Before you start comparing rewards credit cards…
Let’s make sure a rewards card is what you should be looking for.
How to choose a rewards credit card
Focus on these five things as you examine rewards card options, and you might find it a bit easier to decide:
The Motley Fool Canada's featured rewards credit cards at a glance:
| Credit card | In brief | Welcome bonus | Annual fee |
| American Express Cobalt ® Card | Featured all-around rewards card | In your first year, earn 1,250 points for each monthly billing period in which you spend $750 in net purchases on your card. This could add up to 15,000 points in a year. | $155.88 ($12.99 monthly) |
| Scotiabank Gold American Express Card | Featured all-around rewards card | Up to 45,000 Scene+ points (worth up to $450 towards travel) | $120 |
| American Express ® Aeroplan ® Reserve Card | Featured high-end rewards card | New American Express® Aeroplan® Reserve cardmembers can earn 60,000 Aeroplan points after spending $7,500 in purchases on the card within the first 3 months. Earn 25,000 more Aeroplan points after spending $2,500 in purchases in month 13. That’s up to $2,600 or more in value when you combine your welcome bonus points and card benefits. | $599 |
| SimplyCash® Preferred Card from American Express | Featured cash back rewards card | Earn a bonus 10% cash back on all purchases for your first 3 months (up to $2,000 in purchases). Plus, earn a $50 statement credit when you make a purchase in month 13. This could add up to $250 in bonus value in your first 13 months. | $119.88 ($9.99 monthly) |
| Tangerine Money-Back Credit Card | Featured no-fee rewards card | Earn an extra 15% back (up to $150) when you apply for a Tangerine Money-Back Credit Card by January 31, 2022 and spend up to $1,000 in everyday purchases within your first two months.* | $0 |
| BMO World Elite Mastercard | Best Mastercard rewards card | Up to 30,000 BMO Rewards points and annual fee waived for 1st year | $150 |
| SimplyCash® Card from American Express | Best no-fee rewards card | In your first 3 months as a new SimplyCash® Card from American Express Cardmember, you can earn a bonus 5% cash back on all purchases (up to $2,000 in purchases). That’s on top of your everyday cash back earn rates. That’s up to $100 in bonus cash back. | $0 |
| PC Financial World Elite Mastercard | Best store-brand rewards card | Up to 100,000 points (a $100 value) | $0 |
| Tangerine Money-Back Credit Card | Best companion rewards card | Earn an extra 15% back (up to $150) when you apply for a Tangerine Money-Back Credit Card by January 31, 2022 and spend up to $1,000 in everyday purchases within your first two months.* | $0 |
| Tangerine World Mastercard | Best companion rewards card | Earn an extra 15% back (up to $150) when you apply for a Tangerine World Mastercard by January 31, 2022 and spend up to $1,000 in everyday purchases within your first two months.* | $0 |
| KOHO Premium Prepaid Visa | Best prepaid rewards card | None | $84 |
More detail on our featured rewards credit cards:
American Express Cobalt® Card
Great for racking up rewards
Rewards
- 5x Membership Rewards® points on eligible eats and drinks in Canada, including groceries and food delivery; spend cap applies
- 3x Membership Rewards® on eligible streaming subscriptions
- 2X points on eligible ride shares, transit and gas in Canada
Welcome bonus
In your first year as a new Cobalt Cardmember, earn 1,250 Membership Rewards® points for each monthly billing period in which you spend $750 in net purchases on your card. This could add up to 15,000 points in a year.
Learn More
Our review of the American Express Cobalt ® Card
Annual Fee:
$155.88 ($12.99 monthly)
Eligibility:
Credit rating : Fair
Annual Income : $N/A
SimplyCash® Preferred Card from American Express
Great for earning high cash back on all spending
Rewards
- Earn 4% cash back on eligible gas station purchases in Canada
- Earn 4% cash back on eligible grocery store purchases in Canada (up to $1,200 cash back annually)
- Earn 2% cash back on all other purchases
Welcome bonus
In your first three months, earn a bonus 10% cash back on all purchases (up to $2,000 in purchases). Plus, earn a $50 statement credit when you make a purchase in month 13. This could add up to $250 in bonus value in your first 13 months.
