Credit card rewards come in different shapes and sizes, with points and cash back the most popular, but which is best?
Deciding between cash back and rewards points credit cards can significantly impact your financial returns. Our comprehensive guide breaks down which option might be right for your spending habits and lifestyle.
At a glance: Cash back vs. rewards points comparison
Types of cash back and rewards cards
Cash back credit cards
Cash back cards typically fall into three main categories:
- 1 Flat-rate cards: Offer the same percentage back on all purchases (typically 1-2%), with no caps on earnings.
- 2 Tiered cash back cards: Provide higher percentages in specific spending categories and 1% on everything else.
- 3 Rotating category cards: Offer elevated cash back (typically 5%) in categories that change quarterly, up to a spending cap, and 1% on all other purchases.
Points or miles credit cards
Similarly, points and miles cards come in several varieties:
- 1 General travel points cards: The most flexible option, allowing redemptions across multiple airlines, hotels, or even as cash back.
- 2 Airline miles cards: Co-branded with specific airlines and ideal for frequent flyers loyal to one carrier. These often include benefits like free checked bags and priority boarding.
- 3 Hotel points cards: Co-branded with hotel chains, these cards earn points redeemable for stays and room upgrades, though point values tend to be lower than airline miles.
Welcome bonuses: First-year value comparison
You can’t 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. When comparing miles vs cash back credit cards, rewards cards usually offer the most generous welcome bonuses. Cash back introductory offers commonly top out at a couple hundred dollars, whereas rewards cards frequently follow a “go big or go home” approach with offers worth $300 or more.
For example, the TD Cash Back Visa Infinite* Card currently offers up to $600 in value†, including 10% cash back in the first 3 months on eligible purchases up to a total spend of $3,500†. Meanwhile, the TD First Class Travel® Visa Infinite* Card offers up to $1,000 in value†, including up to 135,000 TD Rewards Points† and a first-year annual fee waiver†.
Just remember: the largest introductory offer in the world will be worthless if you can’t meet the required minimum spend. Always ensure you can realistically fulfill the spending requirements before being swayed by a flashy sign-up bonus.
Earn rate: Maximizing your everyday spending
In the battle between rewards points vs cash back, there’s no clear winner when it comes to regular earn rates. Since both card types can feature accelerated earn categories, you need to assess where exactly you spend your money to determine which card will generate the biggest return for you.
Consider the American Express Cobalt® Card, which offers:
- 5x points on eligible dining and groceries in Canada
- 3x points on eligible streaming subscriptions in Canada
- 2x points on eligible gas, transit, and ride shares in Canada
- 1x point on all other purchases
By comparison, the Tangerine Money-Back Credit Card lets you choose up to three categories (from a list of ten) where you’ll earn 2% cash back, with 0.5% on everything else. This flexibility makes it perfect for those whose primary expenses don’t fall into common cash back categories.
The key is matching your card’s earning structure to your actual spending habits.
Perks and features: Added value beyond just cash and points
Most basic cash back or rewards cards include purchase security and extended warranty, with insurance and concierge service commonly offered among higher-end cards.
The main difference appears in premium travel rewards cards. Travel-focused cards typically offer enhanced perks designed to win the loyalty of frequent travelers, including comprehensive insurance packages and airport lounge access.
For example, the Scotiabank Passport® Visa Infinite* Card includes:
- No foreign transaction fees
- 6 complimentary airport lounge visits annually
- Hotel burglary insurance up to $1,000
- Baggage loss/delay coverage up to $1,000
- Travel emergency medical insurance up to $2 million for 25 consecutive days
By comparison, even premium cash back cards like the Scotiabank Momentum® Visa Infinite* typically offer less comprehensive travel benefits, though they may include unique perks like mobile device insurance.
Simplicity: Ease of use matters
Cash back credit cards significantly outperform rewards cards when it comes to simplicity. With cash back, you typically don’t need to worry about:
- Optimal redemption timing
- Minimum point redemption thresholds
- Point transferability or expiration dates
- Calculating the real-world value of your points
For example, the SimplyCash® Preferred Card from American Express offers straightforward cash back that’s automatically credited to your account. In contrast, even relatively straightforward rewards programs like Scene+ (with the Scotiabank Gold American Express®) require more management, with points values varying based on redemption choice.
