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Cash Back vs Rewards Points
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Cash back vs. rewards points: Which is worth more?

Antonio Guillem / Shutterstock

Sandra MacGregor
Author: Barry Choi

By Sandra MacGregor & Barry Choi

Fact Checked: Scott Birke

Partners on this page provide us earnings.

Whether you’re a newbie or a credit card connoisseur, one of the common questions that plague those looking for new plastic is “should I go with a cash back or a rewards credit card?” Certainly, each card type has its own pros and cons, so how do you choose between the two? A cash back card can offer a straightforward, quick financial return; but a rewards card could net you potentially better goodies, like a free trip or hotel stay. Decisions, decisions!

It’s easy to be seduced by a big sign-up offer or a high earn rate, but to ensure you get the match that will maximize your earnings, try to go beneath the surface and consider the key factors we examine below.

Feature Cash back Rewards
Sign-up bonus Typically top out at $200 or so Can be the equivalent of $300 or more
Return on regular spending Evenly matched Evenly matched
Value-added features Features are usually less valuable compared to rewards cards at a similar annual fee level Value of features can be huge, particularly for upper-tier cards
Ease of use Very low maintenance Labyrinth of different transfer rules and redemption rates can be a headache
Annual fee Evenly matched Evenly matched

Sign-up bonus

You can’t really beat the quick budget boost of netting hundreds of dollars’ worth of extra cash or rewards just by signing up for a card and spending the required minimum amount in the time allotted. When comparing miles vs cash back credit cards, miles/rewards cards usually have the most generous welcome bonuses. Cash back introductory offers commonly top out at a couple hundred dollars or so, whereas rewards cards frequently follow a “go big or go home” game plan to attract new customers with offers worth $300 or more. Here’s a comparison between two of the biggest welcome bonus offers in Canada at the moment:

TD Cash Back Visa Infinite* Card

Apply now

4.0

10% back

Welcome offer

Excellent

Suggested credit score

to receive the latest news, tips and offers by email

Apply now

Pros

  • Solid welcome offer

  • High earn rate for 3 popular categories

  • Can use cash back right away

  • Useful automotive benefits

Cons

  • Maximum spend limit for 3% cash back

  • High annual fee for a cash back card

Eligibility

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • Solid welcome offer

  • High earn rate for 3 popular categories

  • Can use cash back right away

  • Useful automotive benefits

Cons

  • Maximum spend limit for 3% cash back

  • High annual fee for a cash back card

Eligibility

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Earn 3% cash back on groceries, gas, and recurring bill payments†

3%

Earn 1% cash back on all other purchases†

1%

Earn 50% more Starbucks Stars when you link your TD card to your Starbucks account.†

50%

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$139

Foreign Transaction Fee

2.5%

TD’s Cash Back Visa Infinite* Card is presently offering a lucrative introductory cash back rate for New Cardholders: Earn up to $500 in value†, including 10% in Cash Back Dollars in the first 3 months on Bonus Eligible Purchases up to a total spend of $3,500†. Conditions apply. Account must be approved by January 6, 2025.

After the introductory period ends, cardholders get a regular cash back rate of 3% cash back on groceries, gas and recurring bill payments† and 1% cash back on all other purchases†.

Click here to apply or learn more by reading our complete TD Cash Back Visa Infinite* Card review.

To receive the first-year annual fee rebate, you must activate your Card and make your first Purchase on the Account within the first 3 months after Account opening and you must add your Additional Cardholders by January 6, 2025.

†Terms and conditions apply.

This offer is not available for residents of Quebec. For Quebec residents, please click here.

The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button.


TD First Class Travel® Visa Infinite* Card

Apply now

4.0

Good

Suggested credit score

Earn up to $1,000 in value†, including up to 135,000 TD Rewards Points† and no Annual Fee for the first year†. Conditions Apply. Account must be approved by January 6, 2025.