Learn More
Annual Fee:
$119.88 ($9.99 monthly)
Eligibility:
Credit rating : Good, Excellent
Annual Income : $N/A
SimplyCash® Card from American Express
Great for earning cash back with no fees
Rewards
- Earn 2% cash back on eligible gas purchases in Canada, 2% cash back on eligible grocery purchases in Canada (up to $300 cash back annually), and 1.25% cash back on all other eligible purchases
Welcome bonus
In your first 3 months, you can earn a bonus 5% cash back on all purchases (up to $2,000 in purchases). That’s up to $100 in bonus cash back.
Annual Fee:
$0
Eligibility:
Credit rating : Good, Excellent
Annual Income : $N/A
American Express® Aeroplan® Reserve Card
Great high-end card for travel rewards and perks
Rewards
- 3X points on eligible purchases made directly with Air Canada® and Air Canada Vacations®
- 2X points on eligible dining and food delivery purchases in Canada
- 1.25x Aeroplan points on everything else
Welcome bonus
New American Express® Aeroplan® Reserve cardmembers can earn 60,000 Aeroplan points after spending $7,500 in purchases on the card within the first 3 months. Earn 25,000 more Aeroplan points after spending $2,500 in purchases in month 13. That’s up to $2,600 or more in value when you combine your welcome bonus points and card benefits.
New Offer: Cardmembers can now get an extra night free for every 3 consecutive hotel nights redeemed with Aeroplan points. Offer ends December 31, 2024.
Annual Fee:
$599
Eligibility:
Credit rating : Great, Excellent
Annual Income : $N/A
Scotiabank Gold American Express Card
Featured all-around rewards card
Rewards
- 5x Scene+ points on eligible dining, grocery, and entertainment
- 3x Scene+ points on eligible gas, transit, and streaming services
- 1x Scene+ points on everything else
Welcome bonus
Up to 45,000 Scene+ points (worth up to $450 towards travel)
Annual fee:
$120
Eligibility:
Credit rating: Good
Minimum income: $12,000
Tangerine Money-Back Credit Card
Featured no-fee rewards card
Rewards
- 2% Money-Back Rewards in two categories of choice
- 0.5% Money-Back Rewards on everything else
Welcome bonus
Earn an extra 15% back (up to $150) when you apply for a Tangerine Money-Back Credit Card by January 31, 2022 and spend up to $1,000 in everyday purchases within your first two months.*
Annual fee:
$0
Eligibility:
Credit rating: Fair
Minimum income: $12,000
BMO World Elite Mastercard
Best Mastercard rewards card
Rewards
- 3x BMO Rewards points on eligible travel, dining and entertainment
- 2x BMO Rewards points on everything else
Welcome bonus
Up to 30,000 BMO Rewards points and annual fee waived for 1st year
Annual fee:
$150
Eligibility:
Credit rating: Very good
Minimum income: $80,000 (individual), $150,000 (household)
PC Financial World Elite Mastercard
Best store-brand rewards card
Rewards
- 30 PC Optimum points per $1 at President's Choice grocery stores (like Loblaws, No Frills, and valu-mart)
- 45 PC Optimum points per $1 at Shoppers Drug Mart
- 30 PC Optimum points per $1 at Esso, Mobil, and PC Travel
- 10 PC Optimum points per $1 everywhere else
Welcome bonus
Up to 100,000 points (a $100 value)
Read our full PC Financial World Elite Mastercard review
Annual fee:
$0
Eligibility:
Credit rating: Very good
Minimum income: $80,000 (individual), $150,000 (household)
Tangerine Money-Back Credit Card
Best companion rewards card
Rewards
- 2% Money-Back Rewards in two categories of choice
- 0.5% Money-Back Rewards on everything else
Welcome bonus
Earn an extra 15% back (up to $150) when you apply for a Tangerine Money-Back Credit Card by January 31, 2022 and spend up to $1,000 in everyday purchases within your first two months.*
Read our full Tangerine Money-Back Credit Card review
Annual fee:
$0
Eligibility:
Credit rating: Fair
Minimum income: $12,000
Tangerine World Mastercard
Best companion rewards card
Rewards
- 2% Money-Back Rewards in two categories of choice
- 0.5% Money-Back Rewards on everything else
Welcome bonus
Earn an extra 15% back (up to $150) when you apply for a Tangerine World Mastercard by January 31, 2022 and spend up to $1,000 in everyday purchases within your first two months.*
Annual fee:
$0
Eligibility:
Credit rating: Good
Minimum income: $60,000 (individual) or $100,000 (household)
KOHO Premium Prepaid Visa
Best prepaid rewards card
Rewards
- 2% cash back on groceries, restaurants, and transportation
- 0.5% cash back on everything else
- Up to 5% cash back at certain brand partners
Welcome bonus
None
Annual fee:
$84
Eligibility:
N/A (Prepaid card, no qualifications)
Our methodology for evaluating rewards credit cards
Although some credit cards are decidedly prettier colors than others, that’s not a particularly great way to choose a credit card. So how exactly do we evaluate rewards credit cards? We’ll take a closer look at that in this section.
