Weekend Reading: New Rewards Credit Card Edition

Long time readers know that I’m passionate about earning and redeeming credit card rewards. It makes good sense to earn cash back or travel rewards on your everyday spending. Some of us may have even become slightly obsessive about maximizing the rewards on their spending – applying for multiple cards every year to take advantage of welcome bonuses and other deals.

One topic I don’t write about often is which rewards credit card is best. The answer depends so much on where you shop, what type of rewards you want to earn, and how you want to redeem your points. Your mileage may vary.

Plus, for several years, I tried to collect as many Aeroplan miles and Marriott Bonvoy points as I could to redeem for travel, which meant the best credit cards for my situation were unlikely to be suitable for the average consumer.

More importantly, the one credit card I did use for my everyday spending (when I wasn’t churning other cards) was no longer available for new applications – so telling people about it was a waste of time.

You see, I’ve used the Capital One Aspire Travel World Mastercard as my everyday card since 2012. It offered 2 reward miles per $1 spent on anything and then allowed cardholders to redeem those points by “erasing” a travel purchase off of their credit card statement. It came with a $120 annual fee, but that was mostly offset by a 10,000 miles anniversary bonus each year.

The Aspire Travel card rebranded as a “World Elite” Mastercard in 2015, but existing cardholders were grandfathered under their old agreement. Then, in 2017, Capital One closed the card to new applications, citing changes to interchange fees that, “made this product unsustainable.”

Surprisingly, existing cardholders continued to earn 2 miles per $1 spent anywhere and continued to receive the 10,000 bonus miles every year on their card anniversary. That has been better than any rewards credit card on the market for the past three years and so I’ve kept using it for everyday spending. 

The TL;DR version of this story is that I received a letter this week from Capital One stating that as of August 5, 2020 the card will only pay 1.5 miles on every dollar spent, and the 10,000 anniversary reward miles has been discontinued.

It’s time to compare rewards credit cards and see whether I need to make a change.

Rewards Credit Card Comparison

Any search for a new rewards credit card must start with an analysis of your own spending. Many cards offer point multipliers for categories such as groceries, gas, dining, or travel. 

Then there’s what I call the Costco effect. A Visa or American Express card may come with generous point multipliers for groceries, but that won’t help you if the majority of your grocery shopping is done at Costco, which only accepts Mastercard.

I examined our household budget and looked at our average monthly credit card spending (ignoring one-time expenses like house or auto insurance). I found we spent a total of $3,460 per month ($41,520 per year) in the following categories:

  • Groceries: $1,600 – Save On Foods ($1,050), Costco ($375), No Frills ($175)
  • Uncategorized / Other: $1,100
  • Recurring bills: $450
  • Dining out: $250
  • Gas: $60

Armed with those numbers, I went to my go-to credit card comparison site – Credit Card Genius – to find the best everyday rewards credit card.

I like this site because I can input all of my spending by category to determine the ideal card for my shopping habits. Here’s what I found:

  1. Scotia Momentum Visa Infinite
    • $120 annual fee
    • First year free
    • 4% cash back on groceries and recurring bills
    • $896 in annual rewards
  2. American Express Cobalt Card
    • $120 annual fee
    • 30,000 point welcome bonus
    • 5x points on eats and drinks
    • $770 in annual rewards
  3. Capital One Aspire Travel World Mastercard
    • $120 annual fee
    • 1.5 reward miles per $1 spent
    • $623 in annual rewards
  4. RBC WestJet World Elite Mastercard
    • $119 annual fee
    • $250 WJD
    • Annual companion voucher
    • $623 in annual rewards
  5. BMO World Elite Mastercard
    • $150 annual fee
    • 35,000 point welcome bonus
    • First year free
    • $611 in annual rewards
  6. Tangerine World Mastercard
    • $0 annual fee
    • Two 2% money back categories
    • $587 in annual rewards
  7. PC Financial World Elite Mastercard
    • $0 annual fee
    • 30 points per $1 spent at PC stores
    • $457 in annual rewards

I adjusted down my grocery spending for the Scotia Momentum Visa Infinite Card and American Express Cobalt Card since I can’t use them at Costco or No Frills. I also reduced my spending in dining, recurring bills, and general for the Cobalt card because Amex isn’t as widely accepted.

One more factor when choosing an everyday rewards credit card is to understand the net rewards (after fees) beyond the first year. How much will you receive once the welcome bonus expires and/or the annual fee kicks-in?

