How to select a reward credit card

Virtually every credit card company in Canada offers at least one card with rewards. The options are pretty much infinite, sometimes making the selection process complicated.

That being said, rewards cards are usually split in 2 categories: cash-back & fixed- value cards and co-branded cards.

Cash-back is self-explanatory. The credit card company will give you a percentage of cash back -usually between 1% and 2%, depending on how much you spend and on what.

A fixed-value card is a point card. For each dollar you spend, the credit card will usually give you a point that you can exchange for perks like movie tickets, flights, gas, groceries etc…

A co-branded card is also a point card, but linked to a specific company, usually an airlines or a hotel. Most co-branded cards are geared towards travelers.

So, how do you select the right reward card?

  • Align the card with your interests: decide what you want of of the credit card, cash-back or perks? What kind of perks? The more specific you are, the easier it will be to narrow down your search.
  • Analyse your spending: in order to make the most of the rewards, you will need to charge pretty much everything to the card. A lot of credit card companies have minimum spending requirements. Look at your spending categories. If you travel a lot and tend to use the same airline and stay at a specific hotel, it may make more sense to go with a co-branded card.
  • Compare cards: don’t just choose the first card you hear of. Do some research. Look at the reward & redemption structure, the annual fee, the interest rate, any current promotion or bonus. Beware of the annual fee, this is how most companies recoup from the card rewards. In order to decide whether the annual fee is worth paying, the value of the rewards and other benefits needs to outweigh the fee.

I have been using the American Express AirMiles card for the last 5 years. A lot of people have been fairly disappointed with the changes AirMiles has made to its program over the years. I am not one of them. Air Miles works for me. It has no annual fee. I charge pretty much everything to this card.

The only disadvantage is that not all merchants accept Amex. I have been doing some research for a second reward card with Visa or Mastercard. Since the American Express AirMiles is a fixed-value card, it did not make much sense to choose a similar card. A cash-back card did not make much sense either, as the amount I would charge to the secondary card would be too low.

One of my favorite hobbies is to go to the movies. I have always redeemed Air Miles to pay for the admission ticket at Cineplex theaters. I found out Scotiabank offers a visa card with the same purpose, the Scene Visa. It is a co-branded card, as you can only redeem points under the Scene program.

Scotiabank is currently offering a 4 000 points bonus for new members. It is 4 admission tickets. Based on what I would annually charge to this card, it would add 2 or 3 extra tickets. That’s 7 free movies. The card has no annual fees. This is the one I got!

To make the most of your reward card, you most importantly need to pay the full balance each month. Interest rates on rewards cards are skyrocketing.







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