Our process is based on a combination of how we go about choosing cards for our own wallets as well as what we view as important to the average Canadian.
So for rewards cards, here’s what we consider:
Rewards earnings
Points-based credit cards work on some point system, whether that’s Amex Membership Rewards, Scene+, Air Miles, etc. For these systems, we calculate a point value based on the conversion value of those points into cash or cash-like instruments (like a statement credit or Amazon gift card) and the value purchasing international airline tickets. For cash back cards, we simply look at the cash back yield.
With that data we can look at the average spending by category for the typical Canadian, and apply the terms of each card’s points system to that spending. That is, if a card offers 3x points for spending on restaurants, but only 1 point for spending on gas, this captures how that breaks down. This let’s us look at the number of points that average Canadian is likely to earn with that card.
By simply multiplying the estimated points we’ve calculated by the estimated point value, we can get to a dollar value for potential earnings from the card.
Welcome bonus value
For the welcome bonus, we look at the total potential points for that bonus and can then simply multiply it by the value we calculated for the points to get to a dollar value for the welcome bonus. We also consider the level of spending that’s required to earn the welcome bonus. Cards that we’d think of as “high end” typically have higher spending requirements to earn the welcome bonus, and are therefore usually only appropriate for higher-earning consumers.
Annual fee
If the card charges an annual fee, that obviously detracts from the earnings value of a card. Some cards waive the annual fee for the first year, which is great, but we still take into account that it will have a fee in future years. As we discuss later on this page, annual fees are hardly a show-stopper for a card, since many cards that carry fees offer welcome bonuses and earn rates that allow card users to easily earn more than the card’s fee.
All of the other perks
There are a lot of other perks that credit cards offer, especially rewards cards. Some of these perks are really valuable. While it can be very hard to put a specific dollar value to these perks — especially since some people may make great use of them, while they’ll have little value for others — we definitely consider these when weighing one rewards card against another. These perks can be a great tie-breaker between two similar cards, or, in some cases, can even vault a card with slightly lower earnings potential over one with higher earnings potential.
Balance transfer offers are another matter though, and we tend not to put much focus on them when choosing a rewards card specifically. If you have credit-card debt and need a balance transfer to help you pay it down, check out our favorite balance transfer cards. Focus on getting that card debt paid down and then turn your focus to maximizing rewards.
Interest rate / APR
Interet rates and APR do not generally play a role in our evaluations of rewards credit cards.
It’s our view that APR is not terribly important when choosing most credit cards, and rewards cards in particular. The reason is that credit cards are not a good way to borrow money (the rates are far too high no matter what the APR) and therefore you shouldn’t be carrying a balance (debt) on your credit card. So the fact that one card has an APR of 20% and the other has an APR of 22% or even 28% shouldn’t make a difference. You’re not borrowing at that rate, so the difference in rate doesn’t matter.
Meanwhile, through our own experience and by talking with consumers who aren’t us, we’ve come to the conclusion that people often put too much weight on APR when choosing a credit card. In a way it makes sense. APR is a standard, and easily comparable number, and lower is naturally better. So when making a difficult choice among credit cards, it’s natural to gravitate to something that seems like it can help you make that choice.
For this reason, we keep APR out of our considerations.
If you find yourself thinking “hey, just wait a second!” while reading this, yes, we know the reality is that many, many people do carry debt on their credit card. And when you have credit card debt, the interest rate does matter. Our view is that for those that have existing credit card debt, the best plan of action is to focus on paying that debt down first, and only then get concerned about how many rewards points their credit card offers. Balance transfer credit cards can be a great way of drastically lowering credit card interest and allowing debt to be paid down more quickly. There are also cards that specifically market themselves as low-interest-rate cards — which usually still aren’t particularly low interest compared to other borrowing methods, but are low compared to most credit cards.
