Canadians have a myriad of options when it comes to choosing the right credit card for their spending needs. Rewards credit cards are increasingly popular as consumers look for ways to earn travel points or cash back on their everyday purchases. Readers often ask me which credit card is best. The answer is that it depends on a number of factors, including how much you spend and where, as well as what you want to get out of the card in terms of a reward.

No doubt that travel rewards credit cards are among the most popular, and for good reason. The allure of a free flight or hotel room holds a lot of appeal to many Canadians looking to escape a cold winter. But most travel rewards programs tend to come with restrictions, fees, and strange policies that make it difficult to redeem your points.

Travel rewards certainly have more perceived value than straight cash back rewards. Flights and hotels are expensive and so anything that can help subsidize your vacation is a welcome relief. Unfortunately, it can be difficult to determine the exact value of your travel rewards points. Since the price of a flight or hotel can vary drastically from day-to-day and season-to-season, it’s hard to pin-point the actual cash value of your rewards.

These reasons are why I take more of a pragmatic approach to choosing a rewards credit card. For me, cash back is king. Here’s why cash back beats travel rewards:

Cash back credit cards appeal to consumers who recognize the rational value of being rewarded for the purchases they make every day. Cash back is as straightforward as it gets. Most cash back credit cards offer you the choice of a statement credit or a cheque in the mail, giving you full control to spend (or save) your rewards.

With a no annual fee card like the SimplyCash Card from American Express, you can earn $150 in cash back rewards annually when you spend $1,000 per month. That’s a return of 1.25 percent on your spending. Plus, you’ll get 5 percent cash back on all eligible purchases at gas stations, grocery stores and restaurants in Canada (up to $250 cash back) for the first 6 months. That adds up to big savings for purchases you make every day.

A recent American Express survey found that, if given cash back on everyday purchases, 41 percent of Canadians would save it for a rainy day, while 17 percent say they would treat themselves to something they’ve been saving for.

What would you do with your cash back rewards? Let me know in the comments below, or send us a tweet using the hashtag #SimplyCash, and there may be something in it for you.

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