If you prefer a set-it-and-forget-it approach, cash back cards may better suit your lifestyle.
Annual fee: Comparable costs
Overall, the annual fees for cash back and rewards cards are comparable, ranging from $0 for basic cards to $120-$150 for mid-tier options, and $500+ for truly premium cards. Your decision shouldn’t hinge on annual fee alone, but rather on which card’s benefits best offset its cost based on your spending habits.
How to compare rewards vs cash back credit cards
One misconception about travel rewards cards is that they come with many restrictions. While this may have been true in the past, most modern travel loyalty programs now offer considerable flexibility. When comparing travel rewards to cash back options, choose cards and programs that align with your spending patterns and travel preferences.
Cash back advocates often point out that generous welcome bonuses with travel rewards cards only apply to the first year. While partially true, you should factor in the additional ongoing benefits that come with premium travel cards:
- Free checked bags
- Airport lounge access
- NEXUS rebates
- Comprehensive travel insurance
- No foreign exchange fees
These perks could save you hundreds of dollars annually, potentially exceeding the card’s annual fee.
Sometimes the decision between loyalty points and cash back comes down to mental accounting. When grocery and gas prices rise, getting immediate cash back feels gratifying. However, you might end up spending more on travel later without points to redeem.
If you travel frequently, rewards cards typically deliver superior value. If you rarely travel, cash back likely makes more sense for your lifestyle.
Real-world comparison: Cash back vs. points
Let's compare actual Canadian credit cards with real numbers to show you the difference in value between cash back and points systems.
Scenario: How much value does each example provide based on $2,000 in monthly spending?
Cash back option: CIBC Dividend® Visa Infinite*
10% cash back†
Welcome Bonus
$878
First Year Value
$558
Annual Value
Welcome Bonus: Earn 10% cash back for the first 4 statements on net purchases of up to $2,000.† Plus, get a first-year annual fee rebate for you and up to three Authorized Users.†
Get this card if you...
-
want high cash back rates on groceries, gas and recurring bills
-
value comprehensive insurance benefits
-
value a great welcome offer
Annual Fee & Annual Interest Rates
$120
Annual Fee
20.99%†
Purchase
22.99%†
Cash Advance
22.99%†
Balance Transfer
Our Take
The CIBC Dividend® Visa Infinite* Card is a cash back credit card offering elevated earn rates on categories such as groceries, gas, transportation, dining, and recurring payments. Cardholders benefit from features like purchase security, extended protection, and optional insurance coverages. It's a good option for those seeking to maximize cash back on everyday spending.
Eligibility
Good (620 - 670)
Recommended Credit Score
$60,000
Required Annual Personal Income
$100,000
Required Annual Household Income
Pros
-
First-year annual fee rebate†
-
10% cash back welcome bonus up to $2,000† spend
-
4% cash back on gas, electric vehicle charging and grocery stores
-
2% cash back on transportation, dining and recurring payments
-
High annual spending cap on benefits ($20,000 in bonus categories or $80,000 total)
Cons
-
High income requirement
-
Sparse travel insurance offering
Annual Interest Rates
20.99%†
Purchase
22.99%†
Cash Advance
22.99%†
Balance Transfer
25.99%†
Penalty
Fees
$120
Annual Fee
2.50%†
Foreign Transaction
$29
Over The Limit Penalty
$42.5
Return Penalty
Rewards cash back
4%
cash back on eligible gas, EV charging, and grocery purchases.†
2%
cash back on eligible transportation, dining purchases and recurring payments†
1%
cash back on all other purchases†
10 cents
save up to 10 cents per litre† at participating Pioneer, Fas Gas, Ultramar and Chevron gas stations.†
Insurance Benefits
$1,000
Mobile device insurance amount
$5,000,000
Emergency medical insurance amount
$500,000
Travel accident insurance amount
$65,000
Rental car insurance amount
Get a first-year annual fee rebate for you and up to three Authorized Users† and earn 10% cash back for the first 4 statements on net purchases of up to $2,000†.