Expires

Jan 6, 2025

Apply now

Pros

  • Major combined value for the welcome bonus (up to $1,000 in value)†

  • Good base earn rate on all purchases

  • Huge earn rate when you book travel through Expedia® For TD†

  • Very flexible redemption options

  • $100 TD Travel Credit†

  • Visa Infinite Benefits

  • Great savings on annual fees for accountholders of TD’s All-Inclusive Banking Plan

Cons

  • Does not provide free lounge access

  • Charges foreign transaction fees

Eligibility

Recommended Credit Score

Good

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • Major combined value for the welcome bonus (up to $1,000 in value)†

  • Good base earn rate on all purchases

  • Huge earn rate when you book travel through Expedia® For TD†

  • Very flexible redemption options

  • $100 TD Travel Credit†

  • Visa Infinite Benefits

  • Great savings on annual fees for accountholders of TD’s All-Inclusive Banking Plan

Cons

  • Does not provide free lounge access

  • Charges foreign transaction fees

Eligibility

Recommended Credit Score

Good

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Earn 8 TD Rewards Points† for every $1 you spend through ExpediaForTD†

8 Points

Earn 6 TD Rewards Points† for every $1 you spend on groceries and restaurants.†

6 Points

Earn 4 TD Rewards Points† for every $1 you spend on recurring bill payments.†

4 Points

Earn 2 TD Rewards points for every $1 you spend using your card.†

2 Points

Earn a Birthday Bonus of 10% of the TD Rewards Points you have earned over the past year, up to a maximum of 10,000 TD Rewards points†.

10% Bonus Points

Get an annual TD Travel Credit when you book at Expedia For TD†

$100

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$139

Foreign Transaction Fee

2.5%

New TD First Class Travel® Visa Infinite* cardholders are eligible to a staggering offer.  Earn up to $1,000 in value†, including up to 135,000 TD Rewards Points† and no Annual Fee for the first year†. Conditions Apply. Account must be approved by January 6, 2025..

Just remember: whether for a cash back or rewards credit card the largest introductory offer in the world will be worthless if you can’t fulfill your side of the bargain and make the required minimum spend. In this case the maximum value of the sign-up bonus offered by the TD First Class Travel® Visa Infinite* Card is superior to that offered by the TD Cash Back Visa Infinite* Card, but only if the cardholder of the former can clear its rather high spending hurdles.

This offer is not available for residents of Quebec. For Quebec residents, please click here .

The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button. Sponsored Content.

† Terms and conditions apply.


You can compare these to some competing welcome offers by checking out our list of the best credit card sign-up bonuses in Canada.

Return on regular spending

In the battle between rewards points vs cash back there is no clear winner for the best regular earn rates. Since both types of cards can feature accelerated earn categories, you need to assess where exactly you spend your money to figure out which card will be the biggest earner for you. This is clear when we compare two top ranking credit cards like the American Express Cobalt® Card and the Tangerine Money-Back Credit Card.

American Express Cobalt® Card

Apply now

4.9

up to 15k pts

Welcome offer

Fair

Suggested credit score

Earn up to 15,000 Welcome Bonus Membership Rewards® points* – that’s up to $150 in value.

Apply now

Pros

  • High earn rates (up to 5% return on spending!)

  • Flexible month-by-month fee structure

  • Free supplementary cards

  • 1:1 points transfer with selected hotels, airlines and frequent flyer programs

Cons

  • Accelerated earn rates only apply to purchases in Canada (not to purchases made abroad)

  • Amex has a more limited merchant acceptance rate than Visa and Mastercard

  • Slightly higher than average annual fee

Eligibility

Recommended Credit Score

Fair

Required Annual Personal Income

$0

Required Annual Household Income

$0

Pros

  • High earn rates (up to 5% return on spending!)

