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The Benefit Of Cash Back Rewards

The benefit of cash back rewards

I’ve been a fan of cash back rewards for many years, and here’s why:

With cash back, you’ll know exactly how much your points are worth, plus redeeming your rewards is easy. 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.

Cash back rewards have gained significant ground by going after consumers who are fed up with travel rewards programs based on their restrictions, booking fees, expiration policies and limited flexibility.

Related: Why Aeroplan collectors are fed up with their rewards program

The allure of a “free vacation” keeps many consumers loyal to their travel rewards program, but for a growing number of Canadians, cash back is king.

An Amex study found that 79% of Canadians are interested in the idea of cash back rewards and recent MarketSense data found the cash back category has the highest growth rate for reward cards.

Cash back credit cards appeal to consumers who recognize the rational value of being rewarded with cash back on the purchases they make every day.

Consumers are looking for more ways than ever before to make their dollars work harder for them. A recent survey by American Express showed that while the vast majority of Canadians (92%) believe it’s important to shop around in order to find the best deals, busy schedules (29%) and lack of discipline (37%) are two of the top factors that make it difficult to shop around for good deals.

Related: Here are 35 ways to save money

But when you use a cash back rewards card it’s like getting a discount with every purchase. Here’s an example:

The average price of gas in Canada today is about $1.30 per litre. Let’s say it takes 60 litres to fill your tank – or $78. With a no-fee card like the SimplyCash Card from American Express, you’ll earn 5% back on eligible purchases at gas stations, grocery stores, and restaurants for the first six months (maximum $250 cash back). You also get 1.25% cash back on everything else you buy with the card – that’s a pretty great rate for a no-fee card.

Swipe your SimplyCash Card at the pump during that six-month period and you’ll get $3.90 in cash back – which saves 6.5 cents per litre on your purchase. That sure beats driving around town to try and find the cheapest gas station.

Related: 20 ways to save money on gas

How do Canadians reduce their everyday shopping expenses:

  • 65% collect and browse through flyers
  • 64% delay purchasing an item until it goes on sale
  • 50% conduct online research to find the best price
  • 48% clip coupons

Sound like fun? I didn’t think so.

With a cash back card, every dollar spent earns money back, regardless of where the card is used.

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8 Comments

  1. Dan @ Our Big Fat Wallet on October 19, 2014 at 9:08 pm

    I am a big fan of cash back as a reward and I like the simplicity it brings – no blackout dates, n o changing rewards programs, no restrictions and no taxes. Scotiabank currently has the best cash back card (Momentum Visa Infinite) and I use it for all my gas and grocery purchases (4% on groceries is really starting to add up)

  2. debs @ debtdebs on October 19, 2014 at 9:59 pm

    I’m a cash back rewards fan all the way. I might consider travel rewards cards after I retire and start traveling a bit more again.

  3. Young Millennial on October 20, 2014 at 5:53 am

    I completely agree with you on the cash back credit cards, as long as you pay them in full each month…but then again that is a MUST for all credit cards.

    I tried rewards cards for about 6 months and once I did the math on what rewards were available to me, how much they actually cost, what I really wanted and what I could get with a cash back card, such as the older Capital One, I made the switch and I have been enjoying cold, hard cash for years.

  4. Barry @ Moneywehave on October 20, 2014 at 8:59 am

    Clearly I love travel rewards but agree that Aeroplan has become a complete pain as of late and I may stop actively collecting their points once I claim my existing points.

    I recently switched my Mastercard to a better cash back rewards cards with help from you no less =D

    Oh and I personally find browsing through flyers fun. Just download the app Reebee, you’ll get all the flyers right onto your tablet or mobile phone.

  5. Kathy Waite fee only @ Eureka Investor Guidance on October 20, 2014 at 9:10 am

    I use my PC master card, pay end of month. One for home and one for work. Then use points to bulk buy pet food or at expensive times like Christmas.

    I hate extended warranties and loyalty programmes, to many rules , to many get out clauses.

    Happy Monday everyone !

  6. Nancy on October 20, 2014 at 11:55 am

    I like the CIBC Dividend Visa for cash back. It pays 1% on all purchases and has no fee associated with it. Sounds like from this article that there might be cards that pay a higher percentage though. It would be nice to see a comparison of all cash back no fee cards to see which card pays the best percentage. Having said that we have been looking at the Westjet Elite Mastercard from RBC. It has a $99 annual fee but pays 1.5% in Westjet points (1 point = $1 towards a Westjet ticket) on all purchases and 2% on Westjet travel purchases as well as gives an annual $99 companion trip ticket with no black out restrictions. If any of your readers knows anything about this card we would appreciate hearing their comments. Of course you have to travel with Westjet to make it worthwhile.

  7. Tawcan on October 20, 2014 at 12:46 pm

    I’m a big fan of cash rewards cards too. Technically the Capital One Aspire rewards card is not a crash rewards card but I treat it that way. I like the simplicity of just calculating 2% reward on all purchases.

  8. Kathy Waite fee only @ Eureka Investor Guidance on October 20, 2014 at 12:58 pm

    Had to smile at Tawcans typo “crash” rewards as so many people do crash and burn using cards and not paying off each month!

    🙂

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