Canada's Best Credit Cards
Today if you are not getting cashback, travel rewards or insurance perks with your credit card, then you might want to consider updating your credit card.
It might not seem worthwhile to change your credit card for a 2% or a 4% cash back reward, but you would probably be wrong. 2% and 4% don't seem like much, but it would be the same as getting 7.3 and 14.6 days respectively worth of spending for free each year.
Pay a Fee or go with a No-fee Credit Card?
It may seem silly to some to pay an annual fee for a credit card. The idea of paying $39 or even a $99 a year may sound foolish, but it can be more than worth your while if you use your credit card consistently.
Let's start with a credit card with a $39 annual fee, which works out to $3.25 a month. The best no-fee credit cards will pay you 1% cash back and the best credit cards with a $39 annual fee will pay you 2% on gas, groceries, restaurants and depending on the card some other items as well. Most other expenses generally pay 1%. To breakeven on the $39 annual fee, all you would need to do is spend $325 a month on groceries, gas and restaurants. The numbers work like this: (1% extra x 12 months x $325) - $39 annual fee = $0. Spend more than $325 a month and you will be ahead with the $39 annual fee card.
The Benefits of a Premium Credit Card
You will not believe how quickly and how many times over a $99 annual fee will pay for itself. The insurance alone can be worth the $99 for many travelers.
The biggest benefit is the extra cash back and/or travel rewards that you will earn with a premium credit card. Getting 4% back on grocery stores and gas stations can earn back your annual fee quickly. Even just two tanks of gas a month, if you own a truck will pay for your annual fee. The numbers work like this: (4% x 12 months x $206.25) - $99 annual fee = $0.
Of course you don't just want to break even. Using your card as often as possible can earn you $681 in travel rewards each year. A monthly budget of $2,000 monthly budget with three quarters spent on gas, groceries, restaurants and entertainment will work out to $681 in net travel rewards in the first year with the Scotiabank Gold American Express. The numbers work like this: (4% x 12 months x $1500) + (1% x 12 months x $500) - $99 annual fee = $681.00 in net travel rewards in the first year.
Subsequent years using the same spending patterns, you will earn $681 in net rewards. The numbers work like this: (4% x 12 months x $1500) + (1% x 12 months x $500) - $99 annual fee = $681.00 in net annual rewards.
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