With all this in mind I concluded that the Scotia Momentum Visa Infinite Card will be my go-to rewards card for everyday spending after August 5. I also acknowledge that I’ll still need a Mastercard when I shop at Costco and No Frills. I already hold the RBC WestJet World Elite Mastercard and so I’ll use that one to earn 1.5% back on my spending at those locations.

I’m not interested in paying more in annual fees than necessary so I’ll cancel the Capital One card in the coming months. This change also spells the end for the Amex Cobalt Card – which I used to use for Save On Foods groceries and liquor store purchases but can’t justify carrying anymore.

This Week’s Recap:

Whew, thanks for staying with me through all of that.

This week I shared my biannual net worth update and checked in on my financial goals for 2020. I’m still moving the needle forward but it looks like I’ll end up short of my goal to reach $1M in net worth by the end of this year.

On day 45 of my Questrade saga I finally managed to open and activate my new corporate investment account and place a trade. Painful.

Weekend Reading:

Matthew Klint looks at why Air Canada continues to insist it has a legal right to deny refunds on cancelled flights.

The Credit Card Genius team posted an analysis of credit card trends and how consumer behaviour has changed during the pandemic.

Travel expert Barry Choi answers a popular question – should I travel right now?

Barry also guest posted on the Eat Sleep Breath FI blog and gave some travel hacking tips for families.

Morningstar’s Christine Benz, a former FIRE skeptic, shares why she now believes these people are actually onto something.

Des Odjick smartly shares her personal money system and how it flows from paycheque to funding necessities and short-and-long-term goals.

My Own Advisor’s Mark Seed takes a detailed look at how to determine your financial independence number.

Here’s a neat calculator from Rob Carrick – a pandemic power-savings tool designed to strengthen your finances in uncertain times.

The latest edition of SPENT looks at how quickly AirBnB has seen a rebound in bookings and revenue compared to hotels:

I’m sure this hits close to home for many parents: In the Covid-19 economy, you can have a kid or a job. You can’t have both.

Here’s how parents can help their adult children financially – without hurting themselves:

“Parents naturally want to help their kids, but they have to help themselves first,” says Dan Bortolotti, portfolio manager at PWL Capital Inc. in Toronto, who has talked parents out of helping their kids in the past.

“It’s not a value judgment,” Mr. Bortolotti says. “You might run out of money and you can’t sacrifice your own future for your kids’ future. Also, they have more time [to earn income]. You have to be careful that you don’t jeopardize your own future.”

Happy Go Money author Melissa Leong says boosting financial literacy in schools isn’t enough.

Confused about currencies? PWL Capital’s Justin Bender tries to make sense of your ETFs Loonie currency exposure in his latest CPM podcast.

Has Warren Buffett lost his touch? Yes, Nick Maggiulli argues, as the Oracle of Omaha (through Berkshire) has surprisingly underperformed the S&P 500 by 17% this year.

Speaking of underperformance, 2019 was another challenging year for active funds in Canada as 92% of them underperformed the index.

Finally, get ready for a long and fascinating read on how money forever changed us.

Have a great weekend, everyone!

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36 Comments

  1. Ron Sigal on July 4, 2020 at 3:32 pm

    I would also consider the MBNA Rewards World Elite (2% return on all purchases, although insurance package is weak), National Bank World Elite (Very strong insurance package, airline benefits that more than cover the annual fee), and HSBC World Elite ($100 airline credit covering most of the annual fee, no foreign transaction fees, 1.5% return on most purchases, 3% on travel, strong insurance package).

    • Robb Engen on July 4, 2020 at 5:14 pm

      Ahh, yes – forgot about the MBNA Rewards World Elite Card. I ran the numbers quickly and saw an annual benefit of $830 if redeemed for travel. Could be a better choice as my Mastercard over the RBC WestJet WE MC.

  2. Frito on July 4, 2020 at 4:52 pm

    I’m a fan of CASH back and ZERO fees. Points are pointless IMO. I’ve got the Tangerine MasterCard and have calculated the top categories for the 2% rebate. Best part of the offer is that if you have a Tangerine savings account, you can get a third 2% category if you have the cash deposited straight to your account. AND they pay out monthly – not once a year – which is great!

    • Robb Engen on July 4, 2020 at 5:08 pm

      Hi Frito, I think the annual fee can be a bit of a red herring. It’s about net cash back, not lowest fee. In my case, the Scotia card will pay back nearly $200 more each year after fees.

      I will concede the once-a-year cash rewards payment from Scotia is not ideal. I do like the instant rewards from my PC MasterCard.

      Travel rewards are much more lucrative than cash back and I have the receipts to prove it. But I’m not travelling anywhere for a while so cash back is a better option.

