There is no absolutely one best no annual fee credit card for all type of purchases in Canada. It highly depends on your spending habits and how much hassle the rewards system is for each credit card. Ideally, it would be better to have several different credit cards that you can use in combination with each other to maximize your benefits. Pretty much all no annual fee cash back credit cards out there give you a maximum of a 1% rate of return. However, there are a few credit cards that give higher than 1% on certain categories.
Pure “Cash” back credit cards
- Earn 1% cash back on all purchases
Earn a bonus 25% extra cash on your anniversary year of having the card(has been cancelled since December 2013)
- You can cash out anytime on any amount
This is pretty much the only MUST HAVE credit card in Canada. This credit card essentially give 1.25% return on all purchases. Therefore, unless there is another credit card that gives a high rate of return on a specific item, all other purchases should go on this credit card.
Unfortunately this card needs new consideration because of the changes.
- Earn 5% cash back on gas and grocery purchases for the first 6 months on $400 worth of monthly (calendar month) purchases
- After the 6 months, earn 2% cash back on gas and grocery purchases on $400 worth of monthly (calendar month) purchases
- 1% cash back for all other purchases on $1250 worth of monthly (calendar month) purchases
- A cheque is automatic sent to you when you hit $50 worth of cash back
This is a useful card to have for gas and grocery until you hit the spending limits. Then it would be best to have another credit card to continue to earn cash back elsewhere. Furthermore, the 1% cash back is not as high as other cards, so I would not use this credit card for other purchases that are not gas and groceries. This credit card is best to use in combination with another credit card.
- Earn 2% cash back on grocery store purchases
- Earn 0.5% cash back on your first $6,000 (annually) worth of purchases that are not groceries
- Earn 1% cash back on any purchases in excess of $6,000
- You can cash out as soon as you reach $25 in cash back value, otherwise the $25 will automatically be credited to your account on your January statement
This is a great card to have if you are already a client of RBC so that you can qualify for multi-product rebates for RBC accounts. This is a great card to have if you max out on the $400 groceries limit your MBNA credit card. Otherwise, this card has too low of a return for anything else.
- Earn 3% cash back at Canadian Tire stores, Canadian Tire gas bars and Mark’s Work Wearhouse/L’Équipeur stores
- Earn 0.25% cash back on the first $1,500 in purchases
- Earn 0.5% on purchases above $1,500 and up to $3,000
- Earn 1% on purchases above $3,000
- Earn 1.5% on purchases above $24,000.
- Get your cash back automatically applied to your account once a year
The 3% cash back at Canadian Tire stores is a great deal if you shop there often, but the return is very low in all other categories in comparison to other available credit cards.
- Earn 2% cash back on Amazon.ca purchases
- Earn 1% cash back on all other purchases
- No foreign transaction fee
- Chase automatically credits your account as soon as you reach $20 in cash back
This is definitely the best card to use when you go outside of Canada. Most credit card companies charge around 2.5% foreign transaction fee. Furthermore, if you purchase things online from a foreign website, you will also have the 2.5% savings on foreign transaction fees.
The above are the best pure “cash” back credit cards available in Canada. However, here are some other types of cash back that can be useful depending on your spending habits.
Other cash back credit cards
Keep in mind the following cash back cards give you cash that you can only redeem on something specific:
- You must be a Costco member to get this card
- Earn 3% cash back on eligible restaurant purchases (for some reason, some restaurants are ineligible)
- Earn 2% cash back on gas purchases to a maximum of $3,000 worth of gas purchases annually at Costco and retail stand-alone gas stations
- Earn 1% cash back on any gas purchases over $3,000
- Earn 0.25% cash back on your first $1,000 of other purchases
- Earn 0.5% cash back on your next $2,000 of other purchases
- Earn 1% cash back on any amount over $3,000 of other purchases
- The cash back is issued to you in January in the form of a coupon to be used at Costco only
If you are a Costco member, this is a credit card that you pretty much must have in your wallet, especially since Costco only takes Amex as a credit card method of payment. Using this credit card at restaurants to earn 3% is an obvious must and the 2% cash back on gas purchases can be very valuable since Costco gas stations usually sell gas at a lower price. Only problem is that Costco gas stations are rare, but they are found next to a Costco, so make it a combo trip. This credit card is fairly useless for all other types of purchases considering the low rate of return. Funny enough, this credit card does not have a higher than 1% rate of return for using this card at Costco.
- Earn 5% cash back on purchases made at the Target store with certain restrictions
- Earn 0.5% cash back on all other purchases, but the cash back only goes to Target Gift Card rewards.
- Once you reach $10 of Target Gift Card rewards (through the 0.5% cash back rate), you can redeem for a Target Gift Card at any time
If you shop at Target often and you need to have a credit card with RBC anyway for the multi product rebate, then this card is definitely worth a look. The 5% cash back is as good as it gets, but this card would not be useful for any other types of purchases.
Summary: Once again, depending on your spending habits and how much hassle you want to deal with in terms of receiving your cash back reward. It would be wise to have a combination of credit cards to maximize your return. To summarize we have credit cards for:
All purchases other than the categories listed below: Capital One Aspire Cash MasterCard
Gas: MBNA Smart Cash Platinum Plus MasterCard, TrueEarnings Card Costco and American Express
Groceries: MBNA Smart Cash Platinum Plus MasterCard, RBC Cash Back MasterCard
Restaurants: TrueEarnings Card Costco and American Express
Travel: Amazon.ca Rewards Visa Card
Online Purchases: Amazon.ca Rewards Visa Card
Store specific: Canadian Tire Cash Advantage MasterCard, Target RBC MasterCard
Furthermore, since none of these credit cards have any annual fees, you wouldn’t have to worry so much about keeping the cards long term. Just remember to monitor the change in benefits. For example, the MBNA Smart Cash Platinum Plus MasterCard used to give 3% cash back on gas and groceries. Dropping to 2% cash back means a loss of 33% in value. Hopefully no other credit card companies devalue their rate of return, but instead, continue to remain competitive with each other. Don’t be scared to use a better credit card, that will take business away from one company, which should make them more competitive if they want to win you back as a customer.
Later on, I will write about which are the best non-cash back (with no annual fee) credit cards.