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Cash Back vs Rewards Points

Cash back vs. rewards points: Which is worth more?

Sandra MacGregor Freelance Contributor
Barry Choi Contributor

Fact checked by Scott Birke

Cash back and rewards cards each have benefits and drawbacks. Read our cash back vs rewards credit card guide before selecting the best fit for you.

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Credit card rewards come in different shapes and sizes, with points and cash back the most popular, but which is best?

Whether you’re a newbie or a credit card connoisseur, one of the common questions that plague those looking for new plastic is “should I go with a cash back or a rewards credit card?” Certainly, each card type has its own pros and cons, so how do you choose between the two? A cash back card can offer a straightforward, quick financial return; but a rewards card could net you potentially better goodies, like a free trip or hotel stay. Decisions, decisions!

It’s easy to be seduced by a big sign-up offer or a high earn rate, but to ensure you get the match that will maximize your earnings, try to go beneath the surface and consider the key factors we examinAt a glance

At a glance

What to look for

Feature Cash back Rewards
Sign-up bonus Typically top out at $200 or so Can be the equivalent of $300 or more
Return on regular spending Evenly matched Evenly matched
Value-added features Features are usually less valuable compared to rewards cards at a similar annual fee level Value of features can be huge, particularly for upper-tier cards
Ease of use Very low maintenance Labyrinth of different transfer rules and redemption rates can be a headache
Annual fee Evenly matched EvenlWelcome bonuses
Welcome bonuses

Sign-up bonus

You can’t really beat the quick budget boost of netting hundreds of dollars’ worth of extra cash or rewards just by signing up for a card and spending the required minimum amount in the time allotted. When comparing miles vs cash back credit cards, miles/rewards cards usually have the most generous welcome bonuses. Cash back introductory offers commonly top out at a couple hundred dollars or so, whereas rewards cards frequently follow a “go big or go home” game plan to attract new customers with offers worth $300 or more. Here’s a comparison between two of the biggest welcome bonus offers in Canada at the moment:

up to $600 in value

Welcome Bonus

$452

First Year Value

$0

Annual Value

Welcome Bonus: Earn up to $600 in value†, including 10% in Cash Back Dollars in the first 3 months on Bonus Eligible Purchases up to a total spend of $3,500†. Conditions Apply. Offer effective as of January 7, 2025.

Learn More Apply Now On TD's Secure Site

TD’s Cash Back Visa Infinite* Card is presently offering a lucrative introductory cash back rate for New Cardholders: Up to $600 in value†, including 10% in Cash Back Dollars in the first 3 months on Bonus Eligible Purchases up to a total spend of $3,500†. Conditions Apply. Offer effective as of January 7, 2025.

After the introductory period ends, cardholders get a regular cash back rate of 3% cash back on groceries, gas and recurring bill payments† and 1% cash back on all other purchases†.

Disclosures:

  • To receive the first-year annual fee rebate for the Primary Cardholder, you must activate your Card and make your first Purchase on the Account within the first 3 months after Account opening. To receive the first Additional Cardholder first-year annual fee rebate, you must add your first Additional Cardholder while the offer is in effect.

  • †Terms and conditions apply.

    This offer is not available for residents of Quebec. For Quebec residents, please click here.

    The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button.

up to $1,000

Welcome Bonus

$468

First Year Value

$0

Annual Value

Welcome Bonus: Earn up to $1,000 in value†, including up to 135,000 TD Rewards Points† and no Annual Fee for the first year†. Conditions Apply.

Learn More Apply Now On TD's Secure Site

New TD First Class Travel® Visa Infinite* cardholders are eligible to a staggering offer.  Earn up to $1,000 in value†, including up to 135,000 TD Rewards Points† and no Annual Fee for the first year†. Conditions Apply..

Just remember: whether for a cash back or rewards credit card the largest introductory offer in the world will be worthless if you can’t fulfill your side of the bargain and make the required minimum spend. In this case the maximum value of the sign-up bonus offered by the TD First Class Travel® Visa Infinite* Card is superior to that offered by the TD Cash Back Visa Infinite* Card, but only if the cardholder of the former can clear its rather high spending hurdles.

You can compare these to some competing welcome offers by checking out our list of the best credit card sign-up bonuses in Canada.

Disclosures:

  • This offer is not available for residents of Quebec. For Quebec residents, please click here .