So it is our strong suggestion (urging!) that before you spend a lot of time comparing rewards credit cards, you’ve already taken the step to pay down existing credit card debt, and have a budget in order so that you can avoid going into credit-card debt again. At that point, APR doesn’t make as much of a difference to you and therefore shouldn’t be a major factor in choosing.
Naturally, this won’t apply to every single case. But when you feel that APR is an important factor for you, you can use APR in conjunction with our rating to help you choose.
Will this methodology work for you?
Because think in terms of the “average Canadian” (whatever that means, right?), our aim is that for most people reading this, yes, the tips we feature here and the cards we feature on this page should help you make a good choice.
There are some instances where our ratings may not work for you. Here are the top reasons they may not:
- You spend a lot more than the average person. If you are a really big spender, your results could differ considerably from how we’re looking at earning potential. The quick remedy to this is to look for the higher-end cards. You’ll likely benefit more from these cards than the average user.
- You spend a lot less than the average person. If you spend a lot less than average, your results will also diverge from how we evaluate cards. In this case, opt for a card with no fee. Yes, earn rates and perks will be less, but it should work out better for you since your earnings won’t be eaten up by an annual fee. We actually have a whole page just for our favorite no-fee cards.
- You don’t plan to maximize your rewards. You don’t have to be a credit-card-rewards wizard to get a lot out of a rewards credit card, but we do assume you’re aiming to generally try to get the most out of your rewards card. For example, if the card offers 5x points on groceries and 1x on everything else, but you prefer to always pay for your groceries in cash… well, that’s just going to throw everything off, right? It’s ok if you’d prefer not to think about how and when to best use your credit card! But if that describes you, you’d probably be better off with a cash back card, and likely a no-fee cash back card.
- You expect that you will carry a balance on your card. We strongly suggest that you do not carry a balance on your credit card if you can at all avoid it. Borrowing rates on credit cards are not attractive and it’s good to exhaust other borrowing avenues and budget adjustments before incurring credit card debt. However, if know that you will need to carry a balance, you should take APR into account in addition to our rating, since we do not include APR as part of our rating.
Now, what exactly is a rewards credit card?
Let’s get back to the basics. Rewards cards allow you to earn points, miles, or cash back when you use your card for eligible purchases. Though some rewards cards will offer you higher rewards for an annual fee, you can find plenty of great no-fee cards in Canada.
What are the types of rewards cards?
Rewards cards are typically broken into four big categories: general (flexible) points cards, cash-back cards, travel-rewards cards, and store cards.
The quick-and-dirty info on these different types is:
- Flexible-points cards will typically give you the best earning opportunities, but also require the most work to optimize your spend and redeem your points.
- Cash-back cards are the easiest type of rewards card because you don’t have to mess around with redemption and conversion. You just get cash. But they also tend to be less lucrative.
- Travel-rewards cards can be fairly lucrative, but also generally more restrictive on earning and redemption versus flexible-points systems. Though this isn’t as true as it used to be.
- Store- or brand-specific cards are the most restrictive in terms of where you can earn points — typically far higher earn rates at affiliated stores and brands — and redemption — often you can only redeem for affiliated store credits. However, within those bounds, they can sometimes be even more lucrative than other points cards. So if you are a regular shopper at a store or brand group with a points card, it’s worth checking out.
Flexible-points cards
Flexible points cards give you points for every dollar you spend. For example, you may earn one point for every $1 you spend, with two points for every $1 you spend on groceries.
It’s possible to calculate a value for the points that you earn on a points card. However, that value can vary considerably depending on how you convert those points. For example, converting points to a gift card or statement credit tends to give you the least value for your points. Depending on the card, this often works out to between $0.007 and $0.01 per point.
When you convert those same points to goods, services, or travel, it’s usually possible to get a lot more value out of those points. In this case, seeing redemption rates of $0.02 to $0.04 per point is not unusual. Getting the most value out of your points can take some time and effort, but for many people it can also be a fun “game”.
Well-known points schemes that fall under this category are American Express’s Membership Rewards and Scene+.