  • Flexible month-by-month fee structure

  • Free supplementary cards

  • 1:1 points transfer with selected hotels, airlines and frequent flyer programs

Cons

  • Accelerated earn rates only apply to purchases in Canada (not to purchases made abroad)

  • Amex has a more limited merchant acceptance rate than Visa and Mastercard

  • Slightly higher than average annual fee

Eligibility

Recommended Credit Score

Fair

Required Annual Personal Income

$0

Required Annual Household Income

$0

the points on eligible eats & drinks purchases in Canada

5x

the points on eligible streaming subscriptions in Canada

3x

the points on eligible gas, transit & ride share in Canada

2x

the points on everything else

1x

additional Membership Rewards point for every $1 you charge on eligible hotel or car rental bookings made with American Express Travel

1

Get up to $100 USD hotel credit to use on amenities like dining, spa or other leisure facilities when charged to the room

$100 USD

Purchase APR

21.99%

Cash Advance APR

21.99%

Annual Fee

$155.88

Foreign Transaction Fee

2.5%

The American Express Cobalt® Card is a “lifestyle” rewards card that offers some of the most elevated earn rates possible for people that really love food and travel. Cardholders get:

  • 5x points on eligible dining and groceries in Canada
  • 3x points on eligible streaming subscriptions in Canada
  • 2x points on eligible rideshares, transit and gas in Canada
  • 1x point on all other purchases

Earn up to 15,000 Membership Rewards® points* by earning 1,250 Membership Rewards® points for each monthly billing period in which you spend $750 on your Card in your first year as a new Cardmember. This could add up to 15,000 points in a year.*

That’s up to $150 towards your next weekend getaway.

*Current or former Cardmembers with this Card are not eligible for this offer. Other terms apply.

Click here to apply or learn more by reading our complete American Express Cobalt® Review.

Tangerine Money-Back Credit Card

Apply now

4.0

Good

Suggested credit score

to receive the latest news, tips and offers by email

Apply now

Pros

  • No annual fee

  • Choose the spending categories where you want to earn the most cash back

  • Unlimited cash back—no maximum spending limit for any purchase category

  • Cash back is paid out monthly rather than annually

  • Periodically includes a special welcome offer where you can get extra cash back

  • 1.95% interest on balance transfers for the first 6 months (1% transfer fee applies)*

Cons

  • Regular cash back rates are still lower than what you can get from a card with an annual fee

  • Limited extra perks or benefits beyond the cash back and balance transfer promotion

  • Generally not a good fit for shopping at warehouse clubs or wholesale grocers like Costco or Walmart

  • Tangerine does not have any physical bank branches

Eligibility

Recommended Credit Score

Good

Required Annual Personal Income

$12,000

Pros

  • No annual fee

  • Choose the spending categories where you want to earn the most cash back

  • Unlimited cash back—no maximum spending limit for any purchase category

  • Cash back is paid out monthly rather than annually

  • Periodically includes a special welcome offer where you can get extra cash back

  • 1.95% interest on balance transfers for the first 6 months (1% transfer fee applies)*

Cons

  • Regular cash back rates are still lower than what you can get from a card with an annual fee

  • Limited extra perks or benefits beyond the cash back and balance transfer promotion

  • Generally not a good fit for shopping at warehouse clubs or wholesale grocers like Costco or Walmart

  • Tangerine does not have any physical bank branches

Eligibility

Recommended Credit Score

Good

Required Annual Personal Income

$12,000

Earn 2% cash back on 2 categories of your choice (e.g. groceries, recurring bills, gas, drug stores, etc.)

2%

Get a Tangerine Savings account and add a 3rd 2% cash back category.

3

Earn 0.50% on all your other everyday purchases.

0.5%

Variable APR

19.95% - 24.95%

Balance Transfer Rate

1.95%

Cash Advance APR

19.95%

Annual Fee

$0

Foreign Transaction Fee

2.5%

What makes the Tangerine Money-Back Credit Card so valuable is that it not only has $0 annual fee but also has the most flexible choice of accelerated earn categories of any card on the market. It’s the perfect shopping companion for those whose primary expenses don’t fall into common cash back categories, as cardholders can choose two of the following 10 spending categories that will earn 2% cash back:

  • Grocery
  • Restaurants
  • Gas
  • Recurring Bills
  • Drug stores
  • Hotel/motel
  • Furniture
  • Home improvement
  • Entertainment
  • Public transit and parking

Cardholders can even opt to get a third 2% cash back category as long as they deposit their earnings into their Tangerine savings account.

