Choosing which credit card is the absolute best is a very difficult task because everyone has a different opinion on what makes something “the best”. Most people would agree that the value of the rewards you get in proportion to the amount of money you spend on the card is a good measurement of what is best, but determining that value isn’t always possible. We have taken a very systematic approach to determining what the best credit cards in Canada are by assigning each credit card a score based on four distinct categories: Typical Return, Maximum Return, Flexibility, and Insurance & Perks.
We would prefer to get right to the results and show you the best credit cards that Canadians can currently apply for, so a detailed explanation of our method and scoring system can be found further down the page. The credit cards have also been broken up into different groups, because not all people are interested in the same type of credit card. Particularly, those people who are most interested in cash back credit cards tend to stay away from travel related credit cards, even if the reward return is much higher.
The Best Cash Back Credit Cards in Canada
|Credit Card||Score||Typical Return||Max Return||Apply Now!|
|1||MBNA Rewards World Elite MasterCard||17.96||1.64%||1.91%||Apply|
|2||Scotia Momentum Visa Infinite||14.90||1.50%||1.80%||Apply|
|3||Capital One Aspire Travel World Elite MasterCard||14.73||1.02%||1.38%||Apply|
|4||HSBC Premier World MasterCard||13.00||1.15%||1.15%||Apply|
|5||MBNA Smart Cash World MasterCard||12.95||1.19%||1.05%||Apply|
|6||SimplyCash Preferred Card from American Express||12.70||1.18%||1.42%||Apply|
|7||BMO CashBack World MasterCard||12.08||1.11%||1.35%||Apply|
|8||MBNA Rewards MasterCard||11.91||1.00%||1.00%||Apply|
|9||HSBC Premier MasterCard||11.41||1.00%||1.00%||Apply|
|10||Canadian Tire Cash Advantage MasterCard||11.03||1.22%||1.88%||Apply|
The Best Travel Rewards Credit Cards in Canada
|Credit Card||Score||Typical Return||Max Return||Apply Now!|
|1||The Starwood Preferred Guest Credit Card from American Express||16||3.02%||13.00%||Apply|
|2||Capital One Aspire Travel World Elite MasterCard||15||1.92%||2.83%||Apply|
|3||RBC Avion Visa Infinite||15||1.66%||12.00%||Apply|
|4||CIBC Aerogold Visa Infinite||13||2.60%||7.53%||Apply|
|5||American Express AeroplanPlus Gold Card||12||2.74%||8.40%||Apply|
|6||MBNA Alaska Airlines Platinum MasterCard||12||2.50%||7.93%|
|7||MBNA Travel Rewards Platinum MasterCard||12||2.44%||2.84%|
|8||TD AAdvantage Platinum Visa||12||2.32%||7.15%|
|9||RBC British Airways Visa Infinite||12||2.14%||7.84%||Apply|
|10||TD First Class Visa Infinite||12||1.02%||5.33%||Apply|
Where To Get More Information
If you need more information before making a decision to apply for any of the above credit cards, there is plenty of information available. We actually have individual pages that describe, in detail, most of the credit cards listed on this page. You can access these additional details by clicking on the names of the credit cards you are most interested in and they will link you to a full HowToSaveMoney.ca page of information about the card you clicked on. There you will find a much more in depth analysis of the card along, a list of the card’s pros and cons, and useful links related to both that specific card as well as credit cards in general.
If you want more information directly from the credit card issuer themselves, then you can simply click on any of the Apply links in the above tables. You will be taken directly to the card issuer’s detail page for the credit card you selected and then you make your decision from there.
The Problem of Reward Value
Unless you are speaking about straight cash back credit cards with no annual fee, no tiers, no bonuses for specific types of purchases, and no annual spending maximums, then determining the value of a credit card’s rewards to an individual person is a very sticky subject. Everyone has a different definition of what provides value and which features and benefits of a card are useful to them and which are not. When looking at travel rewards and points credit cards, it is very complicated indeed because the value of the reward you are getting can change dramatically depending on the circumstances. Let’s consider flight rewards for a minute that are obtained by using either an airline miles or travel points credit card. Here is a partial list of things that could affect the overall value such a flight would have to a particular person:
- Availability of the desired reward due to capacity controls.
- Whether or not the person even likes or wants to travel.
- Remoteness of departure and destination airports.
- Flying in economy, business, or first class.
- Stopovers, open jaw, or one way flights.
- How far in advance the flight is booked.
- Popularity of the route.
- Method of booking.
- Distance traveled.
- Day of the week.
- Cost of jet fuel.
- Time of year.
