If you use your credit card for everyday purchases, you already know how fast those points can add up. A free flight here, a few hundred dollars in cash back there – it feels like getting paid to spend. But there’s a catch: Chasing rewards too aggressively can backfire, leading you to spend more than you normally would just to earn a few extra points.
That’s why the smartest credit card users know how to earn and use them strategically. You can enjoy all the perks without inflating your budget or paying sky-high fees. The key is to approach rewards like an investment: plan, track, and make every swipe count.
Here’s how to do it.
1. Choose a Card That Fits Your Lifestyle
The best credit card for you isn’t necessarily the one with the flashiest travel perks or the biggest sign-up bonus. It’s the one that matches your everyday spending habits.
If you spend heavily on groceries, gas, or dining out, look for a card that rewards those categories. The Scotiabank Momentum Visa Infinite Card, for example, gives up to four percent cash back on groceries and recurring bills – a solid return for regular expenses.
If you prefer travel rewards, you might lean toward a card like the TD Aeroplan Visa Infinite or CIBC Aventura Visa Infinite, which earn points you can redeem for flights, hotels, and more.
And if you’re just after simple, no-hassle rewards with no annual fee, the Tangerine Money-Back Credit Card is a top contender. It lets you choose your own bonus categories and earn two percent cash back without paying to carry the card.
The trick is to make sure the rewards actually align with what you already buy. Otherwise, you’ll end up spending more just to “earn” benefits you could have had without the extra cost.
2. Don’t Overspend to Hit the Sign-Up Bonus
Sign-up bonuses can be tempting – spend $3,000 in the first three months and get 30,000 points sounds great. But that’s only a deal if it doesn’t change your normal spending.
If you wouldn’t naturally hit that amount, forcing yourself to spend more for the sake of the bonus usually erases the value you gain. You might end up paying interest if you can’t pay it off in full, and that wipes out any benefit immediately.
A smart workaround is to time your application around a period when you’ll already have larger planned expenses, like insurance renewals, back-to-school shopping, or travel plans. That way, you earn the bonus without going over your budget.
3. Use the Right Card for the Right Purchase
Many Canadians carry more than one rewards card – not to increase spending, but to optimize it.
If you have two or three cards, assign each one to a specific spending category. Use your grocery rewards card at the supermarket, your travel card for flights and hotels, and your flat-rate cash back card for everything else.
This lets you maximize rewards without adding any new spending habits. To make it easier, label each card with a small sticky note or write a reminder in your phone so you know which one to use where.
4. Avoid Carrying a Balance
Here’s the golden rule: Rewards are worthless if you’re paying interest. (Say that out loud and repeat it over and over, if necessary.)
Credit card rewards typically earn you between one and five percent back on purchases. But interest charges on unpaid balances can easily exceed twenty percent annually. One month of carrying a balance can undo months of careful rewards collecting.
If you find yourself tempted to spend more just for points, consider using your credit card like a debit card – only buy what you can pay off immediately. Setting up automatic payments from your checking account ensures you never forget a due date and helps you keep your rewards truly “free.”
5. Look Beyond Rewards to True Value
The flashiest credit card isn’t always the best deal. Some high-end rewards cards come with hefty annual fees – sometimes $120 or more – that can eat into your earnings.
Before signing up, calculate whether the rewards you’ll realistically earn outweigh the cost. For instance, if you’re earning $150 in cash back each year but paying $120 in fees, you’re really only $30 ahead.
That’s why many Canadians prefer cards like the Rogers World Elite Mastercard or Tangerine Money-Back Card, which offer solid returns without annual fees.
You should also look at secondary perks. Some cards include travel insurance, rental car coverage, extended warranties, or airport lounge access. If you’d normally pay for those separately, they can justify a slightly higher fee. But if not, you’re better off keeping it simple.
6. Redeem Wisely
Cash back is the simplest and most predictable redemption option, but if you’re after travel rewards, aim for high-value redemptions like flights or hotels rather than gift cards or merchandise.
For example, 25,000 Aeroplan points might get you a short-haul flight worth $400, while that same amount could be worth only $250 in merchandise value. Always check the math before redeeming.
7. Keep an Eye on Your Credit Score
Applying for multiple cards can temporarily lower your credit score, especially if you do it frequently. The key is to space out applications – ideally every six to twelve months – and always maintain a low credit utilization ratio (below thirty percent of your available limit).
This ensures you keep your financial profile healthy while taking advantage of new rewards opportunities.
Make the Most Out of Your Points
Credit card rewards can be an excellent way to stretch your dollar…if you play the game wisely.
When you choose a card that fits your lifestyle, pay your balance in full, and avoid spending just for the sake of earning points, those perks truly work in your favor. The goal isn’t to collect as many cards or bonuses as possible. Instead, it’s to make every purchase more rewarding without changing your spending habits. In other words, let the perks fit your life – not the other way around.