Apply here or learn more by reading our complete Tangerine Money-Back Credit Card review.

*Terms and Conditions apply

Check out our respective lists of the best rewards cards and the best cash back cards in Canada to find out which other cards offer particularly high earn rates in the purchase categories where you spend the most.

Value-added features

Most basic cash back or rewards cards include purchase security and extended warranty, with things like insurance and concierge service commonly offered among higher-end cards.

The key main difference between perks offered by miles vs cash back cards manifests in premium travel rewards cards. Travel cards tend to kick the value-added features up a notch: in an effort to win the loyalty of big-spending jet setters, the best travel cards of the lot offer particularly comprehensive insurance packages and/or free airport lounge access. You can see what I mean by comparing the features offered by a travel rewards and cash back credit card, both from the same issuer and with comparable annual fees.

Scotiabank Passport® Visa Infinite* Card 

Apply now

4.3

up to 35K pts

Welcome offer

Excellent

Suggested credit score

Earn up to $1,100* in value in the first 12 months, including up to 35,000 bonus Scene+ points

Expires

Jan 3, 2025

Apply now

Pros

  • No FX fees means the card saves you significant expenses on foreign transaction fees

  • Earn up to 3x Scene+ points per $1 spent on eligible purchases

  • Flexible and straightforward redemption program

  • Visa acceptance globally compared to American Express, especially outside major cities.

  • Enjoy six annual visits to airport lounges

  • Robust insurance offerings, including extended travel emergency medical coverage

  • Access to Visa Infinite Program benefits, with added advantages like a free supplementary card

Cons

  • High annual fee

  • Limited rewards categories for earning reward max rate on purchases

  • Primarily best for travel within Canada

Eligibility

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • No FX fees means the card saves you significant expenses on foreign transaction fees

  • Earn up to 3x Scene+ points per $1 spent on eligible purchases

  • Flexible and straightforward redemption program

  • Visa acceptance globally compared to American Express, especially outside major cities.

  • Enjoy six annual visits to airport lounges

  • Robust insurance offerings, including extended travel emergency medical coverage

  • Access to Visa Infinite Program benefits, with added advantages like a free supplementary card

Cons

  • High annual fee

  • Limited rewards categories for earning reward max rate on purchases

  • Primarily best for travel within Canada

Eligibility

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Scene+ points¹ on every $1 you spend at Sobeys, Safeway, IGA, Foodland and participating Co-ops and more

3x

Scene+ points¹ for every $1 you spend on other eligible grocery stores, dining, eligible entertainment purchases and eligible daily transit options (including ride shares, buses, subways, taxis and more)

2x

Scene+ point for every $1 spent on all other eligible everyday purchases

1x

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$150

Foreign Transaction Fee

0%

The lineup of features on this frequent flier favourite is outstanding and could save globetrotters hundreds to several thousands of dollars on common flight expenses. To start off with, the Scotiabank Passport® Visa Infinite* Card  offers a far-reaching insurance package that includes:

  • Hotel burglary: If you charge a hotel or motel stay anywhere in North America to your Scotiabank Passport® Visa Infinite* Card , you, your spouse and dependent children are eligible for coverage against theft of personal property from your room, up to a maximum of $1,000.
  • Baggage lost/delayed: If you or eligible companions on the same trip (when you charge the full cost of your airplane, train, bus or cruise ship tickets to your Card) lose your bags or if your bags are stolen, you’ll all be covered up to a combined max of $1,000. If your/your eligible companions’ bags are delayed for four or more hours, you’ll also net up to a maximum of $1,000 for the cost of replacing eligible essential items.
  • Travel emergency medical insurance: A vital feature for those who travel often, the Scotiabank Passport® Visa Infinite* Card  covers you, your spouse and dependent children for up to $2 million toward emergency medical coverage for up to 25 consecutive days.