Cash-back credit cards
As the name suggests, a cash back credit card gives you cash back for all eligible purchases.
You typically have a number of different ways to redeem your cash. Most programs allow you to apply your cash back rewards to your statement balance. Other programs give you the option of depositing your cash back in your checking or savings account, mailing you a check, or sending you a gift card.
Hands down, cash back cards are the easiest rewards credit cards to deal with. You don’t have to concern yourself with how you convert your rewards or optimize the value of each point. The flip side to that though, is that with a little effort you can very often earn much higher value from other types of rewards cards.
Travel-rewards credit cards
Travel rewards cards earn points or miles that you can redeem for travel purposes, such as airfare, hotels, rentals, and cruises. Most travel cards offer special travel perks, such as traveler’s insurance, and some feature no foreign transaction fees.
Travel rewards credit cards are very similar to points-based cards, except that the points are often air-miles programs with particular airlines and redemption opportunities are more focused on travel goods and services. Some travel-specific points programs have gotten much more flexible in recent years, but if you’re not a regular traveler, these programs aren’t likely to benefit you as much as others.
There are a couple of things to keep in mind with travel rewards cards. First, many will charge an annual fee, though the extra rewards often make the fee well worth it. Also, though some travel rewards cards do not charge a foreign transaction fee, many do. The cards that do charge a foreign transaction fee can be great for paying for travel before you leave (airfare, hotels, etc.), but aren’t ideal for paying for things while you travel.
Store or brand credit card
Store credit cards are issued by specific retail stores or brand groups with rewards targeted toward that store’s goods. Examples include President’s Choice, Canadian Tire (Triangle), Amazon, and Hudson’s Bay.
Each card will have its own rules, along with its own criteria for how you can redeem your rewards. For example, some store credit cards will only offer you rewards if you use the card in that specific store or within its brand grouping, while others will offer you rewards for all purchases, though double points or cash back for purchases made with affiliated brands.
Store cards can be a really great choice if you are a regular shopper of the brands that are affiliated with the card. But no matter how great the rewards program, if you don’t normally shop with the affiliated brands, it generally won’t make sense for you to get that card.
But… these categories aren’t always rigid
Keep in mind, there aren’t always hard lines between these categories. Some cards will offer you cash back for all purchases, along with extra points for shopping at certain retail stores. Other cards will give you extra points for travel purchases, while also rewarding you generously for purchases in other spending categories, such as food and entertainment. Though there is some crossover between these types of cards, a card’s rewards program will typically be more favourable to certain purchases over others.
How do rewards programs work?
Rewards programs offer you points or cash back for each $1 you spend. An easy comparison point from one rewards card to the next is how many points or how much cash back you get for each of those dollars you spend. But beyond the amount of rewards you earn, you also need to look at the way the program is structured.
You’ll usually see rewards programs structured in two ways.
- Flat rate systems give you a flat earning percentage for each $1 spent. For example, if a rewards card offers you 2% cash back, you’ll earn $2 for every hundred you spend, whether that’s on groceries, travel, or pet supplies.
- Tiered systems give you multiple earn rates, each attached to certain spending categories. For example, a card might give you 3% for all grocery purchases, 2% on gas and transit purchases, and 1% on everything else.
Both cash back and points (including travel and store cards) programs can follow a flat-rate or tiered system.
For obvious reasons, a flat-rate system is simpler. But tiered systems can be more rewarding. If you are considering a tiered-system card though, you need to consider whether the high-earning tiers are categories where you actually spend. A card could offer 10x points (which would be a lot for most points systems) on gas purchases, but if you live in a city and rely on public transit or the post-office world means that you work from home and rarely have to drive anywhere, that earn rate isn’t going to do much for you.
Some tiered systems aren’t fixed, and instead allow you to choose one or two categories for which you’ll get the higher earn rate. This is obviously better than a fixed-tiered system, since you can align it to your spending, but these cards tend to be less generous overall.
Cash back cards are generally simpler in terms of how you get your rewards. You earn your cash back based on the rewards rate and then the cash is either credited to your account or mailed to you as a check.
In points systems, you collect your points in your points account, and then log into that account to convert your points into goods, services, travel, statement credits, etc.
