Credit Card Points vs. Cashback Credit Cards? Which Is Better
If you can wait for the entire year Cash back credit cards are better if you want to be able to cash out your points once you reach the threshold Points programs are better. In Canada, RBC is known for its points program whereas CIBC and BMO are known for the cash back rewards. I’ve tried both and prefer to use RBC mainly because I can cashout sometimes within a month or 2 whereas with BMO as an example I have to wait until the end of the year to get my cash back rewards.
Another reason why I like points is that typically RBC will work with other companies and if you use the services of the company RBC is affiliated with, you’ll also qualify for even more points, now the downside to points is inflation, this is where you have to pay close attention, because this is the reason why I personally don’t hoard points, the more people who use points the more likely RBC is to inflate them, this is why I’ll never completely abandon my cash back credit cards.
Sure our fiat Canadian currency inflates also, however you have more choices on what to spend your cash back on when you have a cashback credit card. One of the great things about a cash back credit card is if you rent and your landlord is willing to take credit card as a form of payment, pay your rent every month using your credit card. Many landlords don’t take credit card, which I personally think is silly because they lose up to 3% in transaction charges, but I also know a lot of people that miss rent, because silly landlords would rather get the full rent rather than nothing at all and this of course is why a lot of renters default, that aside if your landlord allows you to pay with credit card, pay with your credit card, never, however, take out cash advance using your credit card to pay your rent because not only will you get hit with high-interest charges and a cash advance fee, but you also won’t get any cash back or points.
Most cash back cards pay you at the end of the year and this is why I typically don’t use them, however, if there came a time where RBC’s points program was inflated to a ridiculous amount then I’d make the switch to using cashback cards exclusively. As of November 2018, if RBC decides to inflate their points program again chances are I’ll stop using their reward card, because the key to using a rewards card is to never have a balance owing at the end of the month and make sure that if there’s annual fee that you’re getting more money or rewards back from the credit card company than you’re paying in annual fees, at least double.
Any chance you have to use your credit card you should take it, your physical cash should stay in your pockets for emergency, spend the money on your credit card and pay the money back with your APP or pay it back online or over the phone, make it a habit, you’d be surprised how much money you’ll be able to save and how much cashback or rewards you can use to purchase things. Currently RBC is also connected with Petro Canada, I’ve told my uber and lift friends, this is an easy way to get your gas paid for, because RBC has Petro gift cards, plus currently they have bonus points, if your vehicle is used for business purposes you definitely should be using your credit card to bank up points.
So in closing as long as the points on your credit card aren’t inflated too much stick with the points. How you measure points is buy something for say $10 and see how many points that purchase gets you, if your threshold for purchasing something for $10 is more than $1000 spent consider a cashback credit card instead. At RBC one of the best ways to measure the value of your points is how much your points will get you a gift card.
The lowest gift card amount at RBC is $110, but the common gift card is $25, currently it’s $3500 points to get a $25 gift card, which means you have to spend $3500 to get a $25 gift card, if this had been a cashback credit card for $3500 spent at 1% cash back you’d get $35 cash, however, I remind people to check the terms of cashback cards because some of them have thresholds of how much cash back they’ll give you. Also again the cash back credit cards pay you at the end of the year, whereas you can cash out points once you reach their threshold.
