The Perfect Rewards Credit Card Combination

Jam Michael McDonald
by Jam Michael McDonald September 16, 2015 / No Comments

With so many rewards credit cards available, it’s hard to know which one you should have in your wallet. If you are a fairly big credit card user (spend $1,500/month or more), it can actually be worth it to use two annual fee cards. It may seem unnecessary to pay two annual fees, at first, but the right combination of the best credit cards in Canada will make you come out ahead. We analyzed all the rewards credit cards on our site and found these two to be the perfect pairing.

Category Spending Credit Card(s)

To maximize your credit card returns, it is a good idea to have one card that has high category earning rates. There are two cards that far surpass the competition, when it comes to category-earning:

scotiabank-gold-american-express

The first is the Scotiabank Gold American Express card, which offers 4 points for every $1 spent on groceries, gas, dining and entertainment, and 1 point for every $1 spent on everything else. Points can be redeemed for travel at a rate of 100 points = $1. With this card, you have unlimited redemption flexibility, meaning you can book travel on your own through any service and then redeem points to receive a statement credit for your travel expenses. The strategy to maximize your credit card returns is pretty simple: only use this travel rewards credit card for the categories in which you earn 4 points for every $1 spent, and then use another card that offers a higher general spending earning rate for all your other expenses.

scotiabank-momentum-visa-infinite-cash-back

If you’d rather earn cash back than travel rewards, you could opt to use the Scotia Momentum Visa Infinite instead. This card offers 4% cash back on groceries and gas, 2% cash back on drug store purchases and recurring bill payments, and 1% cash back on all other purchases. The strategy to maximize your rewards with this card remains the same: use it to purchase things under the categories that receive a high cash back rate (groceries, gas, drug store purchases and recurring bill payments) and then use another card for your other spending. This is the highest ranked card on our list of Canada`s top 5 cash back credit cards of 2015.

General Spending Credit Card

So, you would first sign up for one of the two credit cards listed above and use it to make purchases under their top-earning categories. Then, we’ve found the card you should use to make all other purchases: the BMO World Elite MasterCard.

world-elite-card

While most rewards credit cards offer 1 point for every $1 spent on everything, the BMO World Elite MasterCard offers 2 points for every $1 spent. Similar to the Scotiabank Gold American Express card, BMO lets you book your travel through any service and then redeem points after-the-fact to receive a statement credit for the cost of the travel. The card also comes with 30,000 points (value of $300) with your first purchase, which almost fully counterbalances the $150 annual fee for the first year. (MasterCard is also more widely accepted than American Express credit cards, so it’s good to have as backup.)

Example of How the Perfect Rewards Credit Card Combination Works

Let’s assume you spend $16,000/year ($1,333/month):

perfect-credit-card-spending

If you used a combination of the Scotia Momentum Visa Infinite + the BMO World Elite MasterCard, this is how many points you’d earn and what they’d be worth*:

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By using the Scotia Momentum Visa Infinite to make all your gas and grocery purchases, you would earn $280 cash back each year. The $99 fee that comes with this credit card is waived for the first year, so your return in Year 1 would be:

Rewards – Annual Fee = Net Return
$280 – $0 = $280

By using the BMO World Elite MasterCard to pay for everything else, you would earn 18,000 points. Tack on the 30,000 bonus points you’d receive with your first purchase, and you’d earn 48,000 points in the first year. Your return in Year 1 would be:

Points x Value Per Point = Value of Rewards Points
48,000 x $0.01 = $480

Rewards – Annual Fee = Net Return
$480 – $150 = $330

Annual return from both cards: $480 + $330 = $810

If you use this combination of two credit cards properly and spend just $1,333/month, your net return could be $810 in the first year. It’s hard to beat a combination like that!

Flickr: Mary Streepy