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The Secret Behind Credit Card Rewards

April 30, 2012
3 mins
A pile of three credit cards

Like most credit card users, I chose the cards I use based on both interest rate and rewards. I have three credit cards in total. One collects WestJet points, which I use to visit my family out west. The second collects rewards points that can be redeemed for grocery money or returned as cash. The last card just collects rewards points.

I couldn’t tell you what kinds of rewards I can purchase, because the whole system is so confusing that I’ve given up using the card altogether. I’d rather use one of the other two cards simply because they’re easy to calculate and are not limited to one type of reward. While I can redeem my points for something tangible (i.e. groceries), I can also choose the cash back option and use the money to pay off other debts. If my third credit card weren’t so darned confusing, I might use it more often, but that’s not the case. Besides, I don’t need another gift card or useless electronic device. If I want those things, I’ll just buy them.

Why more users are choosing cash back cards

According to Globe and Mail personal finance columnist Rob Carrick, I’m not alone. Credit card users are confused about rewards points and are therefore opting for more straightforward cards. In fact, more credit card users are choosing cards that offer cash back over rewards points.

Whereas travel points are still the most attractive option, cash back cards are gaining momentum. Mary-Anne Heustis, a principal with the research firm MarketSense Inc., confirms this.

“Travel is still at the top of the list,” she says, “but what we’ve seen over the past couple of years is that cash back is really picking up momentum.”

Heustis attributes this change to unnecessary confusion in the credit card industry.

“It’s partly because people are getting a little tired of the complexity of the travel category,” she says. “And, there are some very rich offers on the market right now.”

By “rich offers,” she’s referring to cash-back credit cards. Another reason cash-back cards are a more desirable option is because of their straightforwardness.

People are getting tired of rule changes and lame options, says Carrick. I can vouch for the lame options part. When I went to finally went to use my WestJet points, I couldn’t book the flight online, which meant that I lost out on the sale price (it was only available to those who booked online). All of these little rules are annoying and keep me from using my card to its full extent.

A possible solution

All reward cards aren’t created equal. Depending on the card you choose, you’ll be offered rewards points, miles, or cash-back. But how do you know what you’re really getting? Which card offers the best deal? To help you determine the card that offers the highest rate of return, here's an interesting and unique solution to this problem – your reward return.

By putting a number of typical reward items into one basket – electronics, gift cards, etc. – our experts have developed a metric for putting all cards on a level playing field. When comparing their list of rewards credit cards currently on the market, be sure to check their reward return rating. It will help you compare apples with apples and make a better choice based on the return on your spend.

Two cards of note

Based on the reward return rating system, here are the top two cards currently on the market:

MBNA Smart Cash Credit Card Special Offer: 5% cash back on gas and groceries for the first 6 months, receive 3% cash back afterwards and 1% cash back on all other purchases. The best part about this cash back offer is the redemption process - you'll receive a cheque in the mail automatically once your cash back totals at least $50 per month. Plus, an introductory balance transfer rate of 1.99% for the first 10 months can help reduce your monthly interest payments on your outstanding credit card debt.  

  • Interest rate: 19.99%
  • Balance transfer: 1.99% (for the first 10 months, 19.99% after)
  • Annual fee: $0.00
  • Cash advance: 19.99%
  • Min. credit score: Good
  • Reward Return: up to 5.00%

Scotiabank’s Scotia Momentum VISA Infinite

  • Interest rate: 19.99%
  • Balance transfer: 1.99% (for the first 6 months and the 21.99% after that)
  • Annual fee: $99
  • Cash advance: 1.99% (for the first 6 months and the 21.99% after that)
  • Min. credit score: Excellent
  • Reward Return: up to 4.00%

Rewards on every purchase: 4% cash back on all eligible gas and grocery purchases, 2% cash back on recurring payments and drug store purchases, and 1% cash back on all other purchases. Plus, you'll get VISA Infinite enhancements - a unique program of premium enhancements including VISA Infinite Complimentary Concierge and a dedicated VISA Infinite website to help you easily track your cash back rewards.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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