Our Take
The CIBC Dividend® Visa Infinite* Card is a cash back credit card offering elevated earn rates on categories such as groceries, gas, transportation, dining, and recurring payments. Cardholders benefit from features like purchase security, extended protection, and optional insurance coverages. It's a good option for those seeking to maximize cash back on everyday spending.
Eligibility
Good (620 - 670)
Recommended Credit Score
$60,000
Required Annual Personal Income
$100,000
Required Annual Household Income
Pros
-
First-year annual fee rebate†
-
10% cash back welcome bonus up to $2,000† spend
-
4% cash back on gas, electric vehicle charging and grocery stores
-
2% cash back on transportation, dining and recurring payments
-
High annual spending cap on benefits ($20,000 in bonus categories or $80,000 total)
Cons
-
High income requirement
-
Sparse travel insurance offering
Annual Interest Rates
20.99%†
Purchase
22.99%†
Cash Advance
22.99%†
Balance Transfer
25.99%†
Penalty
Fees
$120
Annual Fee
2.50%†
Foreign Transaction
$29
Over The Limit Penalty
$42.5
Return Penalty
Rewards cash back
4%
cash back on eligible gas, EV charging, and grocery purchases.†
2%
cash back on eligible transportation, dining purchases and recurring payments†
1%
cash back on all other purchases†
10 cents
save up to 10 cents per litre† at participating Pioneer, Fas Gas, Ultramar and Chevron gas stations.†
Insurance Benefits
$1,000
Mobile device insurance amount
$5,000,000
Emergency medical insurance amount
$500,000
Travel accident insurance amount
$65,000
Rental car insurance amount
Get a first-year annual fee rebate for you and up to three Authorized Users† and earn 10% cash back for the first 4 statements on net purchases of up to $2,000†.
Annual spending breakdown:
- Groceries/Gas: $800/month = $9,600/year × 4% = $384
- Dining/Transit: $400/month = $4,800/year × 2% = $96
- Everything else: $800/month = $9,600/year × 1% = $96
- Total annual cash back: $576
Points option: TD® Aeroplan® Visa Infinite
up to 40,000 pts†
Welcome Bonus
$1,870
First Year Value
$570
Annual Value
Welcome Bonus: Earn up to $1,300 in value† including up to 40,000 Aeroplan points† and no Annual Fee for the first year†. Conditions Apply.
Get this card if you...
-
want to quickly rack up Aeroplan points
-
need comprehensive travel insurance benefits
-
value a great welcome offer
Annual Fee & Annual Interest Rates
$139
Annual Fee
20.99%
Purchase
22.99%
Cash Advance
22.99%
Balance Transfer
Our Take
The TD® Aeroplan® Visa Infinite* Card is a travel rewards credit card designed for frequent Air Canada travelers, offering elevated Aeroplan points on eligible gas, grocery, travel, and dining purchases. Cardholders benefit from perks such as a NEXUS application fee rebate, a complimentary first checked bag for the primary cardholder and up to eight companions on Air Canada flights, and access to select airport lounges; however, the card carries an annual fee and requires a minimum personal or household income for eligibility.
Eligibility
Excellent (740+)
Recommended Credit Score
$60,000
Required Annual Personal Income
$100,000
Required Annual Household Income
Pros
-
The card has a high earn rate for Aeroplan Points, generating 1.5 points† per $1 spent on eligible purchases.
-
Insurance offered includes coverage in the categories that travellers need, and is generally better than its Aeroplan peers at a similar annual fee level.
Cons
-
No airport lounge membership or free lounge access.
-
Aeroplan points can’t be redeemed for flights outside the Star Alliance network, nor can they be redeemed for cash credit. This makes them less flexible than some competing travel rewards programs.