    The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button. Sponsored Content.

    † Terms and conditions apply.

Return rate

Return on regular spending

In the battle between rewards points vs cash back there is no clear winner for the best regular earn rates. Since both types of cards can feature accelerated earn categories, you need to assess where exactly you spend your money to figure out which card will be the biggest earner for you. This is clear when we compare two top ranking credit cards like the American Express Cobalt® Card and the Tangerine Money-Back Credit Card.

up to 15,000 points

Welcome Bonus

$679.02

First Year Value

$529.02

Annual Value

Welcome Bonus: Earn up to 15,000 Membership Rewards® points* by earning 1,250 Membership Rewards® points for each monthly billing period in which you spend $750 on your Card in your first year as a new Cardmember. This could add up to 15,000 points in a year.*

Learn More Apply Now On American Express' Secure Site

The American Express Cobalt® Card is a “lifestyle” rewards card that offers some of the most elevated earn rates possible for people that really love food and travel. Cardholders get:

  • 5x points on eligible dining and groceries in Canada
  • 3x points on eligible streaming subscriptions in Canada
  • 2x points on eligible gas, transit and ride shares in Canada
  • 1x point on all other purchases

Plus the Cobalt comes with an impressive welcome bonus:

  • Earn up to 15,000 Membership Rewards® points* by earning 1,250 Membership Rewards® points for each monthly billing period in which you spend $750 on your Card in your first year as a new Cardmember. This could add up to 15,000 points in a year.*

    That’s up to $150 towards your next weekend getaway.

    *Current or former Cardmembers with this Card are not eligible for this offer. Other terms apply.

Disclosures:

  • Contact American Express for the most up-to-date referral bonus figures.

    American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the Apply Now link. If you apply and get approved for an American Express Card, (I/we) may receive compensation from American Express, which can be in the form of monetary payment.

$484

First Year Value

$384

Annual Value

Welcome Bonus: Get a bonus 10% cash back for the first 2 months – up to $100. Plus, a 1.95% promotional balance transfer interest rate for the first 6 months.

Learn More

What makes the Tangerine Money-Back Credit Card so valuable is that it not only has $0 annual fee but also has the most flexible choice of accelerated earn categories of any card on the market. It’s the perfect shopping companion for those whose primary expenses don’t fall into common cash back categories, as cardholders can choose two of the following 10 spending categories that will earn 2% cash back:

  • Grocery
  • Restaurants
  • Gas
  • Recurring Bills
  • Drug stores
  • Hotel/motel
  • Furniture
  • Home improvement
  • Entertainment
  • Public transit and parking

Cardholders can even opt to get a third 2% cash back category as long as they deposit their earnings into their Tangerine savings account.

The Tangerine Card also comes with a decent sign-up bonus for new accounts:

  • New cardholders get a bonus 10% cash back for the first 2 months – up to $100. Offer ends Jan. 31, 2025

Check out our respective lists of the best rewards cards and the best cash back cards in Canada to find out which other cards offer particularly high earn rates in the purchase categories where you spend the most.

Disclosures:

  • *Terms and Conditions apply

*Terms and Conditions apply

Features

Value-added features

Most basic cash back or rewards cards include purchase security and extended warranty, with things like insurance and concierge service commonly offered among higher-end cards.

The key main difference between perks offered by miles vs cash back cards manifests in premium travel rewards cards. Travel cards tend to kick the value-added features up a notch: in an effort to win the loyalty of big-spending jet setters, the best travel cards of the lot offer particularly comprehensive insurance packages and/or free airport lounge access. You can see what I mean by comparing the features offered by a travel rewards and cash back credit card, both from the same issuer and with comparable annual fees.

up to $1,300* value

Welcome Bonus

$926

First Year Value

$0

Annual Value

Welcome Bonus: Earn up to $1,300* in value in the first 12 months, including up to 40,000 bonus Scene+ points* Expires Jul 01, 2025

Learn More Apply Now On Scotiabank's Secure Site

The lineup of features on this frequent flier favourite is outstanding and could save globetrotters hundreds to several thousands of dollars on common flight expenses. To start off with, the Scotiabank Passport® Visa Infinite* Card  offers a far-reaching insurance package that includes:

  • Hotel burglary: If you charge a hotel or motel stay anywhere in North America to your Scotiabank Passport® Visa Infinite* Card , you, your spouse and dependent children are eligible for coverage against theft of personal property from your room, up to a maximum of $1,000.
  • Baggage lost/delayed: If you or eligible companions on the same trip (when you charge the full cost of your airplane, train, bus or cruise ship tickets to your Card) lose your bags or if your bags are stolen, you’ll all be covered up to a combined max of $1,000. If your/your eligible companions’ bags are delayed for four or more hours, you’ll also net up to a maximum of $1,000 for the cost of replacing eligible essential items.
  • Travel emergency medical insurance: A vital feature for those who travel often, the Scotiabank Passport® Visa Infinite* Card  covers you, your spouse and dependent children for up to $2 million toward emergency medical coverage for up to 25 consecutive days.

Travellers also save because the card doesn’t charge foreign transaction fees and airports will be much more bearable with the card’s complimentary six free airport lounge visits. There’s no cash back card that offers those kinds of perks.

Plus there's the welcome bonus:

  • up to $1,300* in value in the first 12 months, including up to 40,000 bonus Scene+ points*

Disclosures:

  • Rates, fees and other information are effective as of January 3, 2025. Subject to change.

    Conditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.

    *See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

10% back

Welcome Bonus

$620

First Year Value

$420

Annual Value

Welcome Bonus: Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases). No annual fee in the first year, including on additional cards. Expires Oct 31, 2025

Learn More Apply Now On Scotiabank's Secure Site

For a cash back card the Scotiabank Momentum® Visa Infinite* offers some impressive value-added features, such as Visa Infinite* Concierge Service and Visa Infinite* Dining and Wine Country program. The most attractive extra is its up to $1,000 new mobile device insurance—and it’s one of the few cards in the country to offer this (Scotiabank Passport® Visa Infinite* Card  doesn’t have this feature). But while that insurance bonus is wonderful, you can see by comparing it with the Scotiabank Passport® Visa Infinite* Card  that its other insurance offerings aren’t as outstanding:

  • Hotel burglary: Unlike the Scotiabank Passport® Visa Infinite* Card , the Momentum® Visa Infinite* Card doesn’t feature hotel burglary insurance.
  • Baggage lost/delayed: The coverage is the same as the Scotiabank Passport® Visa Infinite* Card , but the maximum reimbursement amount for each circumstance is $500 (rather than $1,000)
  • Travel medical insurance: The Scotiabank Momentum® Visa Infinite* offers less maximum medical insurance than the Scotiabank Passport® Visa Infinite* Card  (you, your spouse and dependent children are covered for up to $1 million in emergency medical expenses).

Disclosures:

  • Conditions Apply. Visit here for the Scotiabank Momentum® Visa Infinite* Card to learn more.

Simplicity

Ease of use

Cash back credit cards throttle rewards cards when it comes to ease of use. With a cash back card you usually don’t have to worry about what time of year to redeem points, minimum point redemption limits, whether or not your points/miles are transferrable or expire, and the real-world value of your points (check out our Loyalty Points Bible for an explanation about redemption values). Take a look at these two top cards to see which you think would be easier to manage:

up to $780 in value

Welcome Bonus

$1,382

First Year Value

$602

Annual Value

Welcome Bonus: up to $780* in value in the first 12 months, including up to 40,000 bonus Scene+ points Expires Jul 01, 2025

Learn More Apply Now On Scotiabank's Secure Site

To highlight just how much more complicated rewards redemption can be, we’ll look at the Scotiabank Gold American Express®. This card is hands-down one of the easiest and most transparent rewards programs to use. Rewards act almost like cash with one of its Scene+ points equaling $.01—but only if you put your points towards travel. If you don’t use your points for travel expenses, however, the reward system becomes much more complicated and loses value (as is the case with many a travel rewards card).

For example, you earn 5X Scene+ points points for every $1 CAD spent on a variety of categories, including eligible dining. So, if you spend $500 in that tier of categories in a month you get 2,500 points, equivalent to $25 that you can put toward any travel spending (like baggage fees, plane ticket, seat fees, etc.) on your Scotiabank credit card statement within a year of the transaction date. Of course, your travel points are not automatically redeemed for you, unlike with most cash back cards where the cash back points are applied to your statement every month or once a year without any effort on your part.