Travellers also save because the card doesn’t charge foreign transaction fees and airports will be much more bearable with the card’s complimentary six free airport lounge visits. There’s no cash back card that offers those kinds of perks.

Earn up to $1,100* in value in the first 12 months, including up to 35,000 bonus Scene+ points

  • See terms and conditions below‡ for full details.

Apply here or learn more by reading our complete Scotiabank Passport® Visa Infinite* Card  review.

¹ Conditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.

*See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

Scotiabank Momentum® Visa Infinite*

Apply now

5.0

10% back

Welcome offer

Excellent

Suggested credit score

Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases). No annual fee in the first year, including on additional cards.

Expires

Nov 1, 2025

Apply now

Pros

  • High earn rate on everyday spending categories

  • Comprehensive travel and purchase insurance

  • Visa Infinite perks such as concierge, events, and special offers

  • 25% Car rental discounts at Avis and Budget

  • Mobile device insurance

  • Up to $200 welcome bonus

Cons

  • Income requirements are higher: $60k personal or 100k household

  • Cash back can only be redeemed once a year

Eligibility

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • High earn rate on everyday spending categories

  • Comprehensive travel and purchase insurance

  • Visa Infinite perks such as concierge, events, and special offers

  • 25% Car rental discounts at Avis and Budget

  • Mobile device insurance

  • Up to $200 welcome bonus

Cons

  • Income requirements are higher: $60k personal or 100k household

  • Cash back can only be redeemed once a year

Eligibility

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

For every $1 you spend on grocery store purchases, recurring bill payments and subscription purchases

4%

For every $1 you spend on gas and daily transit purchases

2%

Cash back on all other purchases with no cash back limit

1%

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$120

Foreign Transaction Fee

2.5%

For a cash back card the Scotiabank Momentum® Visa Infinite* offers some impressive value-added features, such as Visa Infinite* Concierge Service and Visa Infinite* Dining and Wine Country program. The most attractive extra is its up to $1,000 new mobile device insurance—and it’s one of the few cards in the country to offer this (Scotiabank Passport® Visa Infinite* Card  doesn’t have this feature). But while that insurance bonus is wonderful, you can see by comparing it with the Scotiabank Passport® Visa Infinite* Card  that its other insurance offerings aren’t as outstanding:

  • Hotel burglary: Unlike the Scotiabank Passport® Visa Infinite* Card , the Momentum® Visa Infinite* Card doesn’t feature hotel burglary insurance.
  • Baggage lost/delayed: The coverage is the same as the Scotiabank Passport® Visa Infinite* Card , but the maximum reimbursement amount for each circumstance is $500 (rather than $1,000)
  • Travel medical insurance: The Scotiabank Momentum® Visa Infinite* offers less maximum medical insurance than the Scotiabank Passport® Visa Infinite* Card  (you, your spouse and dependent children are covered for up to $1 million in emergency medical expenses).

Apply here or learn more by reading our complete Scotiabank Momentum® Visa Infinite* review.

Conditions Apply. Visit here for the Scotia Momentum® Visa Infinite* Card to learn more.

*See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

Ease of use

Cash back credit cards throttle rewards cards when it comes to ease of use. With a cash back card you usually don’t have to worry about what time of year to redeem points, minimum point redemption limits, whether or not your points/miles are transferrable or expire, and the real-world value of your points (check out our Loyalty Points Bible for an explanation about redemption values). Take a look at these two top cards to see which you think would be easier to manage:

Scotiabank Gold American Express®

Apply now

4.8

up to 45K pts

Welcome offer

Very Good

Suggested credit score

Earn up to $950* in value in the first 12 months, including up to 45,000 bonus Scene+ points and first year annual fee waived.

