Canadian banks love to gouge us with fees - even raising them while raking in record profits for themselves...
It's no wonder pretty much everyone hates fees!
I'm right there with you, I normally go out of my way to avoid fees too. I've been taking advantage of no-fee virtual banking basically since it began in Canada. I hopped right from a free student account into a no-fee President's Choice Financial account and have stuck with it ever since.
But, there are actually some times when it makes sense to pay a fee.
When dealing with cash back credit cards, simple math can show you if higher cash back rewards will cover the cost of a premium card's annual fee. If so, then it's absolutely worth it to pay the fee. Not only will you end up with more money in your jeans, but you'll also benefit from better insurance coverage and perks.
Even still, there are many people who want to completely avoid fees out of principal. Fees suck and you may even be worried that paying the fee will pressure you to overspend. If that's you, then this no fee cash back card analysis is just what you need.
Best Cash Back Credit Cards With No Annual Fee
To produce these rankings, 30 cash back credit cards with NO annual fee were compared. I've listed the top 9 in the table below from highest to lowest ranked.
Cards that aren't strictly cash back cards have also been included to increase your options. These cards allow you to convert your points to cash, statement credits, or investments in some way.
The table scrolls horizontally using the slider at the bottom.
|Apply||SimplyCash Card from American Express|
|Apply||MBNA Rewards Mastercard|
|Apply||PC Financial World Elite Mastercard|
|Apply||Capital One Platinum Mastercard (Costco)|
|Apply||HSBC Advance Mastercard|
|Apply||Tangerine Money-Back Credit Card|
|Apply||Capital One Aspire Cash Platinum Mastercard|
|Apply||HSBC Premier Mastercard|
|Apply||RBC Cash Back Mastercard|
|Overall Score||Cash On $25,000 Spend1||Cash On $100K Spend2||Sign Up Bonus Value3||Insurance Score||Perks Score|
* Limited time promotion ending soon.
1. $25,000 in annual spending works out to $2,083 in monthly spending which is achievable for a typical Canadian family funneling most of their spending through their credit card. The cash back shown is calculated by splitting spending sensibly across spending categories like groceries, gas, drugstore, travel, bills, and everyday spending. All spending bonuses, tiers, limits, and caps are taken into account in these calculations. Sign up bonuses are NOT included in these numbers, so that will be an extra perk for you.
2. $100,000 in annual spending works out to $8,333 in monthly spending which is too high for most families. I have included these numbers to better evaluate cards and give an advantage to cards who don't have spending caps or limits. It also allows cards that have a good tier system to shine at higher spending levels. The cash back shown is calculated by splitting spending sensibly across spending categories like groceries, gas, drugstore, travel, bills, and everyday spending. All spending bonuses, tiers, limits, and caps are taken into account in these calculations. Sign up bonuses are NOT included in these numbers, so that will be an extra perk for you.
3. The sign up bonus value is the maximum possible dollar value you can get from the bonus if you take full advantage of it. So, with a 5% gas and grocery bonus for 6 months with a $250 cap - $250 would be the value.
The Top 3 In Detail
1) Simply Cash Card from American Express
They call it Simply Cash for a reason - this card is dead simple. You get 1.25% flat cash back on ALL your purchases with no caps or limits. That's the highest earning rate on all purchases of any no fee card with no limits.
The other big draw to this card is the very nice 5% bonus you get on gas and grocery purchases for the first 6 months you have the card. You can earn a maximum of $250 with this bonus. Getting this card just for the bonus alone is worth it.
Why You Want It:
- 1.25% cash back on ALL purchases - the highest of any no fee card.
- 5% bonus cash on gas and groceries for the first 6 months - with a high $250 cap.
- No limit to how much cash back you can earn at the regular rate.
- Free access to Front Of The Line that gives you access to advanced event and concert ticket sales exclusive to Amex cardholders.
- 1.99% introductory interest rate on balance transfers for the first 6 months (limited time).
2) MBNA Rewards Mastercard
The MBNA Rewards Mastercard is a straight 1% cash back credit card with a few important differences: There are no caps, tiers, or limits on the amount of cash back you can earn. It has much more free insurance coverage than no fee credit cards usually have. And, it is extremely flexible in how you can redeem your rewards for cash with none of the usual restrictions.
