Don’t dismiss cash-back cards with an annual fee
While it might seem counterintuitive to pay an annual fee on a cash-back card, be aware that cards with a fee generally deliver better rewards and perks. If these perks are worth more than the annual fee (and if the card fits your spending habits in other ways), you might choose a cash-back card with a fee.
Consider using multiple credit cards
Using too many credit cards at once is generally frowned upon, as this can be a sign of insolvency. However, a strong credit-card strategy can involve pairing cards to maximize benefits. For example, the TD Cash Back Visa Infinite offers 3% back on gas, groceries and recurring bills, but only 1% on everything else, while the Tangerine Money Back Card has no annual fee and offers 2% back in up to three spending categories of your choice. Strategically it would make sense to select drug stores, parking/public transit and restaurants to fill in the gaps on everyday spends without having to pay more for the better earn rate.
Add your partner as an authorized user
Adding an authorized user, typically your partner, to your account can be a cost-effective (or even free!) way to boost your earnings on a premium card. With this setup, both cardholders accrue rewards or cash back on their spends without paying double the annual fees. If, for example, your card has a $120 annual fee, you might be able to get an additional authorized user for as little as $30 more. Some premium cards, like the SimplyCash Preferred from American Express, even let you add authorized users for free. It does bear mentioning that this requires some thought as only the primary cardholder will be responsible for paying off the balance—not the authorized users.
Cash back versus travel credit cards
When choosing a rewards credit card, many Canadians find themselves torn between two types: Cash back and travel. This shouldn’t come as a surprise—both are popular and have valuable strengths. Here we break down both card types to help you decide which card is right for you.
It’s important to be able to understand your credit card rewards program, and cash-back cards are about as clear as you can get. If you earn 2% back, you absolutely know you’re going to receive $0.02 on every $1—no complicated math required. With travel rewards credit cards, there are sometimes different earn rates and redemption values. These variables can affect how or when you want to collect or redeem.
Bottom line: If you’re invested in earning travel rewards, acquainting yourself with your card’s program may be the best way to go, otherwise you can’t top cash when it comes to simplicity.
Rewards and bonus categories
How you earn can be just as important as what you earn. Travel rewards credit cards usually offer a very wide breadth of spending categories to earn in, while cash-back cards can be more restrictive.
Aside from a few exceptions, the majority of cash-back credit cards offer the same limited selection of bonus categories (namely gas, groceries and utility bills). In comparison, travel credit cards have a far larger selection of bonus categories (like restaurants, hotel stays, flights, Uber rides and public transit, in addition to the groceries and gas), which means you can potentially earn more points on more types of purchases.