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Updated: May 30, 2023

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Cash back vs. rewards points: which is worth more?

Antonio Guillem / Shutterstock

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Updated: May 30, 2023

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware this post may contain links to products from our partners. We may receive a commission for products or services you sign up for through partner links.

Whether you’re a newbie or a credit card connoisseur, one of the common questions that plague those looking for new plastic is “should I go with a cash back or a rewards credit card?” Certainly, each card type has its own pros and cons, so how do you choose between the two? A cash back card can offer a straightforward, quick financial return; but a rewards card could net you potentially better goodies, like a free trip or hotel stay. Decisions, decisions!

It’s easy to be seduced by a big sign-up offer or a high earn rate, but to ensure you get the match that will maximize your earnings, try to go beneath the surface and consider the key factors we examine below.

Feature Cash back Rewards
Sign-up bonus Typically top out at $200 or so Can be the equivalent of $300 or more
Return on regular spending Evenly matched Evenly matched
Value-added features Features are usually less valuable compared to rewards cards at a similar annual fee level Value of features can be huge, particularly for upper-tier cards
Ease of use Very low maintenance Labyrinth of different transfer rules and redemption rates can be a headache
Annual fee Evenly Matched Evenly Matched

Sign-up bonus

You can’t really beat the quick budget boost of netting hundreds of dollars’ worth of extra cash or rewards just by signing up for a card and spending the required minimum amount in the time allotted. When comparing miles vs cash back credit cards, miles/rewards cards usually have the most generous welcome bonuses. Cash back introductory offers commonly top out at a couple hundred dollars or so, whereas rewards cards frequently follow a “go big or go home” game plan to attract new customers with offers worth $300 or more. Here’s a comparison between two of the biggest welcome bonus offers in Canada at the moment:

TD Cash Back Visa Infinite* Card

Quick Facts

Standard purchase APR: 20.99%

Balance transfer APR: 22.99%

Cash advance APR: 22.99%

Credit score required: Good-Excellent

Min. personal income required: $60,000

Annual fees: $139 (first year Annual Fee Rebate)†

TD’s Cash Back Visa Infinite* Card is presently offering a lucrative introductory cash back rate for New Cardholders: Earn 10% Cash Back on all Purchases for the first 3 months† up to a total spend of $2,000. After your first $2,000 in Purchases, Gas Purchases, Grocery Purchases and Pre-Authorized Payments will continue to earn 6% up to a total spend of $3,500 for the first 3 months. Plus, first year no Annual Fee for the Primary and Additional Cardholders†. Conditions apply. Must apply online by September 5, 2023.

After the introductory period ends, cardholders get a regular cash back rate of 3% on all recurring bill payments and eligible gas and grocery transactions†, and 1% on all other qualifying transactions†.

Click here to apply or learn more by reading our complete TD Cash Back Visa Infinite* Card review.

This offer is not available for residents of Quebec. For Quebec residents, please click here.

†Terms and conditions apply.

TD First Class Travel® Visa Infinite* Card

Quick Facts

Standard purchase APR: 20.99%

Balance transfer APR: 22.99%

Cash advance APR: 22.99%

Credit score required: Good–Excellent

Minimum Income: $60,000 individual or $100,000 household

New TD First Class Travel® Visa Infinite* cardholders are

eligible to a staggering offer. Earn up to $800 in value†, including up to 100,000 TD Rewards Points, no Annual Fee for the first year† and additional travel benefits. Conditions Apply. Must apply by September 5, 2023.

  • Earn a welcome Bonus of 20,000 TD Rewards Points when you make your first Purchase with your Card†.
  • Earn 80,000 TD Rewards Points when you spend $5,000 within 180 days of Account opening†.
  • Earn a Birthday Bonus of up to 10,000 TD Rewards Points†.
  • Get an annual TD Travel Credit† of $100 when you book at Expedia® For TD.
  • Get an Annual Fee Rebate for the first year†.

