15 Best Cash Back Credit Cards in Canada for 2023

How cash-back credit cards work in Canada

By Barry Choi and Clay Jarvis

Before deciding which cash-back credit card is right for you, it’s helpful to understand how the cash-back redemption process works, the many categories cash-back rewards can fall into, and how cash-back cards compare to other types of credit cards.

What is a cash-back credit card?

Overall, cash-back credit cards are pretty straightforward. You use them as you would any other credit card, and in exchange for making eligible purchases, you get a certain percentage of what you’ve spent back in cash.

How you get cash back with a credit card

Earning process

Let’s say you have a card that offers 2% cash back on groceries. If tomorrow’s weekly run to the supermarket winds up costing you $100 and you pay with your card, you’ll earn $2 in cash-back rewards. The running total of how much cash you’ve earned should be easy to find on your monthly statement or via your online account.

It’s important to look closely at your cash-back credit card’s details to find out just how much you can earn on your purchases. Earn rates can vary based on time, such as when an introductory offer provides a higher rate of rewards and what kinds of products you purchase. Tangerine’s World Mastercard, for example, pays 2% cash back on up to three categories of items, but only 0.5% on all other purchases.

Redemption process

Although it’s called “cash-back,” these rewards can come in several forms

In many cases, you can use cash-back rewards to pay down your credit card balance, but rules may apply. Some cards require you meet a minimum threshold of cash-back rewards before redemption. If you don’t have enough points available, you’ll have to sit on them until you do.

Some bank-issued credit cards may be able to deposit cash back rewards directly into your linked savings account — a convenient way to turn rewards into actual cash.

Pros and cons of a cash-back credit card

Pros: Why a cash-back card may be worth it

• Simplicity; Cash-back cards make it easy to earn valuable rewards.
• Welcome bonuses and introductory offers can be quite generous.
• Accumulated rewards can help pay down your card balance.
• High earn rates for items you buy regularly can yield big rewards.

Cons: Why a cash-back card might not be worth it

• You may not typically buy items that yield above-average earn rates.
• Amassing rewards can be slow depending on how much you spend each month, and whether you pay your bill in full.
• Bonus and introductory offers tend to come with conditions, including spending minimums, which may be challenging to meet.

Types of cash-back credit cards to choose from

All cash-back credit cards work similarly, but even minor differences are worth noting as they can affect your earn rate.

Flat rate

These types of cash-back credit cards earn you the same cash back rate for all purchases made.

Bonus categories

Some cash-back credit cards offer an increased earn rate on select spending categories, such as groceries and restaurants.

Flexible bonus cash back cards

Some cards allow you to choose the spending categories on which you’ll earn your bonus rewards. By selecting categories that align with the types of items you buy frequently, you can maximize your cash back rewards.

NerdTip: Many cash-back credit cards offer higher earn rates for only one or two spending categories. One card might pay an elevated earn rate on gas and travel while another pays extra for groceries and dining out, for example. Holding multiple cash-back credit cards that align with different categories is one strategy that can ensure you’re earning cash no matter how you spend.

Common cash-back bonus categories in Canada

Credit cards have merchant categories assigned by the credit card processing network. These categories are essential since many cash-back credit cards offer bonus cash back on purchases in select categories.

For example, the Simplii Financial Cash Back Visa Card offers higher cash back rewards when you’re dining out, while the BMO CashBack World Elite Mastercard pays out more on grocery purchases.

Knowing the different cash-back categories can allow you to maximize your earnings. Here are some of the most popular merchant categories in Canada and what they typically include:

• Grocery. Any purchase made at grocery stores, such as Loblaws, No Frills and Metro. .
• Restaurants. This usually includes takeout and food delivery services, such as Uber Eats, DoorDash and SkipTheDishes.
• Travel. Airline tickets, hotels, car rentals, etc.
• Gas. Includes any purchase made at a gas station or service station, like Shell, PetroCanada and Esso.
• Transportation. This may include taking an Uber, a taxi, or paying for public transportation.
• Streaming services. Monthly subscriptions to products like Netflix, Disney+, Spotify, etc.
• Drug stores. This may include purchases made at a drug store, like Shoppers Drug Mart.
• Entertainment. This may include money you spend on tickets to the movies, theater, or a live music concert.
• Recurring bills. Including wireless phone, internet, and utility bills paid with a credit card.

The key thing to understand is that each credit card defines its categories differently. For example, some cards may group gas and transportation. Some cards lump groceries and restaurants into a “food and drink” category.

To further complicate things, some merchants don’t fall into the categories you would think they would. For example, Costco is not considered a grocery store. As far as the credit card processors are concerned, Costco is a wholesale store.

Credit card companies do not typically reveal all of the stores associated with a merchant category publicly. Still, you should be able to contact your credit card provider’s customer service to ask about a specific store. Overall, it’s pretty easy to figure out what category your purchases will fall under, but you may need to do a little bit of trial and error.

How cash-back bonus categories work

You’ll earn cash back at an increased rate when making purchases in specific merchant categories, often referred to as bonus categories.