Expires

Jan 3, 2025

Apply now

Pros

  • Lots of daily spend options to earn multiplied point bonuses

  • Swanky Amex perks like Front of the Line presale concert tickets

  • Save on foreign transaction fees when abroad

  • Fantastic insurance coverage, especially for travel

Cons

  • Relatively low-value welcome bonus

  • $120 annual fee that chews into your point value substantially

  • Scene points redeem poorly for travel

Eligibility

Recommended Credit Score

Very Good

Pros

  • Lots of daily spend options to earn multiplied point bonuses

  • Swanky Amex perks like Front of the Line presale concert tickets

  • Save on foreign transaction fees when abroad

  • Fantastic insurance coverage, especially for travel

Cons

  • Relatively low-value welcome bonus

  • $120 annual fee that chews into your point value substantially

  • Scene points redeem poorly for travel

Eligibility

Recommended Credit Score

Very Good

Scene+ points¹ on every $1 you spend at Sobeys, Safeway, Freshco, Foodland and more

6x

Scene+ points¹ for every $1 you spend on dining, food delivery and other eligible grocery stores. Includes popular food delivery and food subscriptions.

5x

Scene+ points¹ for every $1 you spend in Canada eligible entertainment purposes. Includes movies, theatre and ticket agencies stores.

5x

Scene+ points¹ for every $1 CAD you spend in Canada on eligible gas and daily transit options. Includes rideshares, buses, subway, taxis and more

3x

Scene+ points¹ for every $1 CAD you spend in Canada on eligible select streaming services

3x

Scene+ point for every $1 spent on all other eligible everyday purchases

1x

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$120

Foreign Transaction Fee

0%

To highlight just how much more complicated rewards redemption can be, we’ll look at the Scotiabank Gold American Express®. This card is hands-down one of the easiest and most transparent rewards programs to use. Rewards act almost like cash with one of its Scene+ points equaling $.01—but only if you put your points towards travel. If you don’t use your points for travel expenses, however, the reward system becomes much more complicated and loses value (as is the case with many a travel rewards card).

For example, you earn 5X Scene+ points points for every $1 CAD spent on a variety of categories, including eligible dining. So, if you spend $500 in that tier of categories in a month you get 2,500 points, equivalent to $25 that you can put toward any travel spending (like baggage fees, plane ticket, seat fees, etc.) on your Scotiabank credit card statement within a year of the transaction date. Of course, your travel points are not automatically redeemed for you, unlike with most cash back cards where the cash back points are applied to your statement every month or once a year without any effort on your part.

Point redemption gets more complicated and less valuable if you want to redeem Scene+ points on things like a statement credit or a gift card/donation. In these cases, point value goes down from $.01 (on travel. If this all seems too complicated (and remember Scene+ are among the easiest to redeem) then a rewards card may not be for you.

Apply here or learn more by reading our complete Scotiabank Gold American Express® review.

Conditions Apply. Visit here for the Scotiabank Gold American Express® Card to learn more.

*See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

SimplyCash® Preferred Card from American Express

Apply now

4.0

up to 10% back

Welcome offer

Excellent

Suggested credit score

Earn a bonus 10% cash back on purchases in your first 3 months (up to $2,000 in purchases).

Apply now

Pros

  • Competitive cash back rates: Up to 4% on gas and groceries, and more

  • Refer-a-friend bonus up to $750 annually

  • Extra benefits like rental car insurance and travel accident coverage

  • Manufacturer's warranty doubled on purchases

Cons

  • $9.99/month fee ($119.88 annually)

  • Cash back redeemed annually in September

  • Not all benefits may be relevant to all users

  • Limited to American Express acceptance

Eligibility

Recommended Credit Score

Excellent

Pros

  • Competitive cash back rates: Up to 4% on gas and groceries, and more

  • Refer-a-friend bonus up to $750 annually

  • Extra benefits like rental car insurance and travel accident coverage

  • Manufacturer's warranty doubled on purchases

Cons

  • $9.99/month fee ($119.88 annually)