      • Frito on July 4, 2020 at 5:26 pm

        I don’t travel much (never fly anywhere) so not a draw for me. I do have a MBNA Best Western MasterCard (also no fee) that I use solely for paying for hotel stays. 5 points per dollar spent when added to the member points benefit can very quickly add up to free rooms

        • Kevin K on July 5, 2020 at 7:45 am

          Great update on the Capital One card as I have it as well. Your analysis is really current. I’ll keep it for now as I use it for business only. I like to keep my business charges separate from personal for book keeping ease. I’ll have to use up my points before I cancel. It was a good run for 8 years.

      • Bob Wen on July 13, 2020 at 6:53 am

        Robb, in your review of the various credit cards, does the “annual rewards“ amount take into account the annual fee i.e. is the figure shown the rewards after paying the fee? Thanks

  3. Maria @ Handful of Thoughts on July 4, 2020 at 5:24 pm

    We have recently looked at what’s in our wallet and compared credit card options as well.

    I decided to get the Triangle World Elite MasterCard. It as no annual fee, includes roadside assistance and you can use it to pay bills that you usually can’t pay with a credit card. The “cash back” is Canadian Tire money but we are okay with that as it doesn’t expire and there is always something we need for the home.

    I used this card to pay all the property insurance for our rental properties and got hundreds of dollars back in Canadian Tire money. Definitely worth it.

    • Robb Engen on July 5, 2020 at 10:51 am

      Hi Maria, that’s an interesting choice and again highlights that your mileage may vary when it comes to finding a card and a rewards program that works for you. Thanks for sharing!

  4. Mary on July 4, 2020 at 5:29 pm

    In your calculations, are you including Costco purchases as groceries or Other? My understanding is that Mastercard classifies any Costco purchases (other than gas bar) as Other, usually only earning .5% cashback.

    • Robb Engen on July 5, 2020 at 10:53 am

      Hi Mary, the calculations were according to how the specific credit card categorizes these purchases. For my Cap1 MC, every purchase received 2% back. For a Mastercard that offered point multipliers for ‘groceries’, Costco purchases would likely get categorized as “other” and receive whatever multiplier is associated with that category.

  5. Alan5948 on July 4, 2020 at 7:04 pm

    Robb, like you I have been using the Capital One Aspire World Travel Mastercard as my go-to credit card so I was very disappointed to see that the benefits are being downgraded. Your paybacks in annual rewards comparison is very useful. I have also been considering cancelling my RBC WestJet World Elite Mastercard as I only use it for the companion voucher, and of course travel is problematic at present.

    • Kevin K on July 5, 2020 at 8:03 am

      Like Alan5948, I’m struggling with the RBC Westjet card as well. I got it last year as they waived the annual fee. I did use it including the companion ticket so it had good value for me. The Credit card Genius has a good indepth analysis on the card and it reveals that unless you can use all the perks, there are better cards out there.

      Robb, thanks for mentioning quality sites to check out, like ghe Credit Card Genius.

      • Robb Engen on July 5, 2020 at 10:59 am

        Hi Kevin, as I mentioned to Alan, the RBC WestJet card is highly ‘churnable’ meaning you can cancel it now and reapply in a few months if you decide you’ll get value from the companion voucher again. The welcome bonus often fluctuates between $250 and $350 so just watch for the higher bonus and reapply.

        As for Credit Card Genius, my pleasure – it’s a great site and I especially like the user reviews.

        • Kevin K on July 5, 2020 at 11:14 am

          Thanks for that tip Robb, I wasn’t aware of that. I also received a note that WJ card is offering a special of an extra 1.5% for groceries and restaurants and you can use it for a statement credit, in effect cash back and 1.5% is good for cash back. I have to check if the extra is on-top of their 1.5% regular return. That would make it 3% which would be excellent. The special is only good until end of August.

    • Robb Engen on July 5, 2020 at 10:57 am

      Hi Alan, yes it was disappointing but not surprising given how long this card has been discontinued to new applicants.

      I find the RBC WestJet card extremely useful because of the companion voucher. It is also a highly ‘churnable’ card. I’m not sure if they’ll extend the expiry of the companion voucher due to “these times”. That would be nice, but airlines aren’t really known for being nice.

  6. DSB on July 5, 2020 at 8:49 am

    RIP Cap1 WE Travel MC. It was such a great card and it’s sad to see it devalued, but it was inevitable. I still haven’t made a decision yet on a MC replacement. I’ll either go with HSBC WE MC (AF $150, mostly offset by $100 travel credit) or Tangerine MC (no fee Cashback). I still have time since AF isn’t coming up for a while on my Cap1.

