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How Much Is Your Credit Card Worth?

March 24, 21
11 mins
A male barista hands the point of sale terminal to a customer tapping their smartphone

Every credit card has a value, whether it’s a rewards credit card, low-interest credit card, or secured credit card. The value may be in the form of getting cash back, points or interest savings — benefiting cardholders with different needs.

Still, the value within these credit card categories can vary drastically, with some being more rewarding than others.

Often, cardholders are reluctant to get a new credit card, even when it doesn’t offer the best return on their spending or are unaware of their credit card rewards’ actual value, leading to a missed savings opportunity.

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Compare the best credit cards on RATESDOTCA

Find the best credit card for your lifestyle today!

How rewarding is your credit card?

The RATESDOTCA credit card comparison tool breaks down your monthly spending to match you with the most rewarding card for your unique spending habits. You can also see the estimated year-over-year value of your credit card.

Here are a few simple scenarios illustrating how different cardholders use their credit cards and why their payment preference matters:

The routine shopper vs. the general shopper

Understanding your spending habits can help you earn more rewards and save money.

Meet Sam:

Sam has young children and routinely shops for groceries and subscribes to meal kit services — one of their many recurring bill payments. Their spouse is added to the account as an additional cardholder to earn rewards as a family.

Meet Taylor:

Taylor is a homebody who enjoys playing video games, watching movies, and staying up to date with the latest technology. Taylor subscribes to all the streaming services available. You name it; they’ve got it. Taylor regularly shops with a credit card and gets $200 in rewards each year.

Sam and Taylor share the same monthly costs overall; however, their spending habits are quite different. Here is a breakdown of the rewards they would earn:

Comparing spending habits using the same credit card
Cardholder: Sam Taylor
Credit card:

BMO CashBack® Mastercard®*

  • Earn 3% cash back on grocery purchases, up to $500 in purchases monthly.
  • Earn 1% cash back on recurring bill payments, up to the $500 maximum spend each month.
  • Earn 0.5% unlimited cash on all other purchases.

Groceries:

$500 x 3%

$200 x 3%

Gas:

$250 x 0.5%

$300 x 0.5%

Drugstore:

$150 x 0.5%

$50 x 0.5%

Travel:

$200 x 0.5%

$100 x 0.5%

Restaurants:

$250 x 0.5%

$200 x 0.5%

Entertainment:

$150 x 0.5%

$50 x 0.5%

Recurring bills:

$300 x 1%

$500 x 1%

Retail store:

$100 x 0.5%

$100 x 0.5%

Local transit:

$50 x 0.5%

$200 x 0.5%

Other:

$50 x 0.5%

$300 x 0.5%

Welcome offer:

  • Earn up to 5% cash back on all purchases for the first three months. Conditions apply. This offer expires on October 31, 2021.

Total Reward value:

$383

$308

Annual fee:

$0

$0

First-year value*:

(welcome bonus + rewards – annual fee)

$383

$308

Annual reward value (rewards – annual fee)**:

$288

$210

*The RATESDOTCA Best of Finance methodology assumes the cardholder spends an average of $2,000 a month on their card to determine the first-year value. The calculation includes all welcome bonuses and promotional offers at the time of publishing.

**The annual reward value excludes any welcome bonuses cardholders may receive in their first year of membership.

Sam earns more rewards than Taylor because Sam spends the most money within the card’s accelerated earning categories, groceries and recurring bill payments. Taylor spends more broadly and may earn more rewards with a credit card that offers a higher accelerated rate for recurring bill payments.

If you break down your monthly spending into the typical reward categories that credit cards offer, it can help you find the right credit card to maximize your rewards.

Annual fee credit card vs. no-fee credit card

Cardholders can easily dismiss a credit card with an annual fee when there are so many excellent credit cards with no fee.

Meet Cameron:

Cameron is a 42-year-old bargain hunter who has always been money-conscious. Cameron shops around before making any significant financial decision and adheres to a budget rigorously. Cameron understands that sometimes you must spend money to save money and uses a credit card with an annual fee.

Related read: Are Credit Cards with Annual Fees Worth It?