To receive the first-year annual fee rebate, you must activate your Card and make your first Purchase on the Account within the first 3 months after Account opening and you must add your Additional Cardholders by September 6, 2023.

Just remember: whether for a cash back or rewards credit card the largest introductory offer in the world will be worthless if you can’t fulfill your side of the bargain and make the required minimum spend. In this case the maximum value of the sign-up bonus offered by the TD First Class Travel® Visa Infinite* is superior to that offered by the TD Cash Back Visa Infinite* card, but only if the cardholder of the former can clear its rather high spending hurdles.

Click here to apply or learn more by reading our complete TD First Class Travel® Visa Infinite* Card review.

This offer is not available for residents of Quebec. For Quebec residents, please click here.

†Terms and conditions apply.

You can compare these to some competing welcome offers by checking out our list of the best credit card sign-up bonuses in Canada.

Return on regular spending

In the battle between rewards points vs cash back there is no clear winner for the best regular earn rates. Since both types of cards can feature accelerated earn categories, you need to assess where exactly you spend your money to figure out which card will be the biggest earner for you. This is clear when we compare two top ranking credit cards like the American Express Cobalt® Card and the Tangerine Money-Back Credit Card.

American Express Cobalt® Card

Quick Facts

Minimum credit score: Fair-Good

Minimum income: N/A

Age: Age of majority in province/territory

Residency: Canadian resident

The American Express Cobalt® Card is a “lifestyle” rewards card that offers some of the most elevated earn rates possible for people that really love food and travel. Cardholders get:

  • 5 points per $1 spent on eligible eats and drinks, including purchases in grocery stores and food delivery
  • 2 points per $1 spent on eligible transit and travel purchases
  • 1 point per $1 spent on other everyday spending

In your first year as a new Cobalt® Cardmember, you can earn 2,500 Membership Rewards® points for each monthly billing period in which you spend $500 in purchases on your Card. This could add up to 30,000 points in a year. That’s up to $300 towards a weekend getaway or concert tickets. Conditions apply.

Click here to apply or learn more by reading our complete American Express Cobalt® Review.

Tangerine Money-Back credit card

Quick Facts

Minimum credit score: Fair-Good

Minimum income: $12,000

Age: 18+/Age of majority

Residency: Canadian Citizen/Permanent Resident

Other: No bankruptcy for the past 7 years

What makes the Tangerine Money-Back Credit Card so valuable is that it not only has no annual fee but also has the most flexible choice of accelerated earn categories of any card on the market. It’s the perfect shopping companion for those whose primary expenses don’t fall into common cash back categories, as cardholders can choose two of the following 10 spending categories that will earn 2% cash back:

  • Grocery
  • Restaurants
  • Gas
  • Recurring Bills
  • Drug stores
  • Hotel-Motel
  • Furniture
  • Home improvement
  • Entertainment
  • Public transit and parking

Cardholders can even opt to get a third 2% cash back category as long as they deposit their earnings into their Tangerine savings account.

Apply by July 5th, 2023. If you're approved, get an extra 10% cash back in the first two months, valid on up to $1,000 in everyday purchases for a maximum $100 in cash back.* That's on top of the usual 2% in your 2-3 selected categories and 0.5% on everything else.

Apply here or learn more by reading our complete Tangerine Money-Back Credit Card review.

*Terms and Conditions apply

Check out our respective lists of the best rewards cards and the best cash back cards in Canada to find out which other cards offer particularly high earn rates in the purchase categories where you spend the most.

Value-added features

Most basic cash back or rewards cards include purchase security and extended warranty, with things like insurance and concierge service commonly offered among higher-end cards.

The key main difference between perks offered by miles vs cash back cards manifests in premium travel rewards cards. Travel cards tend to kick the value-added features up a notch: in an effort to win the loyalty of big-spending jet setters, the best travel cards of the lot offer particularly comprehensive insurance packages and/or free airport lounge access. You can see what I mean by comparing the features offered by a travel rewards and cash back credit card, both from the same issuer and with comparable annual fees.

