Choi
Barry Choi

Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.

DIVE EVEN DEEPER

How to Use a Credit Card Like a Pro

Using your credit card wisely means building credit, earning rewards and clearing off your balance so you never have to pay interest.

Canada’s 8 Best Travel Credit Cards of 2021

The best travel credit cards have strong earn rates and great travel rewards.

An Introduction to Rewards Credit Cards

Rewards credit cards earn points, miles or cash back on purchases. You can redeem what you earn for travel, merchandise, gift cards and more.

Credit Card Network vs. Credit Card Company Issuers

Credit card issuers are companies that lend and provide cards. Credit card networks create the infrastructure to make transactions possible.