Aeroplan is the most popular loyalty program in Canada for a variety of reasons, including the fact that it’s tied to Air Canada – the largest airline in the country. Many Elite and Super Elite Aeroplan collectors vouch for the program, swearing that it offers the best value on flights, particularly on long-haul business class trips.
But for the rest of us, Aeroplan is a bit of a mixed bag. Easy to earn and collect points, yet difficult to redeem them due to seat restrictions and ever-changing mileage requirements for flight rewards. Not only that, a bigger gripe is that fees and taxes are charged on top of any flight redemption, which doesn’t make it seem like a reward at all.
Some Aeroplan members suggest that those fees and taxes are often higher than booking directly through Air Canada or another airline. So are Aeroplan rewards more expensive than buying a flight directly?
Related: One Aeroplan member’s somewhat satisfying update
Consider this email that I received from a reader named Anthony:
“Currently WestJet is offering flights for $180 from Pearson International (YYZ) to LaGuardia (LGA), return.
Aeroplan reward tickets on the same itinerary are coming in at $185.41, plus miles of course.
I’ve attached a sample itinerary of both (direct flights, leaving almost at identical times).
In other words the fees and taxes on the Aeroplan flights, not even including the points, are more expensive than a cash fare. This would seem to point out in a very clear manner the ridiculousness of the Aeroplan fees and surcharges.
Final thoughts
When I last wrote about Aeroplan members and their frustration with the loyalty program, many readers weighed in with helpful suggestions to help maximize your flight rewards. Tips such as crossing the border and using another Star Alliance member to avoid Air Canada’s fuel surcharges, or adding another leg to your long-haul trip to avoid the airports that charge higher taxes.
But at some point, Aeroplan collectors need to consider the time, money, and effort spent trying to redeem their rewards and realize that a better option is a more flexible travel rewards program that allows you to book any flight and on any airline without restriction.
Related: So you’re ready to dump Aeroplan: Now what?
Because no matter how valuable you think your rewards are, you’re not actually saving money if it costs you more to redeem your points than it would to book on another airline and pay cash.
Cash back credit cards are great for consumers who prefer to earn rewards without the hassle of trying to redeem them for travel or merchandise. With a cash back card you’ll earn points for every dollar you spend, and can easily redeem those points for a cheque or statement credit.
All the banks and major card issuers offer cash back credit cards, each with varying levels of rewards and benefits. Here we’ll attempt to rank them by using a common set of parameters.
No-fee cash back credit cards
Paying an annual fee to use a credit card is anathema to anyone with a frugal mind. For others it’s a question of income and spending – you’ll need to put at least $1,000 on your card each month before a premium rewards card makes sense. Premium cards are also targeted at high income earners – with most requiring annual income of $60,000 or more to qualify.
Our parameters are:
- No annual fee (obviously)
- Annual spend of $12,000
- $400 per month ($4,800 per year) at grocery stores
- $200 per month ($2,400 per year) at gas stations
- $200 per month ($2,400 per year) on other spending
- $100 per month ($1,200 per year) at restaurants
- $100 per month ($1,200 per year) on recurring bill payments
- Rewards calculated on first year, and then after three years of use
1. SimplyCash Card from American Express
The new SimplyCash Card replaces the TrueEarnings Card in the American Express line-up. It offers 1.25% cash back on every purchase with no limit to the amount of cash back you can earn. Plus, you’ll get 5% 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.
- Cash back earned in first year: $307.50
- Cash back earned thereafter: $150.00
- Total cash back earned after three years: $607.50
Best used for: An everyday cash back card, as it has the highest base earn rate (1.25%) of the no-fee cash back cards. Rewards are applied annually as a statement credit.
Apply for the SimplyCash card from American Express here:
2. MBNA Smart Cash Platinum MasterCard
Once known as the top cash back card in Canada, this watered-down version still offers value over other no-fee cards. With Smart Cash, there’s a six-month bonus period where you’ll earn 5% back on up to $400 worth of grocery and gas purchases. You’ll also get 1% cash back on your other spending up to $1,250 per month. After the bonus period you’ll get 2% back on grocery and gas purchases, up to $400 spending per month.
- Cash back earned in first year: $240.00
- Cash back earned thereafter: $168.00
- Total cash back earned after three years: $576.00
Best used for: An everyday cash back card for consumers looking to earn more on grocery and gas purchases and who shop at retailers where American Express is not accepted. A cheque is sent out once your rewards reach $50.
Apply for the MBNA Smart Cash Platinum MasterCard here:
3. RBC Cash Back MasterCard
The best of the bank issued cards; RBC’s Cash Back MasterCard pays 2 percent back at grocery stores, 0.5 percent back on purchases up to $6,000 per year, and 1 percent back on any spending over the $6,000 threshold.
- Cash back earned in first year: $138.00
- Cash back earned thereafter: $138.00
- Total cash back earned after three years: $414.00
Best used for: An everyday cash back card for RBC customers who can leverage it to earn a multi-product discount on their banking package. Cash back credits can be applied to your account once the balance reaches $25.
4. PC MasterCard
Arguably the most popular no-fee rewards credit card, the PC MasterCard pays 10 PC Points for every dollar spent. Cardholders can earn bonus points when they shop at Loblaws stores – anywhere PC products are sold – and new card applicants will receive 40,000 PC Point upon approval. That’s good for $40 worth of free groceries.