- Time of day.
- Seat sales.
So just considering this one type of reward, you can easily see there is no non-subjective way of valuing a flight reward. Then, when you add in a bunch of other reward choices for credit cards that allow you to redeem for many different things, it is very possible for people to make an uninformed decision and choose a less valuable reward. For instance, reward programs like Aeroplan offer merchandise and gift card rewards that give horrible value when compared to flight rewards. These poorer reward choices can have a value even less than half of what the best reward choice would give you, yet people still choose them all the time!
Our Method For Determining The Best Credit Cards
Our method for determining the best overall credit card of a certain type, like travel rewards credit cards, is based on a simple scoring system that assigns a score from 1 to 5 to every credit card in each of several different categories. Those scores are then combined to make up the final score for that particular card. All the credit cards in the group are then ranked by this final score, with the highest score being the top ranked card. If there are any ties, they are decided by looking at the values in the most important category, typical return, and the tied cards are then sorted from highest to lowest typical return. The following is a description of the four categories:
The typical return value is calculated first by determining the value of a typical reward available through the credit card’s rewards program that provides good overall value when compared to other reward options, but is also something that normal people would use. The reward also can’t involve any complicated redemption methods, promotions, or schemes that would make it more difficult to obtain. In the case of the best travel rewards credit cards in Canada, we used a typical reward flight flying from the east coast to the west coast of Canada, say from Halifax to Vancouver. We then assigned a typical value to this reward of about $700 based both on experience and rate spot checks using various travel sites and airline websites. These sample bookings were usually done using a departure date about sixth months from the day of booking. Such a flight can increase in value up to $1000 or more and can decrease in value to as little as $450-$500 due to the many factors previously mentioned.
The second factor when calculating this percentage is the amount of money spent annually on the credit card. Here, a value of $25,000 was chosen because that is an amount that a typical middle class family in any Canadian city should be able to spend in the course of a year relatively easily. This is assuming the use of only one credit card and running every possible purchase, bill, or payment through that credit card. This is used to calculate the number of points or miles earned during the course of the year, which is then turned into a dollar value using a formula that involves the value of a typical reward ($700), the cost in points or miles for that reward, and the amount of time it would take to earn that reward at the given annual spending rate.
Also included in the formula, if necessary, are any bonuses or tiers that the credit card has. Annual renewal bonuses, like those offered by the Capital One Aspire World MasterCard, are taken into account because they are not just a one time sign up bonus but something you can count on year after year. Another example would be spending type bonuses like those offered by the MBNA Smart Cash Platinum MasterCard which gives 3% cash back on gas and groceries instead of the usual 1%, up to an annual maximum of $144. The American Express AeroplanPlus Gold Card is another special case because it earns Aeroplan miles at a different rate depending on how much is spent on the card in a given year. In cases where it is impossible to know how much a person would spend at special stores in order to get a bonus, 20% of annual spending was chosen as a typical amount to use in the calculation.
Finally, once this dollar value is reached, the cost of the annual fee, if any, is subtracted from it and then that value is divided by the annual spending amount turning the number into a percent. The formula was adapted and simplified for every different credit card as necessary, but here is an example formula that was used for the CIBC Aerogold Visa Infinite card:
( $700 x ( ( (25000 x 1) + (25000 x 0.20 x 0.5)) / 25000) - $120) / 25000 = 2.60%
Since reward return is the most important factor when determining which credit card is best, we thought it should carry more weight than the other categories. For this reason we have a second category, max return, that is also based on reward return. In the case of travel rewards credit cards, max return is calculated using every possible trick, special bonus, or redemption method humanly possible to squeeze the absolute maximum value out of your rewards. It would be hard to explain every method that was used in detail, but here are some of the general rules that were used:
- Extremely flexible cards without booking restrictions that can be used in conjunction with sales and specials assume a 30% discount off the regular price and thus the reward value is grossed up by that amount.
- This was not done when determining the best cash back credit cards in Canada because all of those cards share nearly identical rewards, cash or pseudo cash.
- Cards that use airline miles assume business class flight rewards to far away destinations because they provide the best value by far.
- A typical flight in business class flying from Toronto to Hong Kong with a realistic value of $8000 was used in the calculations.
- For cards that have special, regularly occurring, transfer promotions to airline miles, it was assumed that they were always taken full advantage of.
- The same first class flight reward value was used when calculating the return in this case as well.