Meet Kaden:

Kaden is a hardworking 27-year-old renter who dreams of owning a home and saves every penny. Not seeing the point in paying extra fees, Kaden regularly declines offers for no-fee credit card upgrades. Kaden acknowledges the credit card with an annual fee offers a higher percentage of cash back for every dollar spent but is also aware it comes with another expense.

Cameron and Kaden spend the same amount of money each month, but Cameron’s card has an annual fee. Here is a breakdown of the rewards they would earn:

Annual fee credit card vs. no-fee credit card
Cardholder: Cameron Kaden
Credit card:

SimplyCash™ Preferred Card from American Express

  • Earn 2% cash back on all eligible purchases.

SimplyCash™ Card from American Express

  • Earn 1.25% cash back on all eligible purchases.

Groceries:

$500 x 2%

$500 x 1.25%

Gas:

$250 x 2%

$250 x 1.25%

Drugstore:

$150 x 2%

$150 x 1.25%

Travel:

$200 x 2%

$200 x 1.25%

Restaurants:

$250 x 2%

$250 x 1.25%

Entertainment:

$150 x 2%

$150 x 1.25%

Recurring bills:

$300 x 2%

$300 x 1.25%

Retail store:

$100 x 2%

$100 x 1.25%

Local transit:

$50 x 2%

$50 x 1.25%

Other:

$50 x 2%

$50 x 1.25%

Welcome offer:

  • Earn 10% cash back on all purchases for the first four months, up to $4,000 in total purchases.
  • Offer can change without notice.
  • Earn 2.5% cash back on all purchases for the first three months, up to $6,000 in total purchases.
  • Offer can change without notice.

Total Reward value:

$800

$375

Annual fee:

$99

$0

First-year value*:

(welcome bonus + rewards – annual fee)

$701

$375

Annual reward value (rewards – annual fee)**:

$381

$300

*The RATESDOTCA Best of Finance methodology assumes the cardholder spends an average of $2,000 a month on their card to determine the first-year value. The calculation includes all welcome bonuses and promotional offers at the time of publishing.

**The annual reward value excludes any welcome bonuses cardholders may receive in their first year of membership.

Although Cameron’s card has a $99 annual fee, they earn more cash back than Kaden, whose credit card has no fee. Cameron’s card offers a better return on spending even when no promotions or welcome bonuses apply.

Credit cards with annual fees often offer more generous incentives, including bigger welcome bonuses and better insurance coverage. For those who use their credit card frequently, the return on spending can outweigh the annual fee’s cost.

Travel credit card vs. cash back credit card

Cash back rewards are straightforward. Cardholders get a percentage of each dollar they spend. Travel rewards cards can be more complex, with customers earning several thousand points per year to redeem for flights, vacations, or merchandise. Still, travel rewards credit cards offer the best value overall.

Meet Jamie:

Jamie is a 25-year-old young professional living in downtown Toronto who uses a credit card for nearly all purchases and pays the statement in full each month. Jamie has had a credit card since starting university and has a growing credit score. Jamie is mindful of spending and chooses a top-tier travel rewards credit card to maximize rewards — an addition to the no-fee card already in their wallet.

Meet Alex:

Alex is a 32-year-old newlywed living in the GTA and uses a credit card regularly, usually paying more than the minimum payment due each month. Alex has been using the same credit card “forever” and doesn’t pay close attention to the rewards accumulating on their account. Alex considers the rewards a ‘happy little bonus’ each year.

Jamie and Alex spend the same amount of money each month across the same categories. Here is a breakdown of the rewards each would earn:

Travel credit card vs. cash back credit card
Cardholder: Jamie Alex
Credit card:

Scotiabank®* Gold American Express® Card

  • Earn five Scotia Rewards points for every $1 spent on eligible grocery, food delivery, food subscription and entertainment purchases.
  • Earn three Scotia Rewards points for every $1 spent on eligible gas, transit, and streaming services.
  • Earn one Scotia Rewards point for every $1 spent on all other purchases.

Scotia Momentum® Visa Infinite* Card

  • Earn 4% cash back for every $1 spent on groceries and recurring bill payments.
  • Earn 2% cash back for every $1 spent on gas and daily transit.
  • Earn 1% cash back on all other purchases.