- Cash back earned in first year: $160.00
- Cash back earned thereafter: $120.00
- Total cash back earned after three years: $400.00
Best used for: Customers who regularly shop at Loblaws stores and prefer to redeem their rewards point for free groceries. PC Points can be redeemed at the checkout once your balance reaches 20,000 points, or $20.
Apply for the PC MasterCard here:
Honourable mention:
Amazon.ca Rewards Visa
This Chase issued credit card is a hidden gem for those who shop in the U.S. or travel abroad. That’s because Chase is the only card issuer in Canada that doesn’t charge a 2.5% fee to convert your foreign currency purchases into Canadian dollars.
That savings alone beats most rewards cards on the market, plus you’ll earn 2 points for every dollar spent at Amazon.ca and 1 point for every dollar spent elsewhere. You’ll be issued a statement credit once your rewards balance reaches $20.
Apply for the Amazon.ca Rewards Visa here:
Annual fee cash back credit cards
If you’re the type of consumer who likes to put all your monthly purchases on a credit card then an annual fee cash back credit card might be the best bang for your buck. That’s because the top cash back cards typically offer higher cash back incentives and won’t limit the rewards you can earn on your spending.
Our ranking parameters are:
- Annual spend of $30,000
- $800 per month ($9,600 per year) at grocery stores
- $800 per month ($9,600 per year) on other spending
- $300 per month ($3,600 per year) at gas stations
- $300 per month ($3,600 per year) at restaurants
- $300 per month ($3,600 per year) on recurring bill payments
- Rewards calculated on first year, net of fees, and then after three years of use
1. Scotia Momentum Visa Infinite
This card is the reigning cash back king in Canada due to the juicy 4 percent cash back it pays on grocery and gas purchases. You’ll also get another 2 percent back at the pharmacy and on recurring bill payments, plus 1 percent back on everything else.
Applicants must earn a minimum of $60,000 per year or have $100,000 combined household income to qualify. The card comes with a $99 annual fee, which Scotia waives in the first year.
- Cash back earned in first year: $732.00
- Cash back earned thereafter: $633.00
- Total cash back earned after three years: $1998.00
Best used for: An everyday cash back card for households that spend more on groceries and gas and want to take advantage of the best cash back incentive for those categories. Cash back rewards are applied to your account once per year as a statement credit.
Apply for the Scotia Momentum Visa Infinite card here:
2. SimplyCash Preferred Card from American Express
Like its no-fee cousin, the SimplyCash Preferred card goes heavy on the bonus incentives. You’ll get 5 percent back on ALL purchases for the first six months, up to a maximum of $400 cash back, or $8,000 spending during the bonus period. After that the card pays 1.5 percent back on every purchase.
Applicants need just $15,000 in annual income to qualify. The SimplyCash Preferred card comes with a $79 annual fee, but cardholders can get free supplementary cards.
- Cash back earned in first year: $651.00
- Cash back earned thereafter: $450.00
- Total cash back earned after three years: $1551.00
Best used for: A supplementary card for those who want to earn a higher return on their spending outside of groceries and gas – plus, to take advantage of the best in class bonus period promotion. Cash back rewards are applied to your account once per year as a statement credit.
Apply for the SimplyCash Preferred Card from American Express here:
3. Capital One Aspire Travel World Elite MasterCard
Did you know that Canada’s top travel rewards card can also double as a cash back card? Here’s how it works:
With the Capital One Aspire Travel World Elite MasterCard you’ll get 2 miles for every dollar spent. A generous welcome bonus pays 10,000 miles after your first purchase.
You can turn your rewards into an account credit or request a cheque once you have 10,000 miles. Cash rewards are paid out at 75% of the travel rewards value, so 10,000 miles gets you $75.
This card comes with an annual fee of $120, but supplementary cards are free. Applicants must earn a minimum of $60,000 per year or have $100,000 combined household income to qualify.
- Cash back earned in first year: $480.00
- Cash back earned thereafter: $405.00
- Total cash back earned after three years: $1290.00
Best used for: Consumers looking for the most flexible rewards card on the market, with the ability to redeem miles for travel using any airline or hotel, or get cash back at a rate of 1.5 percent on every purchase.
Apply for the Capital One Aspire Travel World MasterCard here:
Honourable mention:
MBNA Smart Cash World MasterCard
Sort of a hybrid between the annual fee cards and the premium (re: high income) cards, MBNA offers a World version of its Smart Cash card for applicants who earn at least $60,000 per year, or have household income of at least $100,000 per year.
The no-fee Smart Cash World MasterCard offers the same welcome bonus as its Platinum cousin, paying 5 percent back on grocery and gas spending for six months, up to $400 per month. However, the World version removes the $1,250 per month spending cap, meaning you can continue to earn cash back at a rate of 1 percent on all your spending with no limits.
- Cash back earned in first year: $492.00
- Cash back earned thereafter: $348.00
- Total cash back earned after three years: $1188.00
Final thoughts
We tend not to put a lot of thought into our choice of credit card, with many of us opting for one offered by our bank simply because it’s convenient.
However, if you’re the type of person who diligently pays off his or her balance every month then shopping around for a rewards credit card that suits your spending habits can pay dividends.
What’s your favourite cash back credit cards?