Credit cards offer a unique level of convenience and it is not a surprise that majority of Canadians have not just one but several credit cards. According to the Canadian Bankers Association (CBA), approximately 89% of Canadian households have at least one credit card. These cards are accepted by a wide range of businesses and you can use them seamlessly when shopping on both online and offline platforms. With there being numerous types of credit cards in the market, you should only take the ones that fulfill your needs fully. Rewards credit cards Canada are a hugely popular option for most Canadians. Let us explore the key reasons why they are popular and why you should consider getting one.
What are Rewards Credit Card Canada?
Rewards credit card Canada operate just like any other credit card but allow users to get some tangible benefits. By using a rewards credit card to make payments, you earn redeemable points or cashback. The more you use your card, the more the points you get. Your credit card company will then offer a wide range of rewards which can vary from products and services to things such as hotel rooms or even cashback. It is a great way to earn more value out of your daily use of the credit card.
Major reward categories
Credit card rewards mainly fall in three distinct categories which are cash, points, and miles. They normally differ in the following ways:
- Cashback rewards
“Cash is king”, goes the saying. It is basically what makes cashback rewards so admirable. You can turn your cash into any value you want simply because it has a neutral monetary value. When you make a purchase using a cashback rewards credit card, you earn a percentage of your payment as a rebate. Your rebate accrues as you make numerous other payments.
Some cashback credit cards have an earn rate which can be based on certain shopping categories. For instance, your credit card may offer more rebate when you purchase groceries or gas. You should as such choose a card that aligns well with your spending habits. If you frequently purchase groceries, for instance, a cashback credit card that offers more refunds on groceries would make more sense. This is because it will take lesser time for you to accrue a lot of cashback.
The cashback you have earned can be offered in numerous means. The financial institution may choose to put it in your savings account or use it to clear your credit card balance. Your cashback might get compounded and issued after it reaches a certain limit, quarterly, or annually. You have to find out to be adequately prepared and be satisfied with the cashback rewards process.
There are several requirements that come with different cash back rewards credit cards that you ought to familiarize yourself with. High earn rates, for instance, require you to have a high income which can lead to an increased tendency to shop.
- Points-based rewards
With a credit card in this category, you earn several points when you make a purchase and pay with your card. You can then redeem your points after they have accrued to a particular number to get certain products and services. The most common types of rewards include merchandise, entertainment, gift cards, travel packages, special events amongst other forms of rewards. These cards earn points on distinct rates that have been established by the credit card issuer, for instance, half a point per dollar spent.
- Air miles rewards
They are most common with travel rewards cards and you get rewarded with miles that you can redeem as tickets when you need to travel. This is the wisest choice if you are a frequent traveller and the number of miles you can earn is dependent on the credit card. Your frequent flier program determines the total number of miles you need to get a flight ticket. However, you can get numerous other peripheral services such as flight, rental car, or baggage insurance and a couple of other medical necessities. As a cardholder, you might also get uncommon perks such as VIP treatment whenever you travel.
How to Choose the Best Rewards Credit Card Canada
There are numerous considerations that you have to make to be able to select the best rewards credit card Canada. The aspects are largely dependent on your spending habits or desires and also the credit card provider. They include:
- Individual spending patterns
Your rewards credit card should allow you to earn points as you spend on the things you normally purchase. It should fit in your lifestyle because even without it, you will still make the purchases that you have to make. As such, its use will allow you to experience more benefits just by spending on the typical things you purchase often. Therefore, a travel rewards credit card will make more sense to you if you are a frequent traveller. When you are a student, the rewards credit card you need differs with the one that would be practical if you were a parent because your purchase decisions at the two stages of life will be different.
- Guaranteed benefits
Different credit card providers have varying mechanisms of allocating points when you make payments using their rewards credit card Canada. You should make a comprehensive comparison to know the ones that give the most points per payment as you stand to get more benefits from them. Also, check the manner that the rewards are structured with regards to the points you need to get rewarded and what the rewards are.
- Interest rates
Lower interest rates allow you to be able to repay the credit card debt much faster and in a seamless manner too. As such, you have to inspect the APR imposed by the credit card provider and compare with other similar financial institutions. Only choose those who give you the lowest APR.
- Annual fee
The amount you have to pay for the rewards card maintenance yearly can vary from one provider or card category to the other. Some cards like student rewards credit cards may have zero annual fees.
- Initial application requirements
Your credit card provider will prequalify you for the card when you apply and they have to make several checks. Some providers may offer to give you the rewards credit card even when you do not meet certain criteria like being employed.
How to maximize your rewards
Other than choosing a suitable credit card based on the factors that have been described above, you should do the following to maximize your rewards:
- Dump cards with lesser rewards
You dilute the value of your rewards when you carry around several rewards cards. It is better to have one or two that offer you great value and carefully consider the benefits offered by those that have high interest rates and annual fees. When dumping any of your credit cards, do it cautiously to avoid lowering your credit score. To avoid a negative impact on your credit rating, do not close numerous cards at once.
- Spend more on one card
When you buy the same things using different credit cards, you lower the potential of getting more points or cashback in any individual card. As such, it might take a very long time for you to redeem the respective rewards. As a result, you may not experience the value of redeeming your credit cards. To avoid spending a lot of money that you do not have just to earn rewards, consider paying for a majority of your expenses using one rewards credit card Canada.
- Maintain excellent credit
An excellent credit score allows you to seamlessly redeem your rewards. This is especially the case for cashback rewards credit cards where the issuers review your credit score before offering you the cashback you have earned.
- Look out for bonuses
Some credit card issuers normally offer a higher rate in several distinct categories. When you shop through their online rewards malls, they may also have bonus offers which you should look out for.
For the rewards to be fulfilled, you have to pay your credit balance every month and also the accrued interest amounts. You should also know that rewards credit card Canada attract an annual fee regardless of whether you use them or not. The fee is normally imposed as payment for the privilege of using a credit card that offers certain rewards. Even though the fee might appear expensive, your continual use of the card can allow you to get numerous rewards that outweigh the annual charge.
Comparing multiple credit cards and card providers to determine which best suits your needs can be a hectic process. However, without such a comparison it will be impossible to make a prudent choice of the best rewards credit card Canada. This is why you should rely on us to help you make a comprehensive comparison of all rewards credit card Canada that suits your situation before you apply for one. Visit our website and use the reliable web tool to tailor your own comparisons or talk to us if you have any difficulties.