One of the best financial decisions we ever made was to start using a cash back credit card, instead of a debit card, for all our daily purchases and recurring bill payments.
My wife and I were addicted to debit, and paying over $300 a year in fees to get unlimited debits with our TD chequing accounts. So we combined our finances, switched to a no fee bank account and now we use the MBNA Smart Cash MasterCard to pay for gas, groceries and entertainment. We’ve also set-up automatic payments for our phone, cable and utility bills.
We’ve used the Smart Cash card for over a year and collected more than $500 in cash back credit card rewards. So we’re ahead by more than $800! Best of all, there is no annual fee.
Related: Why Cash Back Beats Travel Rewards
If you have the discipline to pay off your credit card balance in full every month, using a cash back credit card can be a great way to earn rewards for your everyday spending.
To find the right card, you need to figure out how much money you spend on average each month. Some annual fee credit cards offer juicy rewards, but unless you have a good income and spend at least $2,500 per month on your card, you’re better off with a no fee rewards card.
Related: PC MasterCard Review
Cash Back Credit Card Comparison
I looked at the cash back credit cards with no annual fee, and compared them based on spending $1,000 a month or $2,500 a month to see which was best.
| Credit Card | Cash back on $1,000/month* | Cash back on $2,500/month** |
| MBNA Smart Cash | $252 | $516 |
| Capital One Aspire Cash | $280 | $550 |
| Canadian Tire Cash Advantage | $216 | $486 |
| RBC Cash Back | $180 | $360 |
| PC MasterCard | $140 | $320 |
| Scotia Momentum No-Fee | $120 | $300 |
| CIBC Dividend Card | $101 | $281 |
| TD Rebate Rewards | $105 | $235 |
| BMO Cash Back | $60 | $150 |
*based on spending $500 per month on groceries and $200 per month on gas
**based on spending $800 per month on groceries and $300 per month on gas
The Capital One Aspire Cash World MasterCard comes out on top for the best cash back credit card. You’ll get $100 cash bonus with your first purchase, 1% cash back on all spending, and they’ll top up your rewards balance with an extra 50% of the cash back you’ve already earned each year.
The Smart Cash card is another good cash back card option. That’s because new cardholders enjoy a bonus reward rate of 5% cash back on grocery and gas purchases during their first six months. After the introductory period, this card gives 2% cash back on gas and grocery purchases, and 1 per cent cash back on all other spending.
Choosing the best cash back credit card all depends on how much you spend a month, and on which categories you spend the most money. Plus, you’ll want to look beyond what you’ll earn in the first year, which can be front-loaded with introductory bonuses.
Related: Choose Your Rewards Card Carefully
After the first year, you’ll earn $192 a year when you spend $1,000 a month and $372 a year when you spend $2,500 a month with the MBNA Smart Cash card.
With Capital One Aspire Cash, you’ll earn $180 a year when you spend $1,000 a month and $450 a year when you spend $2,500 a month
I like using a cash back credit card to help save and earn money on my everyday spending. Since I’m spending the money anyway, I’d rather use a credit card and get a cash rebate rather than use my debit card and pay bank fees.
One way to pay off debt faster is to transfer your high interest debt to a credit card with a lower interest rate. You can do this with balance transfer credit cards, where you’ll get a period of time with a low rate, ensuring each payment you make goes toward reducing principal, not just interest.
When you sign up for a balance transfer credit card, you need a plan to pay off your debt within the introductory period. Avoid taking on more debt. New purchases get charged at the regular interest rate, so if you can’t stop using your card, you’ll end up in more debt once the introductory period expires and the rate shoots back up to 20 per cent.
Best Balance Transfer Credit Cards
The best balance transfer credit cards offer zero per cent interest and a lengthy introductory period. MBNA’s Platinum Plus MasterCard currently has the best offer – zero per cent interest rate on balance transfers for 10 months, and no annual fee.
If you carry a $5,000 credit card balance at the standard 19.99 per cent rate, you can save $515 in interest charges and pay off your debt two months faster by using a balance transfer card. Here’s how:
Transfer your balance to the MBNA Platinum Plus card and start putting $500 a month toward repaying your debt with the goal of eliminating it before the 10-month interest free period expires.
The same repayment schedule on the card with the 19.99 per cent rate will take an extra two months to pay it off and cost you $515 in interest.
Beware, sometimes there are up-front fees associated with a balance transfer. For example, MBNA charges 1 per cent of the amount you’re going to transfer. So if you transfer $5,000, you’ll be charged $50.
Related: Avoid These Credit Card Products
Here’s a look at the best balance transfer credit cards:
| Card name | Balance transfer rate | Duration | Regular interest rate |
| MBNA Platinum Plus | 0 per cent | 10 months | 19.99 per cent |
| Scotia Value Visa* | 0.99 per cent | 9 months | 11.99 per cent |
| RBC Rewards Visa Gold | 1.90 per cent | 10 months | 21.99 per cent |
| PC MasterCard | 5.97 per cent | 4 months | 19.97 per cent |
| Capital One SmartLine | 5.99 per cent | 3 years | 7.99 per cent |
*$29 annual fee
Related: Annual Fee Credit Cards – When They Make Sense
When you pay credit card interest, you don’t make much of a dent in the actual amount of money you owe. This is especially true if you only pay the minimum. If you pay $100 a month, but $50 goes toward interest, half your payment does nothing to reduce your debt.
One of the reasons people get discouraged with their debt situation is because they don’t see progress. Balance transfer credit cards, with zero per cent interest for the first few months, can help you make real progress, and pay down your debt faster.