    • Robb Engen on July 5, 2020 at 11:03 am

      Hi DSB, yes I agree it’s sad to see it get devalued but we knew this was coming. The HSBC card might be a good option, I’m just not familiar with the points redemption.

  7. Sandy on July 5, 2020 at 9:38 am

    There is a way to use your VISA at Costco and that is to purchase cash cards online. You have to wait for the cards to be mailed to you, however, if you are intent on earning rewards with a VISA, then use this avenue. You can use a VISA to make any online purchase at Costco. If memory serves me, you also get credit towards your annual Costco rewards which can be used at membership renewal time.

    With respect to credit card rewards, we use PC Financial Mastercard because of the enhanced rewards for purchases both in store, as well as at the gas pump and the rewards can be used pretty much as soon as they are processed – a day or so depending on place of purchase. For grocery store purchases with this credit card, expecting that you are an Optimum member (free membership), you get credit for any purchases, plus credits for your customized offers (based on your purchase history and mailed directly to you every week), and credit for using the Mastercard for the purchase. We have amassed and redeemed hundreds of dollars worth of groceries since joining this program several years ago.

    Surprising that there is rarely any mention of the Manulife Visa which we have also used for years. Being Manulife One customers, the annual fee is waived if annual purchases equal a minimum of $20,000 – not hard to do even as a mature couple. Cashback is applied to your credit card account every 3 months. There is nothing like CASH as a reward – you can use it for things you have already purchased or for things that you are likely to purchase, instead of being forced into some rewards program (we are former Air Miles members).

    • Robb Engen on July 5, 2020 at 11:08 am

      Hi Sandy, yes I’m familiar with using VISA to purchase Costco cash cards online. We’ve done that before when we’ve needed to meet a minimum spend threshold on a VISA card. I wouldn’t do it on a regular basis though as it’s a bit of a pain and time consuming to get the card.

      I do have the PC World Elite MC and use it at No Frills and the nearby gas station. I agree, great value for those in store purchases.

      I haven’t heard of the Manulife VISA but I’ll check it out. I agree that cash back is useful but it also depends on what you’re trying to do with the rewards. If you find a travel program that offers great value and you can use the points to redeem for flights or hotels then travel rewards can make sense and be much more lucrative than cash back.

  8. Farly on July 5, 2020 at 2:47 pm

    My deal breaker with Scotia Momentum Visa is you pay the fee in November, the cash back is reward in April. So if you cancel you loss 6 months worth of points.

    Also Walmart Supercentre does not qualify for 4% cash back.

    • Robb Engen on July 5, 2020 at 11:14 pm

      Hi Farly, the once a year cash back is definitely not ideal. However for now, with travel out of the picture, this is the card with the highest net cash back for me so I’ll take it.

      • Farly on July 6, 2020 at 2:30 pm

        The reason I don’t like the Scotia Momentum card is not the once a year cash back, but because the date the cash back and the payment date are 6 months apart. If you want your card you are paying a de facto penalty.

        The cash back date and the payment date should be the same, so at the payment date you can make the decision to continue or cancel the card without penalty.

        • Robb Engen on July 6, 2020 at 2:38 pm

          Hi Farly, I understand. The annual fee is due on or around your card anniversary date (when you signed up for the card) whereas the cash back rebate is always typically paid in November. I agree they should line-up. I will re-evaluate again right after the cash back is received in November and cancel right away if there’s a better offer.

  9. GISELE FRANCK on July 5, 2020 at 3:06 pm

    Hi Robb,
    to your comment to Sandy (above) re: travel rewards vs cash back, can you explain why you think travel rewards are better than cash back please?

    • Robb Engen on July 5, 2020 at 11:22 pm

      Hi Gisele, broadly speaking most travel rewards programs are more lucrative than cash back cards. Cash back cards tend to tier their category multipliers in favour of groceries and gas, but if you don’t spend a lot in those categories then most of your purchases may end up only earning 1% or 0.5%.

      It certainly depends on the travel rewards program. For instance, anyone who has collected Air Miles knows how frustrating it can be to try and redeem your miles for a flight. You get dinged with fees and taxes, making your free rewards look like anything but.

      My Capital One Travel card was straightforward. Book travel anywhere with your card and then redeem your points against the charge on your statement for a 2% redemption rate.

      Aeroplan can be even more generous if you know the right tricks, like avoiding flights on Air Canada and instead flying on one of the other Star Alliance carriers that doesn’t impose a fuel surcharge. We travelled on United Airlines last summer and paid about $2,000+ less in fees and taxes than we would have through Air Canada.