For example, let’s say your credit card gives you 4% cash back on gas. If the card has a flat rate of 1%, this means you’ll earn cash back on gas with a bonus rate of 3%, making it so all your gas purchases would give you 4% cash back. Since many gas stations sell other things such as snacks and gift cards, you’d also earn 4% cash back on any of those items.

Generally speaking, Canada’s best cash-back credit cards offer multiple bonus categories. Getting a cash-back card that lines up with your spending patterns can be pretty lucrative. For example, if you spend a lot on groceries, getting a cash-back credit card with an increased earn rate on groceries can significantly benefit you.

You’ll still earn the base earn rate when you make purchases that don’t fall under a bonus category or after you have reached the bonus category cash-back limit.

The base earn rate is different for each cash-back credit card, but it typically ranges between 0.5% – 2%.

How to redeem your cash-back rewards

Every credit card provider has different rules when it comes to redeeming your cash back. Some allow monthly redemption, while others pay out annually. Other providers allow redemption only after you’ve hit a certain threshold.

The following are the payout requirements for the major cash-back credit card providers:

• American Express. All cash back earned is paid out annually on your September statement.
• BMO. Redeem as little as $1 in cash back as a statement credit. You can also set up automatic direct deposits to your BMO chequing or savings account starting at $25.
• CIBC. Cash-back redemptions start at $25. Any unredeemed cash back will appear on your January statement annually.
• RBC. Once you earn $25 in cash back, you can have the balance credited to your account at any time by calling in. Alternatively, all accumulated cash back will be credited to your account every January.
• Scotiabank. All cash back earned appears as a credit on your November statement.
• Tangerine. Paid monthly to your savings account or applied to your credit card balance.
• TD. You can redeem your cash back when you have a minimum amount of $25. Another option is to take your cash back annually every January where there is no minimum amount required.

» MORE: Read our in-depth TD Cash Back Visa Infinite Review

When is it a good time to redeem my cash-back?

Many cash-back credit cards will allow you to redeem your rewards as soon as they reach a minimum threshold. But you can also save them up over time and cash them in for a more significant, single-shot pay-down of your credit card balance, for example.

Choosing to redeem cash rewards on a regular basis is certainly satisfying. But it could mean dipping below your minimum threshold. The next time you want — or need — to use your rewards, you may not have enough at your disposal.

Saving your cash back rewards to generate more impact — say, to ease the blow of a particularly big purchase — is a worthy strategy, too. But know that if you fail to keep your account in good standing or decide to close it suddenly, you could lose out on accumulated rewards.

How to choose a cash-back card

With dozens of cash-back credit cards available, comparing them all can be time-consuming. That said, there are a few things you should look at when considering any cash-back card.

Interest rates

It’s important to look closely at the interest rates associated with any cash-back credit cards you’re considering; many start out in the 19.99% range. Zero interest is charged on balances paid in full every month, but if you don’t, it can significantly add to your debt and erode the benefit of any cash-back rewards you earn.

If you don’t typically pay your credit card balance in full each month, you may want to seek out a cash-back credit card with a 0% introductory rate offer, or low ongoing interest rate.

Annual fee

Decide if you want to pay an annual fee or not. In most cases, paying a yearly fee means you’ll earn more cash back and get better benefits. On the other hand, no-fee cash-back cards may have a lower earn rate, but if you don’t charge much to your card, you could come out ahead compared to a card with a fee.

Some of the best cash-back cards in Canada with no annual fees include the Tangerine Money-Back credit card and the Simplii Financial Cash Back Visa card.

Welcome bonus or intro offer

Cash-back credit cards in Canada commonly offer a sign-up bonus for new applicants. The welcome bonus usually comes in the form of a higher cash-back rate for a set period. For example, you might get 10% cash back on all purchases up to $3,000 in spending. If the earn rates are similar with two cards, but one has an excellent welcome bonus, then you might as well take advantage of the promotion.

The BMO CashBack World Elite Mastercard and CIBC Dividend Visa Infinite Card are two selections on our best cash-back credit card list with intro offers worth hundreds of dollars, for example.

Credit card bonus offers nearly always come with terms and conditions to be met, however, so be sure you read over the offer thoroughly and understand how much you may need to spend in order to qualify.

Bonus categories

The increased earn rate on bonus categories is arguably the most critical factor when comparing cash-back cards. It’s ideal to choose a card that gives you increased cash back on the categories where you do the most spending.

Take the Desjardin Cash Back World Elite Mastercard, for example, which offers 4% cash back on groceries, 3% on restaurants, entertainment and public transportation, and 1% cash back on everything else. This could be a great card for someone who enjoys cooking at home as well as dining out, because they’d a high rewards rate whether shopping for recipe ingredients or trying out a new brunch place.

Keep in mind that the amount you spend in bonus categories every year could potentially earn you more than any welcome bonus offered.

Credit card insurance

Many cash back credit cards offer various forms of insurance as an added perk.

While helpful, some of these offers occupy the more basic end of the insurance spectrum: rental car insurance, mobile device insurance and extended warranties on the items you purchase.

But some cards, like the Scotia Momentum Visa Infinite Card, for example, offer more robust insurance options, like out-of-province/out-of-country emergency medical insurance for the first 15 days of a trip.