What’s really important to know about points programs though is that there are many specifics that differ from one program to the next. So while it’s great to understand generally how a points program works, it’s even more important to know how the specific program you’re using works. That means it’s critical to dig into the details. Sure, you can use the points program without knowing all of the specifics, but if you want to get the most out of your points, knowing the ins and outs is a must.
What reward programs are there in Canada?
Points programs are more generally known as “loyalty rewards” programs and there are quite a few good ones in Canada. You don’t need a credit card to participate in many of the top rewards programs — for instance, you can earn Aeroplan points by flying Air Canada, no matter what credit card you use. Same goes for PC Optimum points if you shop at Loblaws-brand stores.
Where credit cards come into the picture is when a credit card issuer partners with one of these rewards programs. Then it’s possible to also earn rewards points for a given program by using that particular credit card. The PC Financial Mastercard, for instance, allows users to earn PC Optimum points just for spending on the card. In some instances, like American Express’s Membership Rewards program, the primary way to earn points is by using a credit card.
Here’s a quick look at some of the most popular loyalty points programs in Canada:
- Air Miles – One of the largest programs in Canada. “Collectors” can earn Air Miles rewards points from a wide variety of brand partners, from Sobeys Ontario and Metro to Hudson’s Bay and Holiday Inn. Both BMO and American Express offer credit cards that allow users to earn Air Miles points.
- Aeroplan – The Aeroplan points program is Air Canada’s points system, so the most obvious way to earn and redeem points is through Air Canada flights. However, Aeroplan rewards participants can also redeem rewards for hotels, rental cars, and even gift cards and merchandise. Other ways to earn Aeroplan points include linking your Aeroplan account to your Starbucks rewards card or using one of the Aeroplan-linked credit cards from TD, American Express, or CIBC.
- PC Optimum – If you regularly shop at Shoppers Drug Mart or any of the Loblaws brand stores, or fill up at Esso or Mobil, then there’s a good chance that the PC Optimum program is familiar to you. Spending money at any of the above locations (or JoeFresh) can earn you PC Optimum points. Using the PC Financial credit cards allows you to collect PC Optimum points even faster at the PC-affiliated retailers, as well as on the rest of your everyday spending.
- American Express Membership Rewards – As you might guess from the name, this rewards program is hitched specifically to use of an American Express credit card. The Membership Rewards program is one of the most flexible and potentially lucrative of the credit card rewards programs, especially if you are looking for travel rewards.
- Petro-Points – Petro Canada’s Petro-Points program allows you to earn points every time you fill up your tank, and points can be redeemed for discounts on fuel (naturally) as well as in-store purchases, car washes, and gift cards. While there aren’t Petro-Points cards per se, Petro Canada has a partnership with RBC, so if you link an RBC credit card with a Petro-Points account, you’ll save on fuel and increase the points you earn through both programs (Petro-Points and RBC Rewards).
- Cineplex SCENE Rewards – If you’re into dinner and a movie, SCENE is a handy rewards program to have. Members earn rewards for visiting Cineplex theatres, as well as eating at partner restaurants like Swiss Chalet, Harvey’s, and Montana’s. The Scotiabank SCENE credit card is an option to earn SCENE points faster and on a broader variety of spend.
This list only scratches the surface of loyalty programs in Canada. And essentially every bank has its own program — including TD Rewards, BMO Rewards, Scotia Rewards, CIBC Aventura, and RBC Avion Rewards.
What credit score do you need to get a rewards card?
While every credit card company is different, your credit score should be at least good (680 or above) if you want to be sure your application will be accepted. Some credit card companies will give rewards cards to those in the average range, but it’s not common.
Does the card network matter? Visa vs. Mastercard vs. American Express
All credit cards — and that certainly includes rewards credit cards — work because they’re on a credit card network that sends a message from the merchant (where the purchase is made) to the bank that issues the card, to let that bank know that you’ve made a purchase. The three networks that host basically all credit cards in Canada are Visa, Mastercard, and American Express. The question, then, is whether it makes a difference which network your card is on.
Let’s start with the network where it may make the most difference: American Express. Many consumers already have the notion that American Express cards are not as widely accepted as either Visa or Mastercard, and that’s true. And that may cause some consumers to skip over Amex cards. The problem with that, especially when it comes to rewards credit cards, is that American Express simply offers the best rewards credit cards. The rewards and welcome bonuses are more generous and the perks beyond the points are compelling.