  • Cash back redeemed annually in September

  • Not all benefits may be relevant to all users

  • Limited to American Express acceptance

Eligibility

Recommended Credit Score

Excellent

cash back on eligible gas station purchases in Canada

4%

cash back on eligible grocery store purchases in Canada (up to $1,200 cash back annually)

4%

cash back on all other purchases

2%

Purchase APR

21.99%

Cash Advance APR

21.99%

Annual Fee

$119.88

Foreign Transaction Fee

2.5%

The SimplyCash® Preferred Card from American Express comes with a very achievable welcome bonus: Earn a bonus 10% cash back on purchases in your first 3 months (up to $2,000 in purchases).. Conditions apply.  The card also offers competitive cash back: Earn 4% cash back on eligible gas station purchases in Canada, 4% cash back on eligible grocery store purchases in Canada (up to $1,200 cash back) and 2% cash back on all other purchases. The annual fee is $119.88 ($9.99 per month. Additional cards are free..).

Click here to apply or learn more by reading our complete SimplyCash® Preferred Card from American Express review.

Annual fee

Overall, the annual fees for cash back and rewards cards are comparable, ranging from $0 for basic no-frills cards, to $120 or $150 on average for higher-end cards, to $500+ for truly premium cards.

How to compare rewards vs cash back credit cards

One misconception about travel rewards cards is that there are many restrictions. While that may have been the case in the past with some programs, just about every travel loyalty program now gives you a lot of flexibility. When comparing travel rewards credit cards to cash-back rewards, you need to choose cards and programs that line up with your spending and travel preferences. Even though you may enjoy travel rewards, the current program and credit card that you’re using may not be ideal. When this happens, you may not find your points as useful and be tempted to switch to a cash-back card instead. You need to occasionally analyze what’s in your wallet and what your points are worth. Switching to a different program or credit card may still be more valuable than making a switch to a cash-back product.

It’s more than the first-year benefits

Cash-back cardholders like to point out that the generous welcome bonuses that come with travel rewards cards are only available for the first year. Once your first anniversary date comes up, the value decreases significantly.

While that has some truth to it, you do need to factor in the additional benefits that come with the card. Depending on which travel card you get, it may come with free checked bags, airport lounge access, a NEXUS rebate, comprehensive travel insurance, and no foreign exchange fees. These extra perks could save you hundreds of dollars a year, which is more than what the annual fee is for most cards.

Some cash-back cards offer travel and mobile device insurance, but it’s not that common. The argument could be made that cash-back cards are worth even less in the second year once you’ve maxed out the welcome bonus and annual fee rebate.

Choose whether cash back or rewards makes sense to you

There can be an emotional attachment when it comes to cash-back credit cards. When grocery and gas prices are on the rise, people will naturally look for a way to save. While a cash-back card that gives you an increased earn rate for groceries and gas could help, you might end up spending more on travel since you won’t have any points to redeem later.

For some people, the decision between loyalty points and cash back comes down to mental accounting. Admittedly, it can be hard to keep track of different earn rates and perks. However, instead of thinking about your money in different buckets, think of the whole picture. If you’re maximizing your points, travel rewards cards will give you more value than a cash-back credit card. That said, if you don’t like to travel, it doesn't make sense to be collecting travel rewards, so go ahead and switch to a cash-back card.

Is one better than the other?

No single card can meet the needs of all consumers, and whether cash back or rewards oriented, different cards emphasize different types of spending and consumer needs. Rather than trying to determine categorically if a cash back or rewards card will be the best fit for you, you need to look at each card individually to find the best match for your lifestyle.

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Sandra MacGregor Freelance Contributor

Sandra MacGregor has been writing about finance and travel for nearly a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, Forbes.com and the Toronto Star.

Barry Choi Contributor

Barry Choi is a Toronto-based personal finance and travel expert who makes frequent media appearances. When he's not educating people on how to be smarter with money, he's earning and burning miles and points for luxury travel.

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