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:
- Scotia Momentum Visa Infinite
- $120 annual fee
- First year free
- 4% cash back on groceries and recurring bills
- $896 in annual rewards
- American Express Cobalt Card
- $120 annual fee
- 30,000 point welcome bonus
- 5x points on eats and drinks
- $770 in annual rewards
- Capital One Aspire Travel World Mastercard
- $120 annual fee
- 1.5 reward miles per $1 spent
- $623 in annual rewards
- RBC WestJet World Elite Mastercard
- $119 annual fee
- $250 WJD
- Annual companion voucher
- $623 in annual rewards
- BMO World Elite Mastercard
- $150 annual fee
- 35,000 point welcome bonus
- First year free
- $611 in annual rewards
- Tangerine World Mastercard
- $0 annual fee
- Two 2% money back categories
- $587 in annual rewards
- 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.
Day 44 and counting trying to open a corporate investment account w/ @Questrade. I have to think that dumber people than me with more complicated businesses have successfully opened an account in less time.
— Boomer and Echo (@BoomerandEcho) July 2, 2020
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!