      Aeroplan miles can be valued as high as 2.5 cents per mile, and more likely in the 1.5 cents per mile range. That adds up to big savings when you travel long distance by plane.

      We found similar value with Marriott Bonvoy, but the challenge is earning hotel points using an Amex card, which isn’t as widely accepted.

      Cash back is fine, and it’s my best option right now with no travel in the foreseeable future. I find to maximize your cash back you need to hold 2-3 cards and use then strategically at the stores that pay back the most cash on your spending.

  10. John on July 6, 2020 at 10:58 am

    Hi Robb, I was with Scotia Momentum Visa Infinite before I switched to Rogers World Elite Mastercard (which coincidentally reduced their cash back program in early June). My complaint about Scotia Visa is that they were unable to set up a PAP from my non-Scotia bank account. It became annoying for me to remember to set up a bill payment each month and was one of the reasons why I left.

  11. Shel on July 7, 2020 at 10:22 am

    Another card worth consideration which didn’t make the list is TD’s Cash Back VISA Infinite card. Currently 10% back on first 2k spend, FYF, 3% back on grocs, gas & recurring bill pmts. Plus 2 big benefits: 1) you can redeem your cash back against your statement balance once you have a minimum of $25 earned (at any time, online–no waiting for an annual anniversary); 2) emergency road service also included for cardholder + spouse (incl dead battery, tire change, breakdown/tow, traffic accident services, etc).

  12. Hiren Patel on July 7, 2020 at 4:27 pm

    Hi Robb,
    Here in ONT, No Frills accepts the Scotia Momentum Visa for a while now. I used to use my Costco MC there but was surprised when I learned that all of a sudden they accepted Visa which is a bonus for me : )
    I’ve had the SMV for a while and no regrets. I do like the ‘forced savings’ component in the once a year rebate and how it just goes right back on the card STS.
    Happy charging with the SMV!
    (PS LMK if you decide to get a supplementary card and if they waive the fee for ya or not.)
    Cheers!
    HP

    • Robb Engen on July 9, 2020 at 5:30 pm

      Hi HP, yes many stores including our local No Frills are temporarily accepting Visa to make it easier for shoppers and reduce the usage of cash. I don’t expect it to last much longer though.

  13. GYM on July 7, 2020 at 11:05 pm

    Sorry to hear that your points and card are getting devalued. I got a letter for my Rogers World Elite that things are getting devalued too to 1.5% and there’s a $15,000 minimum spend. I ran the numbers and BMO World Elite was another option. I decided to keep the Rogers card until next year anyway when they start to evaluate the $15,000 minimum spend.

    • Robb Engen on July 9, 2020 at 5:32 pm

      Hi GYM, yeah that was a big downgrade for the Rogers WE MC for sure. So many different ways to go now for an everyday card. I feel like I’ll switch focus again once travel opens up and I can take advantage of those perks.

  14. Alex on July 9, 2020 at 3:59 pm

    Just FYI, check with your local No Frills, the one local to me started taking Visa again last year.

  15. Nicolle on July 9, 2020 at 9:35 pm

    Hi Robb
    I too have the Capital One Aspire Travel World Mastercard and was disappointed with the devaluation. I have had this card for quite a while. I am wondering if i cancel the card, does it’s credit history go with it and would this factor in to my approval for a new card? Does your getting new cards and cancelling old affect your credit rating?

  16. Francois Cassista on July 13, 2020 at 6:23 am

    Hi Robb,
    I follow the same patterns as you do except for my day to day operations. I use the Desjardins Odyssey World Elite Mastercard instead.

    However, the rewards is in points (bonidollars) but since I pay my assurance with it, (1 point = 1$), it’s fine by me. The card give me 1.5% for the first 20000$ then 2% after that. Also, If you are a member and you always pay your monthly bills, Desjardins will add 20% to your annual points.

    Also, the best thing about this card is their travel insurance.
    Coverage up to $5,000,000 per insured person for eligible medical care and services required, including transportation, repatriation, living expenses and dental care. Age 59 or under: 60 days

    https://www.desjardins.com/ca/personal/loans-credit/credit-cards/odyssey-world-elite-mastercard/insurance/index.jsp#voyage-3-jours

  17. Bob Wen on July 13, 2020 at 7:03 am

    Robb, for clarity, in your summary of the various credit cards, do the “annual rewards“ amounts take into account the annual fee i.e. is the figure shown the rewards after paying the fee? Thanks

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