Annual Interest Rates
20.99%
Purchase
22.99%
Cash Advance
22.99%
Balance Transfer
Fees
$139
Annual Fee
2.50%
Foreign Transaction
3.00%
Balance Transfer
Rewards Aeroplan
1.5 points†
for every $1 spent on eligible gas, grocery and direct through Air Canada® purchases (including Air Canada Vacations®)
1 point†
Earn 1 point for every $1 you spend on all other purchases
2x
Earn points twice with Aeroplan partner brands and on the Aeroplan eStore.
50%
Earn 50% more Aeroplan points at Starbucks when you link your card to your account. Conditions apply.
1
partial NEXUS application fee rebate every 48 months†
1st
checked bag free for you and up to 8 travel companions†
Insurance Benefits
$1,000
Mobile device insurance amount
$500,000
Travel accident insurance amount
$2,500
Hotel burglary insurance
$65,000
Rental car insurance amount
Earn up to $1,300 in value†, including up to 40,000 Aeroplan points†, no annual fee for the first year† and additional travel benefits. Conditions Apply. Offer effective as of January 7, 2025.
Earn a welcome bonus of 10,000 Aeroplan points when you make your first Purchase with your new Card†
Earn 15,000 Aeroplan points when you spend $7,500 within 180 days of Account opening†
Plus, earn a one-time anniversary bonus of 15,000 Aeroplan points when you spend $12,000 within 12 months of Account opening†
Enroll for NEXUS and once every 48 months get a partial application fee rebate†
Plus, share free first checked bags with up to 8 travel companions†
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 while this offer is in effect.
Starbucks Bonus Offer for New Linked Members†: Link your TD Aeroplan Visa Infinite to earn 600 Starbucks Stars and redeem them for free Starbucks treats. Limited time only. Conditions and restrictions apply.
Our Take
The TD® Aeroplan® Visa Infinite* Card is a travel rewards credit card designed for frequent Air Canada travelers, offering elevated Aeroplan points on eligible gas, grocery, travel, and dining purchases. Cardholders benefit from perks such as a NEXUS application fee rebate, a complimentary first checked bag for the primary cardholder and up to eight companions on Air Canada flights, and access to select airport lounges; however, the card carries an annual fee and requires a minimum personal or household income for eligibility.
Eligibility
Excellent (740+)
Recommended Credit Score
$60,000
Required Annual Personal Income
$100,000
Required Annual Household Income
Pros
-
The card has a high earn rate for Aeroplan Points, generating 1.5 points† per $1 spent on eligible purchases.
-
Insurance offered includes coverage in the categories that travellers need, and is generally better than its Aeroplan peers at a similar annual fee level.
Cons
-
No airport lounge membership or free lounge access.
-
Aeroplan points can’t be redeemed for flights outside the Star Alliance network, nor can they be redeemed for cash credit. This makes them less flexible than some competing travel rewards programs.
Annual Interest Rates
20.99%
Purchase
22.99%
Cash Advance
22.99%
Balance Transfer
Fees
$139
Annual Fee
2.50%
Foreign Transaction
3.00%
Balance Transfer
Rewards Aeroplan
1.5 points†
for every $1 spent on eligible gas, grocery and direct through Air Canada® purchases (including Air Canada Vacations®)
1 point†
Earn 1 point for every $1 you spend on all other purchases
2x
Earn points twice with Aeroplan partner brands and on the Aeroplan eStore.
50%
Earn 50% more Aeroplan points at Starbucks when you link your card to your account. Conditions apply.
1
partial NEXUS application fee rebate every 48 months†
1st
checked bag free for you and up to 8 travel companions†
Insurance Benefits
$1,000
Mobile device insurance amount
$500,000
Travel accident insurance amount
$2,500
Hotel burglary insurance
$65,000
Rental car insurance amount
Earn up to $1,300 in value†, including up to 40,000 Aeroplan points†, no annual fee for the first year† and additional travel benefits. Conditions Apply. Offer effective as of January 7, 2025.