Scotiabank Passport® Visa Infinite* Card

Quick Facts

Minimum credit score: Excellent

Minimum income: Meet a minimum annual income of $60,000 or a minimum household income of $100,000 or minimum assets under management of $250,000

Age: Age of majority in your province or territory

Residency: Canadian citizen or permanent resident

Other: No bankruptcies in the past seven years

The lineup of features on this frequent flier favourite is outstanding and could save globetrotters hundreds to several thousands of dollars on common flight expenses. To start off with, the Scotiabank Passport® Visa Infinite* Card offers a far-reaching insurance package that includes:

  • Hotel Burglary: If you charge a hotel or motel stay anywhere in North America to your Scotiabank Passport® Visa Infinite* Card, you, your spouse and dependent children are eligible for coverage against theft of personal property from your room, up to a maximum of $1,000.
  • Baggage Lost/Delayed: If you or eligible companions on the same trip (when you charge the full cost of your airplane, train, bus or cruise ship tickets to your Card) lose your bags or if your bags are stolen, you’ll all be covered up to a combined max of $1,000. If your/your eligible companions’ bags are delayed for four or more hours, you’ll also net up to a maximum of $1,000 for the cost of replacing eligible essential items.
  • Travel Emergency Medical Insurance: A vital feature for those who travel often, the Scotiabank Passport® Visa Infinite* Card covers you, your spouse and dependent children for up to $2 million toward emergency medical coverage for up to 25 consecutive days. If you are 65 years of age or over, you’ll be covered for up to 3 consecutive days. This may not sound like much, but some credit cards in Canada don’t offer any coverage at all for those 65 or over.

Travellers also save because the card doesn’t charge foreign transaction fees and airports will be much more bearable with the card’s complimentary six free airport lounge visits. There’s no cash back card that offers those kinds of perks.

Earn up to $1,100* in value in the first 12 months, including up to 35,000 bonus Scene+ points and first year annual fee waived on your first supplementary card.Âą Offer ends October 31, 2023.

Apply here or learn more by reading our complete Scotiabank Passport® Visa Infinite* Card review.

Âą Conditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.

Scotia Momentum® Visa Infinite* Card

Quick Facts

Minimum credit score: Excellent

Minimum income: Meet a minimum annual income of $60,000 or a minimum household income of $100,000 or minimum assets under management of $250,000

Age: 18+/Age of majority in province

Residency: Canadian Citizen/Permanent Resident

For a cash back card the Scotiabank Momentum® Visa Infinite* Card offers some impressive value-added features, such as Visa Infinite* Concierge Service and Visa Infinite* Dining and Wine Country program. The most attractive extra is its up to $1,000 new mobile device insurance—and it’s one of the few cards in the country to offer this (Scotiabank Passport® Visa Infinite* Card doesn’t have this feature). But while that insurance bonus is wonderful, you can see by comparing it with the Scotiabank Passport® Visa Infinite* Card that its other insurance offerings aren’t as outstanding:

  • Hotel burglary: Unlike the Scotiabank Passport™ Visa Infinite* Card, the Momentum® Visa Infinite* Card doesn’t feature hotel burglary insurance.
  • Baggage lost/delayed: The coverage is the same as the Scotiabank Passport™ Visa Infinite* Card, but the maximum reimbursement amount for each circumstance is $500 (rather than $1,000)
  • Travel medical insurance: The Scotiabank Momentum® Visa Infinite* Card offers less maximum medical insurance than the Scotiabank Passport™ Visa Infinite* Card (you, your spouse and dependent children are covered for up to $1 million in emergency medical expenses), and coverage only lasts for up to 15 consecutive days if you’re under age 65. There’s no coverage for those 65 years of age or over.