For the purposes of calculating the maximum return, an annual spending rate of $100,000 was used instead of $25,000 to account for bonuses that increase with more spending as well as annual spending limits that some cards have which makes them nearly useless after a certain spending threshold is breached. Here is an example formula that was used for the The Starwood Preferred Guest Credit Card from American Express:
( $8000 x ( 100000 x 1.25 x 1.30 / 100000) - $120) / 100000 = 13.00%
Flexibility is a very important factor for many people when choosing a credit card but it is often overlooked by people when trying to determine which credit card is best because it is hard to quantify. That is why we created a numerical score for this category to quantify it as much as possible. Of course, there is still subjectivity involved here, but it is much more concrete than not taking it into account in the formula and only discussing it after the fact. Here are some factors that were taken into consideration when assigning the flexibility score:
- Travel Rewards Credit Cards:
- Are multiple reward options available like flights, gift cards, merchandise, etc?
- Can reward travel be booked using any booking medium or is calling a special redemption center required?
- Can flights be booked on any airline or travel provider, or just one?
- Can points or miles be converted directly to cash?
- Are there any booking fees or other costs associated with redeeming for a reward?
- American Express cards were docked 1 point for their decreased merchant acceptance.
- Cash Back Credit Cards:
- How frequently can the accumulated cash be accessed?
- Can your cash be mailed out as a cheque instead of just a bill credit?
- What is the minimum amount of cash that must be earned to do a redemption?
- In the case of Pseudo Cash, how restrictive are the terms and conditions of use?
Insurance & Perks
Many credit cards, especially the premium ones with annual fees, come with a full suite of insurance and perks that are available to the cardholder and often their immediate family members or travel partners as well. Some people couldn’t care less about these extra features, especially since they tend to revolve around traveling. There are exceptions like extended warranty, purchase protection, and price protection but traveling seems to be the focus. However, here are a few examples of how this insurance can actually be very valuable to the right person:
When renting a car that is fully paid for by credit card that has Collision Damage Waver (CDW) & Loss Damage Waiver (LDW) insurance, you can easily save $20-$30 per day, which is the cost of getting this insurance through the rental agency.
Travel insurance including Emergency Medical, Trip Cancellation, Trip Interruption, Accidental Death and Dismemberment, and Lost and Stolen Baggage can cost in the hundreds of dollars per trip. Some people would never get this insurance if it wasn’t offered by their credit card so they could benefit from it to the tune of thousands or even hundreds of thousands of dollars that they otherwise wouldn’t have.
If a new $1000 laptop was just purchased and then it was accidentally dropped and completely ruined or it was stolen from a school or workplace, then Purchase Protection would cover you for the full cost of that loss!
So, as you can see, these insurances do offer real value and should be an important consideration when determining the best overall credit card. To determine insurance and perks score we developed a spreadsheet listing each of the possible insurances found on any Canadian credit card. From there, a tally was made for the number of insurances each of the competing credit cards possessed. A second tally was done for the number of category wins each credit card had. A category win is when that specific card offers the best insurance of a certain type when compared to all the other cards. For example, the Capital One Aspire World MasterCard offers 2 years of extended warranty coverage and 120 days of purchase protection, as opposed to the usual 1 year and 90 days, so it would have two category wins for those.
Finally, those two tallies were added together to produce a final number used to rank the credit cards by insurance from highest to lowest. Ties were settled by looking at the most important or rare insurances and seeing which card had a better offering. From there a score from 1 to 5 was assigned to each card based on how close their total was to the average. This final score could then be adjusted up or down by 1 if a particular card offered an incredible perk that wasn’t already taken into consideration by one of the other categories and that none of the other cards had. This didn’t happen very often.
What The Scores Mean
Each category was always scored from 1 to 5, with 1 being the lowest score and 5 being the highest. Here is what each of these scores mean:
|1||The credit card performed the worst in the category or it was so close to the worst that giving a higher score would not make sense.|
|2||The credit card performed below average in the category.|
|3||The credit card was close to the category average.|
|4||The credit card performed above average in the category.|
|5||The credit card performed the best in the category or it was so close to the best that giving a lower score would not make sense.|
The category scores out of 5 are then added together to make the final score out of 20 which is used to rank the cards from best to worst, with the highest score being the best. From there ties are decided by the Typical Return category because it is the most important and relevant category to the most people. You will also notice that the highest score achieved so far is only 16, so there is still definitely room for improvement and for one card to master every category!
So there you have it! A thorough and measured approach to determining the best credit cards in Canada. The cards ranked number one may not be the best for everyone, but we are confident that they are the best overall and would best suit the average Canadian. And, if one of the top cards is not for you, there should be at least one card in the top 10 that you can get excited about and is hopefully better than the credit card you already have!