So what should you do if you want a top-notch rewards card, but are concerned about Amex cards being accepted? For one, know that most of the major restaurants, retailers, and services that you use do accept Amex. There are notable exceptions, like Loblaws and Costco, but outside of that, whether it’s Tim Hortons or McDonalds, Sobeys or Metro, Canadian Tire or Amazon.ca, your American Express card will be accepted.
There’s also a fairly easy solution for the times that Amex isn’t accepted: have a secondary card. If you take out an Amex for the rewards and perks, there’s (usually) no reason that you cannot have a Visa or Mastercard in your wallet as well. There are no-fee rewards cards on the Visa and Mastercard networks that you can take out and have a solution for shopping at places that don’t take Amex and avoid losing out on a rewards-collecting opportunity.
But while American Express does offer rewards cards that are a cut above, there are still some very solid rewards cards on the Visa and Mastercard networks. If the rewards and perks of one of these line up better for you or you are concerned about card acceptance and you are against the idea of multiple cards, then this is a fine way to go.
In this case, does Visa vs. Mastercard matter? We’ve written more specifically about the difference between Visa and Mastercard, but in short: it doesn’t matter all that much. Both are worldwide networks with wide acceptance and both are network-only operators that exclusively partner with banks to issue cards (whereas American Express is the card network and card issuer for most of its cards). So for the most part, choose card that fits your needs and don’t stress about whether it’s Visa or Mastercard.
Where some differences do come in are the perks that are offered based on card tier within the Visa and Mastercard networks. You may notice that a card is often not just a Visa card, but a Visa Infinite card or a World Elite Mastercard. The “Infinite” and “World Elite” here denote card tiers and denote Visa- and Mastercard-offered perks. The card issuer will usually highlight the top perks that come with the card tier, but it can be worth it to familiarize yourself with the perks of that rewards tier as well, so you don’t miss out on valuable offerings.
About those welcome bonuses
You don’t want to miss out on welcome bonuses when you’re comparing rewards credit cards, because they can get very generous in Canada. And we mean very generous. Welcome bonuses for many of the top cards can easily be in the $100s, and some can even get above $1,000.
There are a few things that you have to know about welcome bonuses to get the most out of them (and not miss out altogether!).
There are Terms & Conditions to qualify
Yes, you need to understand whether you qualify for the welcome bonus, or you may not get it at all, no matter how much you spend in your first months as a cardholder. Typically it’s pretty simple: if you had the same card, or a very similar card from the same issuer, within the past couple of years, there’s a chance you won’t qualify for the welcome bonus. This is the card companies trying to avoid people gaming the system too much.
With that in mind, if you’re salivating over an Amex card and you’ve never held an Amex card of any sort, there’s little chance you won’t qualify for the welcome bonus (if you’re accepted for the card, of course). If you’re concerned you may not qualify, just make sure to read the terms and conditions of the bonus on the issuer’s site.
You have to spend a certain amount… be sure that makes sense!
There are certain welcome bonuses that you get just for qualifying for the card. Those are great. But many require that you spend a certain amount on the card within a certain period of time. This is not a license to spend money that you wouldn’t have otherwise spent! Please re-read that last sentence before continuing. Yes, you can shift spending from elsewhere onto the new card to meet the welcome-bonus requirements, but don’t overspend to get a welcome bonus.
Beyond that, make sure you understand the spend level and timeframe you have for the welcome bonus to make sure that you get it.
Watch for the multiple bonuses, with multiple timeframes
On some cards, especially those with the biggest bonuses, there are multiple timeframes for earning your bonuses. Most typical is an initial bonus you can earn by spending a certain amount in the first two or three months of card ownership, followed by a secondary bonus you can earn by spending a certain amount every month throughout the first year of card ownership.
Who should get a rewards credit card?
When used responsibly, rewards cards are excellent choices, as they can help you earn a lot of money.
But they’re not for everyone. For one, if you plan on carrying a high balance, the costs from interest may outweigh the rewards (in this case, you may be better off with a low APR card). Additionally, if your credit score is low, you may not be eligible for a rewards card. For scores lower than 700, you should focus on raising your score first. By improving your credit score, you’ll qualify for more lucrative rewards and potentially with a lower interest rate, too.
Should you pay an annual fee to own a rewards card?
The quick, but unsatisfying answer to this question is: yes, sometimes.
