13 Best Cash-Back Credit Cards in Canada for June 2025

Most cash-back credit cards have limits on the cash back you can earn — sometimes called caps. Look at your card’s terms and conditions for rates and limits. Most cash-back credit cards set the limit per category, but they may lump some categories together. Limits may also include 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.

Cash-back rewards are typically considered a rebate/discount by the Canada Revenue Agency, so they’re not taxed as income

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.

Pros

Cons

Many cash-back credit cards will allow you to redeem your rewards as soon as they reach a minimum threshold. But you can also save them up over time and cash them in for a more significant, single-shot pay-down of your credit card balance, for example.

Choosing to redeem cash rewards on a regular basis is certainly satisfying. But it could mean dipping below your minimum threshold. The next time you want — or need — to use your rewards, you may not have enough at your disposal. Saving your cash back rewards could generate more impact — to ease the blow of a particularly big purchase, for example. But know that if you fail to keep your account in good standing or decide to close it suddenly, you could lose your accumulated rewards.

Cash-back bonus rewards categories refer to the specific spending categories or types of purchases that earn higher cash-back rewards.

For example, your credit card might earn 1% on all purchases, but 4% cash back on gas — this is a bonus reward category.

Getting a cash-back card with bonus categories that align with your spending patterns can be pretty lucrative.

Base earn rates differ for each cash-back credit card but typically ranges between 0.5% and 2%.

Cash-back categories can vary depending on the credit card and issuer, but here are some common categories in Canada:

The key thing to understand is that each credit card defines its categories differently and employs its own merchant category codes. For example, some cards have different codes for fast food establishments and restaurants. 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 credit card processors are concerned, Costco is a wholesale store.

Credit card companies 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 it may take some trial and error.

Answering this question depends on what you’re looking to get out of your credit card.

There are two situations where a cash-back card might not be the right choice:

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 you could potentially earn? If so, it makes more sense to get a travel credit card.