Cash Back vs Points Credit Cards in Canada: Which Pays You More?
A 5x points card isn't automatically better than a 2% cash back card. Convert both to dollars and the answer usually becomes obvious. Here's how.
By Andrew Updated How we review cards
Cash back gives you a known dollar amount. Points can be worth more or less than that, depending on the program and how you redeem them. To compare the two fairly, turn every earn rate into cents per dollar spent. Once you do that, many “5x” offers look more modest, and a few look even better.
Step 1: Know what a point is worth
Every program prices points differently. Here’s what issuers and programs say for their common redemptions:
| Program | Common redemption value | So “1x” is roughly |
|---|---|---|
| Scene+ (Scotiabank) | 100 points = $1 on Scene+ Travel, Apply Points to Travel and Sobeys-family groceries | 1% |
| BMO Rewards | 150 points = $1 on travel with Pay with Points; 200 points = $1 on other purchases | 0.67% (travel) / 0.5% (other) |
| MBNA Rewards | 100 points = $1 on travel; 120 points = $1 for cash back and charity | 1% (travel) / 0.83% (cash) |
| Aeroplan | Varies by flight; TD says most of its cardholders received $0.02 or more per point on flight redemptions | Around 2% on good flight bookings, often less elsewhere |
| Amex Membership Rewards | Varies: statement credits, Amex Travel, or 1:1 transfers to Aeroplan | Depends on how you redeem |
Flexible and airline points have a range rather than one number. If you mainly redeem for statement credits or gift cards, use a lower value. If you regularly book long-haul flights with Aeroplan, a higher one is fair.
Step 2: Convert the earn rates
Cash back: the percentage is the value. 4% means 4 cents per dollar.
Points: earn rate × value per point.
- Scotiabank Gold American Express, 5x on non-Sobeys groceries and dining: 5 × 1 cent = 5%.
- BMO eclipse Visa Infinite, 5 points per $1 on groceries, dining, gas and transit (up to annual caps): 5 ÷ 150 = 3.3% on travel redemptions.
- TD or CIBC Aeroplan Visa Infinite, 1.5 points per $1 on gas, groceries and Air Canada: 1.5 × 2 cents = 3%, if you redeem at 2 cents.
Compare that with cash back cards such as the SimplyCash Preferred (4% on gas and stand-alone groceries up to $30,000 a year combined, then 2%; 2% on everything else) or the CIBC Dividend Visa Infinite (4% on gas, EV charging and groceries; 2% on transportation, dining and recurring payments; caps apply).
Step 3: Run your own numbers
Take a household that spends $800 a month on groceries and $300 on dining, so $13,200 a year in those two categories.
- CIBC Dividend Visa Infinite ($120 fee): groceries at 4% = $384; dining at 2% = $72. Total $456, or $336 after the fee. Both categories count toward CIBC’s $20,000 annual category cap, which this example stays under.
- Scotiabank Gold Amex ($120 fee): if all groceries are at non-Sobeys stores (5x) and dining is 5x, that’s 66,000 points, about $660 at 1 cent, or $540 after the fee. At Sobeys-family stores, groceries earn 6x and the total is higher.
In this example the points card wins, but only if you actually redeem the points for travel or groceries at 1 cent each, and only where American Express is accepted. If your grocery store doesn’t take Amex, the comparison changes completely. See Amex acceptance in Canada.
When cash back is the better choice
- You want simplicity and don’t want to track redemption values.
- You don’t travel much, or you travel on budget fares where points don’t stretch far.
- You value flexibility: cash back can pay down any balance.
- You’re likely to let points pile up unused.
When points are the better choice
- You travel at least once or twice a year and will put in some effort to redeem well.
- You want travel perks such as checked bags, lounge access or no foreign transaction fees, which often come with points cards.
- Your biggest spending categories line up with a points card’s accelerated categories, like dining on the Cobalt.
Don’t forget the hidden costs
- Annual fees. Always subtract them.
- Caps. Many top earn rates stop after an annual or monthly limit. The Cobalt’s 5x applies to up to $2,500 a month in combined eligible purchases; the Simplii Cash Back Visa’s 4% applies to the first $5,000 a year at restaurants.
- Interest. At 20% or more, carrying a balance wipes out any rewards. Cash back and points are only worth it if you pay in full.
For more on valuing points, see credit card points value.
FAQ
Are points worth more than cash back? Sometimes. Fixed-value points like Scene+ are about 1 cent each. Airline points can be worth more on the right flights, and less on poor redemptions.
Is 2% cash back good in Canada? As a base rate on everything, 2% is strong. The SimplyCash Preferred, for example, pays 2% on purchases outside its 4% categories.
Can I have both? Yes. Many people pair a cash back card for everyday spending with a points card for a category it rewards heavily.
What to do next
Compare options on the cash back hub and the rewards hub, or use the finder to see cards ranked against your own spending.
Offers change. This is not financial advice. Approval is never guaranteed.