If you don’t have the time or don’t feel like doing the work to figure out if you’ll earn more from a card with an annual fee, it’s safer to just choose a card with no annual fee (we have an entire page of our favourite no-fee cards). Otherwise, a little math can get you to your answer.
More specifically: if the extra rewards outweigh the annual fee, then the card is worth its weight.
Let’s look at an example. Let’s say you’re looking at two cards, Card A and Card B. Card A has an annual fee of $100 and a 5% earn rate. Card B has no annual fee and a 3% earn rate.
First, you want to determine how much you need to spend in order to make up for the $100 you spent on the annual fee. In order to earn $100 on Card A, you need to spend $2,000. So, at $2,000 you break even on Card A.
But now let’s look at Card B. If you spend $2,000 on Card B, you earn $60. Because there’s no annual fee that’s $60 you earn outright. In other words, if you only spend $2,000 in one year, then Card B would be more profitable, even with the extra rewards on Card A.
At what point does Card A become the better deal? $5,000 is the breakeven point. When you spend $5,000 on Card A ($250 – $100 annual fee = $150) you earn as many rewards as Card B ($150). After $5,000 Card A becomes more profitable.
Usually, this will get you to a convincing answer one way or the other. However, it can be worth considering the extra perks here too. Especially on higher-end (read: higher-annual-fee) cards, there can be some fairly valuable rewards outside of the points or cash back — these might include airport lounge access, ride-share rides, or meal-delivery-service subscriptions. If there are certain perks that you know you’ll take advantage of, you can add the value of those into this calculation as well.
Should you own more than one rewards credit card?
It’s not totally outlandish to own more than one rewards card. But don’t go credit-card happy and take out too many. For one, taking out more lines of credit could jeopardize your credit score. And if you have too many similar cards, like too many travel cards, you could end up spreading your rewards too thin, not to mention incurring more annual fees.
For that reason, it’s best to keep your rewards cards to a minimum. When you take out a new card, make sure you have a specific purpose for doing so. For instance, you may be both a frequent traveler, but you spend a great deal of money at the grocery store. In this case, you may want to have a rewards credit card for your grocery purchases and a separate card for travel expenses, both optimized to give you the highest value of rewards.
Or you may have a very lucrative points-based rewards card that has a foreign transaction fee. In this case, you may do most of your spending with that card, but then have a second rewards card that has no foreign transaction fee that you pull out when you’re traveling.
How can you pick a rewards card?
1. Decide the type of rewards card you want
First, pick a rewards program that aligns with your spending habits. For example, if you spend most of your money on food, look for a credit card that gives you optimal rewards for food expenses. Likewise, if you’re a frequent traveler, apply for a credit card with great travel perks and rewards.
2. Compare rewards on cards
Once you’ve narrowed your credit card options to a specific card, start comparing the rewards points, sign-up bonuses, and additional perks in each card.
It’s important to compare all the perks, not just rewards points. Comparing rewards points and percentages can be helpful, but it may be somewhat misleading. For example, you may see that Card A offers you two points for every dollar you spend, while Card B offers only one. A two to one ratio is always better, right?
Not necessarily. The points may equal different dollar values. For Card A, one point may be worth $.01, while for Card B, one point may be worth $.02.
Even if the points have the same dollar value, you may find the perks on one card to be more resourceful than those on another. For a deeper comparison of rewards cards, you can always use this page. We’ll continue updating it with pertinent information on Canada’s best rewards cards.
3. Compare welcome bonuses
Welcome bonuses can really swing the comparison between cards, so make sure to weigh these sign-on and spending offers as you compare one card to the next. But also make sure that your typical spending would mean that you’d qualify for the bonus without overspending.
4. Consider the fees
Finally, pay attention to all the fees associated with a credit card. This includes the annual fee, APR, balance transfer fee, cash advance fee, foreign transaction fees, and late fees. Keep in mind that paying an annual isn’t necessarily a bad thing. But you want to ensure the annual rewards outweigh any fees incurred.
Some offers on The Motley Fool are from our partners — it’s part of how we make money and keep this site going. But does that impact our reviews? Nope. Our commitment is to you. If a product isn’t any good, our review will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market.
American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the “see offer” button. If you apply and get approved for an American Express Card, we may receive compensation from American Express, which can be in the form of monetary payment.