If you want a really simple and flexible rewards program on a card that can potentially save you much more when you take advantage of the included insurance, then this is the right choice for you.
Why You Want It:
- 1 point per dollar spent which equals 1% cash back on spending.
- Redeem your points any time you want online or by phone.
- Redeem your points any way you want:
- cheque, bank deposit, statement credit, travel, merchandise, and charity.
- 90 days purchase protection & 1 year extended warranty.
- 1 Million in travel accident insurance.
- Car rental theft and damage coverage.
- Additional car rental accident and personal effects coverage.
3) PC Financial World Elite Mastercard
As the only no fee World Elite Mastercard in Canada, this card is really popular among shoppers of Superstore and other Loblaw owned grocery stores that issue PC Points.
And why wouldn't it be?
You get 30 points per dollar spent on your grocery purchases in any of those stores which is the same as a 3% return on your spending - better than the 1% you'd normally get with a no fee cash back credit card.
You'll also get 30 points per dollar spent at Esso, Shoppers Drug Mart, PC Travel, and PC Mobile.
Why You Want It:
- 30 points per dollar spent at PC Plus affiliated grocery stores which is like getting a 3% return on your spending.
- 30 points per dollar spent at Esso, Shoppers Drug Mart, PC Travel, and PC Mobile.
- 10 points per dollar spent everywhere else - a 1% return on your spending.
- 20,000 bonus points when you open your account, that's worth $20 in free groceries.
- Redeem your points at any PC Plus affiliated store for a discount on your purchase.
- 1 year extended warranty and 90 days purchase protection are included on every purchase you make.
- 10 days emergency medical insurance and coverage for rental car loss or damage when you travel.
- Concierge help line to make your life easier.
What's Important To You?
Ranking cards by their features is all well and good, but you might have specific needs when it comes to your credit card. I've broken down the top cards by popular features to help you choose the one that is the best fit for you.
Maximizing Your Cash
The best way to get the most money with no fee cash back cards is to split your spending across multiple cards. I recommend using the Tangerine Money-Back Credit Card for purchases in the 3 categories you spend the most like groceries, recurring bills, and gas to earn 2% on those purchases. Then, put the rest of your spending on the Simply Cash Card from American Express to earn 1.25% instead of the usual 1%.
With this strategy, you'll earn 2% cash back on your top 3 spending categories while getting an increased 1.25% cash on the rest of your purchases. When Amex isn't accepted, you can simply fall back to your Mastercard as a backup.
Very Specific Spending Habits
Again, the Tangerine Money-Back Credit should be your go-to card if you spend a lot at certain stores or certain things. Even if spending habits change, you can change your increased bonus cash categories every three months to account for that.
Low Income Requirements
Many no annual fee cards have low income requirements to qualify. If you avoid World editions and the HSBC cards that require you to have a minimum of $100,000 in assets at HSBC, then you're all set. The best choices are the SimplyCash from American Express (no minimum) and the MBNA Rewards Mastercard ($35,000 minimum).
Get Paid When And How You Want
If you want flexibility, then any card from MBNA can't be beat!
They allow you to redeem your cash any way you want. You have the following options: statement credit, direct deposit, cheque, charity donation, travel redemption, gift cards, merchandise, and more. You can also redeem as often as you want for as much as you want. There is a $50 minimum, but you'll get there in no time.
Many of the other cards only allow you to redeem as a statement credit once per year in a specific month. Nothing like holding your cash hostage and then having it disappear amongst your regular purchases, eh?
Great Insurance And Perks
The HSBC Premier Mastercard has the best insurance package by far. That pesky requirement of having $100,000 of assets under management by HSBC to qualify keeps being a major problem though.
The top alternative is the MBNA Rewards Mastercard which has a total of 7 types of free insurance included.
Why not get no-fee banking to go with your no-fee credit card?
To Fee Or Not To Fee?
What do you think about paying fees for a credit card? Are you willing to spend money to make money in this area? Why or why not?
Finally, please remember that letting credit cards entice you into debt with rewards is NEVER worth it. Credit card rewards are only worth it if you plan to pay off your card in full every month to avoid debt and interest charges.