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It's better to have some cash in your jeans than to wait for the trip of your dreams.

Call it the show-me-the-money approach to credit card rewards. A growing number of people are using cards that generate cash rewards paid every year instead of trying to accumulate travel points redeemable for flights and vacations.

"Travel is still at the top of the list, but what we've seen over the past couple of years is that cash back is really picking up momentum," said Mary-Anne Heustis, a principal at the research firm MarketSense Inc. "It's partly because people are getting a little tired of the complexity of the travel category. And, there are some very rich offers on the market right now [in the cash-back category]"

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An example mentioned by Ms. Heustis is the MBNA SmartCash Platinum Plus MasterCard, which gives you 5 per cent cash back on gas and grocery purchases for the first six months and 3 per cent cash back on these purchases thereafter. On all other retail purchases, you get 1 per cent cash back with this no-fee card.

Another top contender in the cash-back category is the newly revamped Capital One Aspire Cash World MasterCard, which gives you 1 per cent cash back on your purchases, plus an additional annual cash bonus equal to 50 per cent of your reward dollars and a $100 bonus reward on your first purchase. This is a no-fee card as well.

Cash-back cards aren't just an answer to travel rewards programs that have been making themselves less attractive with rule changes and lame flight options. In economically uncertain times, it's appealing to receive hard cash either in the form of a cheque from your card company or as a credit to your monthly card statement.

In fact, Ms. Heustis has found that people are increasingly redeeming their travel rewards for gift certificates and merchandise. With some travel cards, you have the option of either kind of reward. Stymied in trying to book a flight – any flight – with Aeroplan, my wife redeemed some points recently for a Future Shop gift card.

Credit card companies are quite fond of cash rewards as well, Ms. Heustis said. Unused reward points earned by customers are a liability on the balance sheet, and that means it's in a card issuer's best interest to have rewards used quickly. In fact, many cash-back cards automatically deliver your rewards once per year.

There are close to 30 cash reward credit cards for individuals and businesses in the Canadian market. The reward scheme is always a variation on the theme of paying you back a percentage of your purchases on a card in cash.

Some cards using a tiered system to determine how much reward cash you get. With TD Rebate Rewards Visa, you get 0.5 per cent cash on the first $3,000 in purchases and 1 per cent on annual purchases of more than $3,000 to a maximum of $25,000. More complex is the CIBC Dividend Unlimited World MasterCard, which has five tiers for determining how much cash you get. The card offers "up to" 2 per cent cash-back; check the tiers and you'll find that you only get that much for purchases between $35,000 and $50,000 a year.

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The MBNA SmartCash Platinum card is an example of how card issuers are increasingly offering premium levels of cash for purchases at gas stations, drugstores and supermarkets. Note that card issuers are in fact helping themselves here. They're training customers to use their credit cards to pay for even small day-to-day purchases, which in turn means more revenue in the form of card fees paid by retailers.

Research by Ms. Heustis's firm has found that a significant number of people with cash-back cards relegate them to "the back of the wallet," which means they're using them as backups. Cash-back cards are well-suited to be your main card, or be given backup status because they don't charge an annual fee in most cases.

The cards that do charge an annual fee typically offer somewhat more generous rewards, but you'll need to spend fairly heavily on the card to make it a better choice than a no-fee option. As a general rule, no-fee is the way to go with cash-back.

One more consideration in choosing a cash-back card is the way in which your rewards are sent. Some apply them once a year against the balance on your card statement. MBNA sends you a cheque automatically every time your cash-back total hits at least $50 at the end of a monthly billing cycle. Capital One lets you call in at any time to redeem as much cash as you want.


Best in class credit cards

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The research firm MarketSense has declared these cards to be the best in their category based on results of a survey of more than 5,000 people last fall. The cards were chosen on the basis of how often people said they would recommend them, how much they used them, the value placed on the card's features and the emotional attachment to the card.




BMO Gold Air Miles

TD, CIBC, RBC Infinite Visa

Retailer Rewards

PC Financial MasterCard


RBC Esso Visa

Canadian Tire Gas Advantage

Cash back

MBNA SmartCash

TD Rebate Rewards


Scotia L'earn Visa

Source: MarketSense Inc.

How To Find A Reward Card

All types

RedFlagDeals (

Travel rewards

Rewards Canada (

For more personal finance coverage, follow me on Twitter (rcarrick) and Facebook (Rob Carrick).

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