For most Canadians, the choice between cash back and travel rewards points represents one of the most important financial decisions they’ll make with their credit cards. The answer isn’t as straightforward as you might think, and choosing the wrong strategy could cost you hundreds or even thousands of dollars in value every year.
Understanding Cash Back: The Straightforward Option
Cash back credit cards deliver exactly what they promise: a percentage of your spending returned as cash. The math is simple and transparent.
Top Canadian cash back cards in 2026 offer impressive returns:
The SimplyCash Preferred Card from American Express leads the pack for the fifth consecutive year, offering 4% back on gas and groceries, plus 2% on all other spending. In the first year, cardholders can earn between $350 to over $1,430, and $200 to over $1,280 in subsequent years.
For no-fee options, the Rogers Red World Elite Mastercard provides a flat 1.5% cash back on all purchases with no annual caps, bumping to 3% on U.S. purchases. Rogers customers see this increase to 2% on all spending, and when redeemed toward Rogers services, the value jumps to 3%.
The cash back advantage: You know exactly what you’re getting. Earn $100 in cash back, and you have $100 in value. There’s no complexity, no redemption calculations, and no worrying about program devaluations.
The Points Equation: Where Value Gets Interesting
Travel rewards points operate on a different principle entirely. Instead of fixed percentages, points programs offer variable value depending on how you redeem them.
Here’s where the math becomes compelling:
Aeroplan points are currently valued at 1.4 cents per point. The American Express Cobalt Card, ranked as Canada’s top travel rewards card for the ninth consecutive year, earns 5 points per dollar on eligible dining and groceries.
Let’s break down what this means: Spend $1,000 on groceries with the Cobalt Card, and you’ll earn 5,000 points. At 1.4 cents per point, that’s $70 in travel value—a 7% return. Compare this to the 4% cash back rate on the SimplyCash Preferred, which would give you $40 on the same spending.
The difference? $30 in additional value, or 75% more.
The Real-World Comparison: Running the Numbers
Let’s examine two typical Canadian households with $50,000 in annual credit card spending:
Scenario 1: The Cash Back Maximizer
Annual spending breakdown:
- Groceries: $12,000
- Gas: $3,000
- Dining: $6,000
- Everything else: $29,000
Using the SimplyCash Preferred Card:
- Groceries and gas: $15,000 × 4% = $600
- Everything else: $35,000 × 2% = $700
- Total annual value: $1,300
Scenario 2: The Points Optimizer
Same spending with the American Express Cobalt Card:
- Groceries: $12,000 × 5 points = 60,000 points
- Dining: $6,000 × 5 points = 30,000 points
- Everything else: $32,000 × 1 point = 32,000 points
- Total: 122,000 points
At 1.4 cents per point: $1,708 in travel value
The points strategy delivers $408 more value annually—a 31% increase.
When Cash Back Wins
Cash back isn’t always the runner-up. There are specific situations where it’s the superior choice:
You don’t travel regularly. If you take one domestic trip every few years, accumulating points doesn’t make sense. Cash back provides immediate, flexible value you can use for anything.
You need liquidity. Cash back can be redeemed as statement credits or deposited directly into your bank account. This flexibility matters when you need to reduce your credit card balance or want funds for non-travel expenses.
You want simplicity. Points programs require research, strategy, and active management. Cash back requires none of that. Earn it, redeem it, done.
You’re a casual spender. With lower annual spending (under $20,000), the difference between cash back and points becomes minimal. The simplicity of cash back often outweighs the modest additional value from points.
When Points Dominate
Leveraging travel rewards to their full potential can truly transform the way you travel. Here’s when points become the clear winner:
You travel internationally. Business class flights to Europe or Asia can cost $5,000-$8,000 in cash but only 75,000-100,000 Aeroplan points. That’s a redemption value of 5-8 cents per point—nearly four times the baseline valuation.
You’re a strategic spender. Points programs reward those who understand the system. Transferring points to the right airline partner, booking during promotional periods, or targeting sweet spots in award charts can multiply your value significantly.
You have higher annual spending. The more you spend, the more the percentage differences compound. At $75,000+ in annual spending, the gap between cash back and optimized points strategies can exceed $1,000 annually.
You value premium experiences. Points unlock access to business class flights, luxury hotel stays, and travel experiences that would be prohibitively expensive with cash. A $10,000 business class ticket for 100,000 points represents value you simply can’t achieve with cash back.
The Hybrid Approach: Having Your Cake and Eating It Too
The most sophisticated strategy? Use both.
Many successful points collectors maintain a cash back card for categories where points don’t offer advantages, while maximizing points cards for high-earning categories. The MBNA Rewards World Elite Mastercard offers up to 5.5 points per dollar with high spending caps, while the Neo World Elite Mastercard provides up to 5% cash back on groceries.
This approach requires more management but delivers maximum value across all spending categories.
The Bottom Line: Which Actually Saves More?
For most Canadians who travel at least once or twice annually, points programs offer 25-50% more value than cash back when used strategically. The American Express Cobalt Card’s 5x earning rate on dining and groceries, combined with Aeroplan’s 1.4-cent valuation, creates a 7% return that no cash back card can match.
However, this advantage disappears if you don’t redeem your points for travel or if you’re not willing to learn the system. Cash back provides guaranteed value with zero effort.
The real question isn’t which saves more—it’s which saves more for you.
If you’re new to travelling the world on points, the learning curve might seem steep. But the potential to transform your $50,000 in annual spending into $15,000-$20,000 in premium travel experiences makes it worth the effort.
Your home for smarter travel starts with understanding this fundamental choice. Choose cash back for simplicity and flexibility. Choose points for maximum value and aspirational travel. Or choose both, and optimize every dollar you spend.
The power is in your hands.
