Choosing the right rewards path
This post is sponsored by RBC.
With so many great reward options available in the Canadian marketplace, choosing the right credit card isn’t always easy. Some of the most common reward types include cash back, rewards points, and travel-specific points, and each offers specific benefits. The good news is, the best rewards card is simply the one that matches your lifestyle. Here’s how to assess the right fit for your wallet. Is a premium rewards credit card right for you?
Choosing the right type of rewards card starts with understanding your habits, and whether it makes financial sense for you to pay a fee in exchange for higher-value perks. For example, travel cards can offer amazing value, but because they typically come with an annual fee, they’re not the right fit for everyone.
Premium cards that offer travel points often come with annual fees and higher credit limits, so applicants usually need a larger annual income and stronger credit score to get approved. If you’re still building or repairing your credit, you may be better off with a secured card or a no-fee option rather than paying for perks you won’t use.
It also helps to think about how you manage your balance. If you don’t always pay in full, interest charges will cancel out the value of any rewards you earn.
From there, it comes down to preference. Travel cards are ideal for people who take at least one or two trips a year and want flexibility for flights and hotels. Cash back cards work well for anyone who prefers something simple, low-maintenance, and guaranteed to put money back in their pocket.
Identify your spending habits and rewards goals
Your spending behaviour should guide your decision more than anything else. Think about how you actually use your card each month.
What categories do you spend on the most?
Groceries, gas, restaurants, online shopping, and subscription services are all common spending categories. If these are your main expenses, look for a card that rewards spending in these areas, like the no-fee RBC ION+ Visa.
based on spending $2,200/mo after $48 annual fee
- Earn rewards
1pt – 3pts / dollar spent
- Welcome bonus
Earn up to 21,000 points (a $149 value)
- Annual fee
$48
How often do you travel?
Before choosing a rewards card, take a moment to think about how frequently you travel. Your travel habits can make the decision much clearer.
- Frequent traveller: A travel rewards card is likely the right fit, as it can reward you for everyday purchases with significant savings on flights and hotels. We’re a fan of the RBC Avion Visa Infinite and RBC WestJet Elite Mastercard for their solid earning rates, redemption flexibility, and generous welcome bonuses.
- Occasional traveller: If you take a trip once every year or two, a cash back card or a flexible no-fee points card might suit you better.
- Not a traveller at all: Cash back is usually the best choice because you can use the rewards for groceries, bills, or whatever you want.
based on spending $2,200/mo after $120 annual fee
- Earn rewards
1pt – 1.25pts / dollar spent
- Welcome bonus
Earn up to 55,000 points (a $1,100 value)
- Annual fee
$120
Cash back vs. travel rewards vs general rewards
Not sure whether cash back or travel rewards are a better fit? This chart shows how the two compare so you can spot what matters most to you.
|
Category |
Cash back credit cards |
Travel rewards credit cards |
General rewards credit cards |
|
How rewards work |
Straightforward to earn - with a set percentage per purchase |
May require a little planning to maximize value, depending on how and when you redeem points |
Flexible earning, with rewards maximized in select categories, such as groceries, transportation, or entertainment |
|
Flexibility |
Extremely flexible, cash can be used for anything |
More specialized, point values vary and are often highest when redeemed for travel |
Can be specialized based on redemption type, may earn more on specific brands |
|
Redemption options |
Simple, typically redeemed for statement credits or deposits |
Flights, hotels, car rentals, merchandise, gift cards, and sometimes point transfers |
More redemption options, for example, turning points into gift cards or other household items |
|
Perks and benefits |
Usually lighter, but may include basic insurance and bonus earn categories |
Often more robust and typically include travel insurance, lounge access, priority services, hotel perks, and early access to VIP events |
Like travel cards, premium rewards credit cards often include robust insurance coverage, fraud protection services, and insider access |
|
Best for |
Anyone who prefers easy, predictable rewards or doesn’t travel often |
People who travel at least once or twice a year and want to stretch their travel budget further |
Those who spend heavily in certain categories, want to maximize on those purchases, and don’t necessarily want to use points for travel |
|
Annual fee |
Many strong no-fee options available |
Often comes with an annual fee, but typically comes with travel perks that help offset it |
Usually has an annual fee, but can be offset by value offered by rewards |
How to calculate the real value of rewards
Choosing the best credit card for rewards means comparing what you will earn in real numbers. Here is a simple example that works for both cash back and points cards.
Imagine you spend $2,000 a month on your credit card. Over a year, that’s $24,000.
Cash back example:
If your card pays 2% cash back on most purchases, you earn $40 a month.
That’s $480 a year in cash back. Simple.
Travel points example:
If your card earns 2 points per dollar, you earn 4,000 points a month. Over a year, that equals 48,000 points. If each point is worth around 1 cent on travel, that’s about $480 in value.
However, if you do your research you can often find a high-value redemption (for example, a flight where your points are worth closer to 1.5 cents each), increasing your points’ value to about $720.
This is why travel points can sometimes beat cash back, but only if you redeem them for high-value travel options. If you plan to redeem for statement credits or smaller purchases, cash back may be easier and just as valuable.
How welcome bonuses factor in:
Many rewards cards offer welcome bonuses when you meet a minimum spend in the first few months, or even gifted upon approval. These can add a big boost to your first-year rewards. Just make sure the spending requirement fits your normal habits. A bonus should feel like a perk, not a temptation to stretch your budget.
Be aware of additional costs
When comparing the best rewards credit cards in Canada, these details matter just as much as the earn rate:
Annual fees
A card with a fee can still offer great value if the rewards and perks outweigh the cost. If you only earn a small amount of rewards each year, a no-fee option might be a better fit.
Redemption rules
Some programs are more flexible than others. Look for clear, easy ways to redeem points without blackout dates or complicated restrictions.
Built-in benefits
If your card includes travel insurance, mobile device insurance, or rental car coverage, make sure you’ll actually use it. These benefits can add real value if they replace coverage you would otherwise pay for out of pocket.
Lifestyle extras
Some RBC cards offer discounts or bonus points through partnerships with everyday merchants like Petro-Canada, Rexall, and Hertz. These small perks can add up over time.
The bottom line
Choosing the best credit card with rewards doesn’t have to be complicated. Look at your lifestyle. Think about your travel plans. Decide whether you prefer simple cash rewards or higher value through travel points. From there, compare your yearly spending to the card’s earn rate and any annual fee. With the right match, your everyday spending can work harder for you and help you reach your goals a little faster.