Earn a welcome bonus of 10,000 Aeroplan points when you make your first Purchase with your new Card†
Earn 15,000 Aeroplan points when you spend $7,500 within 180 days of Account opening†
Plus, earn a one-time anniversary bonus of 15,000 Aeroplan points when you spend $12,000 within 12 months of Account opening†
Enroll for NEXUS and once every 48 months get a partial application fee rebate†
Plus, share free first checked bags with up to 8 travel companions†
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 while this offer is in effect.
Starbucks Bonus Offer for New Linked Members†: Link your TD Aeroplan Visa Infinite to earn 600 Starbucks Stars and redeem them for free Starbucks treats. Limited time only. Conditions and restrictions apply.
Annual spending breakdown:
- Groceries/Gas: $800/month = $9,600/year × 1.5 points = 14,400 points
- Everything else: $1,200/month = $14,400/year × 1 point = 14,400 points
- Total annual points: 28,800 Aeroplan points
Who’s the winner?
So, who wins? It's pretty much a draw, but if you simply want value-for-money, the TD® Aeroplan® Visa Infinite has the slight edge. That's because $28,800 Aeroplan points is valued at around $609 when used for flights - roughly $30 more than the Dividend Visa Infinite Card.
Conclusion
No single card can meet every consumer’s needs. Rather than trying to determine categorically whether a cash back or rewards card will serve you better, examine each card individually to find the best match for your spending habits and lifestyle preferences.
The ideal credit card isn’t about maximizing every possible point or percentage of cash back—it’s about finding the option that delivers the most value based on how you actually live and spend.
TD Cash Back Visa Infinite disclosures:
- To receive the first-year annual fee rebate for the Primary Cardholder, you must activate your Card and make your first Purchase on the Account within the first 3 months after Account opening. To receive the first Additional Cardholder first-year annual fee rebate, you must add your first Additional Cardholder while the offer is in effect.
-
†Terms and conditions apply.
This offer is not available for residents of Quebec. For Quebec residents, please click here.
The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button.
TD First Class Travel Visa Infinite disclosures:
- [[ ribn.prod.td-first-class-travel-visa-infinite-card.long_disclaimer ]
American Express Cobalt disclosures:
-
Contact American Express for the most up-to-date referral bonus figures.
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. If you apply and get approved for an American Express Card, (I/we) may receive compensation from American Express, which can be in the form of monetary payment.
Tangerine Money-Back disclosures:
- *Terms and Conditions apply
Scotiabank Passport Visa Infinite disclosures:
-
Rates, fees and other information are effective as of January 3, 2025. Subject to change.
Conditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.
*See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.
Scotiabank Momentum Visa Infinite disclosures:
-
Conditions Apply. Visit here for the Scotiabank Momentum® Visa Infinite* Card to learn more.
Scotiabank Gold American Express disclosures:
-
Conditions Apply. Visit here for the Scotiabank Gold American Express® Card to learn more.
*See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.
SimplyCash Preferred disclosures:
-
Contact American Express for the most up-to-date referral bonus figures.
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. If you apply and get approved for an American Express Card, (I/we) may receive compensation from American Express, which can be in the form of monetary payment.
CIBC Dividend Visa Infinite disclosures:
- †Terms and Conditions Apply. This offer is not available for the residents of Quebec.
-
This is a digital-exclusive offer.†
To be eligible for this offer:
1) this offer must have been directly communicated to you from CIBC or from a partner/affiliate; and
2) you must apply for the eligible card through the link provided in the CIBC or partner/affiliate communication to you.†
This offer is reserved for you. Please do not forward it to anyone else.
CIBC may approve your application, but you are not eligible to receive this Offer if you have opened, transferred or cancelled another Dividend card within the last 12 months.†
Any opinions, analyses, reviews, or recommendations expressed on this page are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by our advertising partners.
TD Aeroplan Visa Infinite disclosures:
- †Terms and conditions apply.
-
The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button. Sponsored Content.†Terms and conditions apply.
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.
Barry Choi is a Toronto-based personal finance and travel expert who makes frequent media appearances. When he's not educating people on how to be smarter with money, he's earning and burning miles and points for luxury travel.
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