Compare the Best Rewards Credit Cards
For many people, a favourite credit card feature is the ability to earn rewards on everyday purchases. Earning rewards through your credit card means you’re getting cash back or points on things you were going to buy in the first place. Rewards credit cards come with different rewards programs, so it comes down to what you’re looking for – gift card redemptions, hotel stays or flights.
Find the Right Rewards Credit Card for You
You’ll need to navigate hundreds of card options to find the right rewards card for you, which can be difficult. Rewards credit cards come with different rewards programmes meant for different audiences. Here are the most common types of rewards credit cards you’ll encounter in your search for the right card.
- Cash back. A cash back card will give you some money back as a percentage of your purchases. The cash back can be deposited into your savings or checking account or applied as a statement credit.
- Travel. A travel rewards card comes with perks like discounted trips, travel insurance benefits, seat upgrades and more. You can choose a co-branded travel card that gives boosted rewards in purchases made with a specific airline or general-purpose travel cards that are only tied to the card issuer and not a particular airline.
- Business. Business rewards cards let you bag rewards for your business-related spending, say a 2% cash back on each purchase your business makes. Perks offered by these cards include travel and auto insurance, free employee cards and travel statement credits.
Benefits of Rewards Credit Cards
Earn from Your Purchases
An incredible feature of rewards credit cards is that they let you earn from purchases. This is particularly the case with cash back credit cards that give a corresponding point for each dollar spent. You can later redeem these points or use them for discounted purchases.
Travel for Free
Travel rewards cards work much like their cash back counterparts, except rather than cash, your points are equivalent to mileage. You may qualify for a free travel ticket for collecting a certain number of mileage points.
Get Additional Perks
Besides rewards and cash, you can also enjoy exclusive privileges not available to those who don’t own them. The additional benefits include car rental insurance and travel accident insurance, among others.
No Foreign Transaction Fees
With some rewards credit cards, you won’t pay a foreign transaction fee when you make purchases outside of Canada.
Rewards Credit Cards FAQs
What is A Rewards Credit Card?
A rewards credit card lets you earn points as you spend. The points can later be redeemed for rewards like cash back, travel packages, flights, retail products, gift cards and more.
How Do Rewards Credit Cards Work?
The rewards earned on a rewards credit card are a kind of pseudo-currency often referred to as cash, miles or points. You’ll only get real value for your rewards after redeeming them for things like flight upgrades or hotel vouchers. Since it costs credit card issuers money to provide rewards programmes, these cards often attract high-interest rates and charge an annual fee.
What Rate Can I Get with Rewards Credit Cards?
With most rewards credit cards, the rate you get depends on your creditworthiness. You can expect a variable ARP in the range of 8% – 30% for purchases and balance transfer with a good credit score.
Can Anyone Get A Rewards Credit Card?
Rewards credit cards aren’t really for everyone. Most rewards cards require a good credit score, usually 670 or more, to qualify. Besides, it would help if you made it a habit to pay all your balances off every month to avoid accumulating debt, which may attract a significant interest on your card.
How Do I Compare Different Rewards Credit Cards?
The idea of comparing different rewards credit cards is to find a card that not only offers your preferred features but also suits your lifestyle. You also want to keep the costs associated with your card as low as possible. Here are some pointers to guide your comparison shopping.
- Points earned. You want to earn as many points as possible for every dollar spent to get good value. It’s always best to consider cards that give at least 1 point per dollar spent on eligible transactions. Some cards also have caps and expiry dates on the points you can score, so be sure to understand these limits.
- Points value. Earning numerous points per dollar seems attractive, but the value of every point depends on the number of points it takes to redeem. You don’t want to get 5,000 points for $5,000 spent only to redeem a $50 gift card.
- Interest rate. Rewards credit cards tend to attract high-interest rates. If you don’t always settle your full balance each month, think about the amount of debt you could accumulate.
- Fees. Rewards cards charge an annual fee, so you’ll only get value for your card if the rewards outweigh the fees. If you often travel abroad, consider a card that doesn’t charge a huge fee on Canada’s purchases.
- Blackout dates. Some rewards cards come with blackout periods when you can’t redeem your points. Read your rewards program fine print to understand how these dates can impact you.