Groceries:

$500 x 5

$500 x 4%

Gas:

$250 x 3

$250 x 2%

Drugstore:

$150 x 1

$150 x 1%

Travel:

$200 x 1

$200 x 1%

Restaurants:

$250 x 5

$250 x 1%

Entertainment:

$150 x 5

$150 x 1%

Recurring bills:

$300 x 1

$300 x 4%

Retail store:

$100 x1

$100 x 1%

Local transit:

$50 x 3

$50 x 2%

Other:

$50 x 1

$50 x 1%

Welcome offer:

  • Earn up to 40,000 Scotia Rewards points in the first year.
  • This offer expires on August 31, 2021.
  • Earn 10% cash back on all purchases for the first three months, up to $2,000 in total purchases.
  • Plus, pay no annual fee for the first year.
  • This offer expires on August 31, 2021.

Total Reward value:

114,400 Scotia Rewards

$717

Annual fee:

$120

$120 (waived for the first year)

First-year value*:

(welcome bonus + rewards – annual fee)

$1,024

$717

Annual reward value (rewards – annual fee)**:

$624

$444

*The RATESDOTCA Best of Finance methodology assumes the cardholder spends an average of $2,000 a month on their card to determine the first-year value. The calculation includes all welcome bonuses and promotional offers at the time of publishing.

**The annual reward value excludes any welcome bonuses cardholders may receive in their first year of membership.

Jamie and Alex both have credit cards with $120 annual fees, though Jamie’s card offers a greater return on their spending.

Travel rewards cards usually have flexible rewards programs. Though, cardholders will always get the best value for their points when redeeming for travel-related options. Cardholders may be able to redeem their rewards for statement credits, merchandise, or other cash-equivalent options — albeit for a lesser redemption value.

How to maximize rewards

Cardholders can maximize rewards by using the right credit card to match their spending style.

Consider the following details:

  • Monthly spending: How much money are you spending each month? Those who spend roughly $2,000 a month may benefit from a credit card with an annual fee.
  • Accelerated categories: Where are you spending your money? Many credit cards have accelerated reward categories, like gas and groceries.
  • Annual fee: Credit cards with an annual fee may end up saving you money each year. Using a flat-rate rewards card with no-fee in addition to your primary credit card can help you earn the most for miscellaneous purchases.
  • Additional benefits: Many credit cards include perks like airport lounge access, travel insurance, or even roadside assistance — saving cardholders from paying out-of-pocket expenses.

The best way to maximize rewards is by using a primary credit card (with an annual fee) and a secondary credit card (with no fee). Paying with the card that offers the best return on spending can ensure you are always getting the most rewards for your purchases.

Busting common credit card myths

Many people use the same credit card until their bank offers them an upgrade, and still, this may not be the best choice for them. Sometimes it’s out of misguided loyalty or an oversight, but the card might not fit their needs.

Related read: Is It Time to Say Goodbye to Your Starter Credit Card?

Here are some common credit card myths:

  • You can only get a credit card from your bank. It can be easy to get your first credit card from your bank. But after a few years of building a credit history, you should shop around for your next credit card, and it doesn’t have to be from your financial institution.
  • All credit cards are the same. Credit cards vary in rewards, interest rates, benefits, and perks. The right credit card should match how you spend your money and redeem rewards.
  • Applying for a new credit card will hurt your credit score. Applying for a new credit card may temporarily affect your rating; however, it could also improve your credit score if used responsibly.

Change can be hard but finding the right credit card is easy. Compare credit cards at RATESDOTCA to find your best match and maximize your rewards.

Rates, product information, and reward estimates are subject to change at any time and do not constitute financial advice. This post was not sponsored. The views and opinions expressed in this review are purely those of RATESDOTCA. Information in this article is accurate as of the date of this posting, March 24, 2021. Read our full disclaimer.

Hayley Vesh

Hayley Vesh is a creative, resourceful, and knowledgeable content producer who is passionate about financial literacy, storytelling, and generating ideas. She writes about credit cards, savings, debt management, and personal finance. In her spare time, Hayley can be found wandering in the woods, hunting for second-hand treasures, or curled up with a steeped tea and a good podcast.

Find Hayley Vesh on LinkedIn.

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