Point redemption gets more complicated and less valuable if you want to redeem Scene+ points on things like a statement credit or a gift card/donation. In these cases, point value goes down from $.01 (on travel. If this all seems too complicated (and remember Scene+ are among the easiest to redeem) then a rewards card may not be for you.

Disclosures:

  • Conditions Apply. Visit here for the Scotiabank Gold American Express® Card to learn more.

    *See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

bonus 10% cash back

Welcome Bonus

$892.12

First Year Value

$642.12

Annual Value

Welcome Bonus: Earn a bonus 10% cash back on purchases in your first 3 months (up to $2,000 in purchases).

Learn More Apply Now On American Express' Secure Site

The SimplyCash® Preferred Card from American Express comes with a very achievable welcome bonus: Earn a bonus 10% cash back on purchases in your first 3 months (up to $2,000 in purchases).. Conditions apply.  The card also offers competitive cash back: Earn 4% cash back on eligible gas station purchases in Canada, 4% cash back on eligible grocery store purchases in Canada (up to $1,200 cash back) and 2% cash back on all other purchases. The annual fee is $119.88 ($9.99 per month. Additional cards are free..).

Disclosures:

  • Contact American Express for the most up-to-date referral bonus figures.

    American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the Apply Now link. If you apply and get approved for an American Express Card, (I/we) may receive compensation from American Express, which can be in the form of monetary payment.
Annual fee

Annual fee

Overall, the annual fees for cash back and rewards cards are comparable, ranging from $0 for basic no-frills cards, to $120 or $150 on average for higher-end cards, to $500+ for truly premium cards.

How to compare

How to compare rewards vs cash back credit cards

One misconception about travel rewards cards is that there are many restrictions. While that may have been the case in the past with some programs, just about every travel loyalty program now gives you a lot of flexibility. When comparing travel rewards credit cards to cash-back rewards, you need to choose cards and programs that line up with your spending and travel preferences. Even though you may enjoy travel rewards, the current program and credit card that you’re using may not be ideal. When this happens, you may not find your points as useful and be tempted to switch to a cash-back card instead. You need to occasionally analyze what’s in your wallet and what your points are worth. Switching to a different program or credit card may still be more valuable than making a switch to a cash-back product.

It’s more than the first-year benefits

Cash-back cardholders like to point out that the generous welcome bonuses that come with travel rewards cards are only available for the first year. Once your first anniversary date comes up, the value decreases significantly.

While that has some truth to it, you do need to factor in the additional benefits that come with the card. Depending on which travel card you get, it may come with free checked bags, airport lounge access, a NEXUS rebate, comprehensive travel insurance, and no foreign exchange fees. These extra perks could save you hundreds of dollars a year, which is more than what the annual fee is for most cards.

Some cash-back cards offer travel and mobile device insurance, but it’s not that common. The argument could be made that cash-back cards are worth even less in the second year once you’ve maxed out the welcome bonus and annual fee rebate.

Choose whether cash back or rewards makes sense to you

There can be an emotional attachment when it comes to cash-back credit cards. When grocery and gas prices are on the rise, people will naturally look for a way to save. While a cash-back card that gives you an increased earn rate for groceries and gas could help, you might end up spending more on travel since you won’t have any points to redeem later.

For some people, the decision between loyalty points and cash back comes down to mental accounting. Admittedly, it can be hard to keep track of different earn rates and perks. However, instead of thinking about your money in different buckets, think of the whole picture. If you’re maximizing your points, travel rewards cards will give you more value than a cash-back credit card. That said, if you don’t like to travel, it doesn't make sense to be collecting travel rewards, so go ahead and switch to a cash-back card.

Conclusion

Conclusion

No single card can meet the needs of all consumers, and whether cash back or rewards oriented, different cards emphasize different types of spending and consumer needs. Rather than trying to determine categorically if a cash back or rewards card will be the best fit for you, you need to look at each card individually to find the best match for your lifestyle.

Sandra MacGregor Freelance Contributor

Sandra MacGregor has been writing about finance and travel for nearly a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, Forbes.com and the Toronto Star.

Barry Choi Contributor

Barry Choi is a Toronto-based personal finance and travel expert who makes frequent media appearances. When he's not educating people on how to be smarter with money, he's earning and burning miles and points for luxury travel.

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†Terms and Conditions apply.