Additional benefits

Many cash-back credit cards come with additional benefits that may appeal to you.

Some perks to look out for include

• Travel insurance.
• Roadside assistance.
• Mobile device insurance.
• Credit card concierge services.
• Extended warranties.
• Purchase protection.

» NerdWallet's top choices: Canada's best credit cards for June 2022

How to apply for a cash-back credit card

Even though the benefits of a cash-back credit card are relatively simple to understand, you’ll still have to reckon with a few eligibility requirements to be approved for one.

Age and residency status

Most cash-back credit cards require you to be both a Canadian resident and the legal age of majority in the province where you live to apply for your own card.

The age of majority is 18 in Alberta, Manitoba, Ontario, Prince Edward Island, Quebec and Saskatchewan. It’s 19 everywhere in all other provinces.

Credit score

A good credit score is required in most cases to qualify for a cash-back credit card. In Canada, a credit score that ranges between 660 and 724 is considered good.

If you do not have a good credit score, consider a credit card designed for bad or no credit, a prepaid card, or a secured credit card instead of a cash-back credit card.

Personal or household income requirements

Some cash-back credit cards come with relatively lower income requirements. Tangerine’s Money Back Credit Card, for example, only requires an annual income of $12,000.

But if you want a higher-tier cash-back credit card, you’ll need a higher income. For example, World Elite cards require a personal income of $80,000 or a household income of $150,000.

Cash-back vs points: which is better?

Answering this question depends on what you’re looking to get out of your credit card card.

If you’re hoping for a little help paying your credit card bills, cash back may be the route to take. Cash-back rewards are typically easy to calculate, collect and apply toward your balance.

On the other hand, credit card points can generally be redeemed in a wider variety of ways, including discounts on travel or merchandise. That flexibility can be very attractive to some consumers. However, the value of the points you collect can fluctuate, making tracking your points a more complicated endeavour than cash back rewards.

Cash-back vs rewards: which is better?

There are two situations where a cash-back card might not be the right choice. The obvious case is when the cash back you can earn is less than what you’ll pay in annual fees.

The other time when a cash-back card might not be worth it is if you can get a better return with a rewards credit card instead. For example, let’s say you got a travel rewards credit card and did the same spending. Would the points you earn be worth more than the cash back you could potentially earn? If so, it makes more sense to get a travel credit card.

How to maximize your cash-back credit card

There are plenty of tricks to help you get the most out of your cash-back credit cards. The more tips you adopt, the more cash back you’ll earn. That said, it’s best only to follow the advice that you’re comfortable with.

Apply for a new card ahead of major expenses

Since many of the best cash-back credit cards in Canada have a generous welcome bonus, it’s often worth your trouble to apply for a new card before you make a major purchase.

For example, let’s say you need to renew your home and auto insurance, which will cost you about $2,000. You could apply for a cash-back credit card that offers you 10% cash back as the welcome bonus. Then, when you charge your insurance to your card, you’d get $200 back.

Keep in mind that many cash-back credit cards have a limit on their sign-up offer. If you have a substantial purchase, you could apply for more than one card and split up your purchase to maximize your cash back. However, if you need to pay an annual fee for the new card, it may negate the cash back you earn, so pay attention to the details.

Pay attention to the sign-up bonuses

Welcome offers are constantly changing, so watch for any current promotions. Getting 10% cash back for a set period is generous, but if the card also waives the annual fee for the first year, they’re practically paying you to sign up. When you get close to 12 months of card membership, you might cancel the card before your annual fee posts. You could then apply for a new cash-back credit card with a good sign up bonus.

Carry multiple cards

Many people focus on a single cash-back credit card, but there’s nothing wrong with having multiple credit cards. In fact, having more than one card is the easiest way to maximize your cash back. Start off with a primary card that gives you an increased earn rate where you do most of your spending. You could then complement that card with a no-fee card that gives you bonus categories where your primary card doesn’t. Just use the credit card that gives you the most cash back whenever you shop.

Buy gift cards in bonus categories

Groceries and gas are two of the most popular merchant categories where you’ll earn additional cash back. Here’s the thing: both grocery stores and gas stations sell gift cards that can be used at many retailers. That essentially allows you to earn extra cash back.

For example, let’s say your credit card gives you 5% cash back at grocery stores. You could purchase gift cards at a grocery store for restaurants, Amazon, streaming services, drug stores and gas. That would guarantee you 5% cash back. When you need to make purchases at those merchants, use the gift cards you already purchased.

Add supplementary users

Most credit cards allow you to add supplementary users. The advantage here is that all authorized cardholders also earn cash back on their purchases, including any bonus. Best of all, the cash back gets combined into a single pool, so you’ll be racking up that cash back in no time.

Use cash-back websites

Various online sites allow you to earn additional cash back whenever you shop online. First, you need to create an account. Afterwards, you would select the partner retailers through their online portal. When you do your shopping, eligible purchases will earn you cash back. If you pay with your cash-back credit card, you’d be earning cash back twice. That’s right, you can double dip without much work.

Cash-back credit card companies in Canada

Here are some widely known credit card issuers in Canada, along with their networks and notable cash-back cards.

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