Apply here or learn more by reading our complete Scotia Momentum® Visa Infinite* Card review.

Ease of use

Cash back credit cards throttle rewards cards when it comes to ease of use. With a cash back card you usually don’t have to worry about what time of year to redeem points, minimum point redemption limits, whether or not your points/miles are transferrable or expire, and the real-world value of your points (check out our Loyalty Points Bible for an explanation about redemption values). Take a look at these two top cards to see which you think would be easier to manage:

Scotiabank Gold American Express® card

Quick Facts

Minimum credit score: Excellent

Age: Age of majority in your province or territory

Residency: Canadian citizen or permanent resident

Other: No bankruptcies in the past seven years

To highlight just how much more complicated rewards redemption can be, we’ll look at the Scotiabank Gold American Express® Card. This card is hands-down one of the easiest and most transparent rewards programs to use. Rewards act almost like cash with one of its Scene+ points equaling $.01—but only if you put your points towards travel. If you don’t use your points for travel expenses, however, the reward system becomes much more complicated and loses value (as is the case with many a travel rewards card).

For example, you earn 5X Scene+ points points for every $1 CAD spent on a variety of categories, including eligible dining. So, if you spend $500 in that tier of categories in a month you get 2,500 points, equivalent to $25 that you can put toward any travel spending (like baggage fees, plane ticket, seat fees, etc.) on your Scotiabank credit card statement within a year of the transaction date. Of course, your travel points are not automatically redeemed for you, unlike with most cash back cards where the cash back points are applied to your statement every month or once a year without any effort on your part.

Point redemption gets more complicated and less valuable if you want to redeem Scene+ points on things like a statement credit or a gift card/donation. In these cases, point value goes down from $.01 (on travel. If this all seems too complicated (and remember Scene+ are among the easiest to redeem) then a rewards card may not be for you.

Apply here or learn more by reading our complete Scotiabank Gold American Express® card review.

SimplyCash® Preferred Card from American Express

Quick Facts

Minimum credit score: Fair-Good

Minimum income: N/A

Age: 18+/Age of majority

Residency: Canadian Resident

In your first 10 months as a new SimplyCash® Preferred Card from American Express Cardmember, you can earn a $40 statement credit for each monthly billing period in which you spend $750 in purchases on your Card. This could add up to $400 in statement credits in the first 10 months. Conditions apply.  The card also offers competitive cash back: Earn 4% cash back on eligible gas station purchases in Canada, 4% cash back on eligible grocery store purchases in Canada (up to $1,200 cash back annually) and 2% cash back on all other purchases. The annual fee is $9.99/month (Equals a total fee of $119.88 annually).

Click here to apply or learn more by reading our complete SimplyCash® Preferred Card from American Express review.

Annual fee

Overall, the annual fees for cash back and rewards cards are comparable, ranging from $0 for basic no-frills cards, to $120 or $150 on average for higher-end cards, to $500+ for truly premium cards.

The basic idea is that the higher your annual fee, the more earn power and extra goodies you get. For example, the The Platinum Card® features a hefty annual fee of $699, but you get an outstanding bonus offer and an amazing stack of airport, airline, entertainment insurance and other benefits. But aside from the The Platinum Card® and a few other super deluxe cards, rewards cards and cash back cards have more or less the same range of annual fees.

Is one better than the other?

No single card can meet the needs of all consumers, and whether cash back or rewards oriented, different cards emphasize different types of spending and consumer needs. Rather than trying to determine categorically if a cash back or rewards card will be the best fit for you, you need to look at each card individually to find the best match for your lifestyle.

Recommended read:

American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information click the Apply now link. Conditions apply.

About our author

Sandra MacGregor
Sandra MacGregor, Freelance Contributor

Sandra MacGregor has been writing about finance and travel for nearly a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, Forbes.com and the Toronto Star. She spends her free time travelling, and has lived around the globe, including in Paris, South Korea and Cape Town.

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