Those who know me know that when I get interested in something I sometimes tend to get a bit …obsessed with it. This would be an apt description of my recent interest in the subject of cash back credit cards. The card that has been my go-to card for the past year- my CIBC Dividend Platinum VISA, is coming up for its yearly fee. I accepted an offer to upgrade to it from my no-fee card last Spring with the first year fee waived and thought I would try it out for a year to see how much I would earn in cash back rewards and decide if it was worth keeping before the annual fee gets charged to my account. Well after receiving my cash back for the first year, I came to the realization that after the regular fee is deducted from the cash back I received, the remaining amount of cash reward would be roughly the same as if I had been. Using a no-fee card for the year.
The realization that my regular spending habits don’t seem to be enough to justify owning a fee-based card got me to thinking about the no-fee credit card options out there. Well, I started looking at all of the no-fee cash back cards out there and kept looking. Honestly, there are a LOT of no-fee cash back cards to choose from in the Canadian credit card marketplace these days and it didn’t take me long to realize that not all of the no-fee cards are created equal. After much searching and comparison I had my list of cards to recommend -and to be honest, it was probably too much searching and comparison considering I pretty much had my answers maybe halfway through the comparison process.
I won’t bore you by droning on about the selection process before sharing my choices with you, instead I will just get right to it.
I made my choices based on the assumption that someone looking for no-fee cash back card alternatives would likely lean more towards getting the highest returns available instead of trying to get the most insurance or perks possible on their cash back cards. However, for the sake of peace of mind if for nothing else, I have accounted for the fact that some might wish to go with the reassurance of insurance over higher cash back rewards when making their choices. Also, I have chosen to stay away from American Express cards only because of the lower acceptance levels for the cards at various retailers in Western Canada.
The title of this post, “The Frankenstein Mastercard”, is obviously a tongue in cheek reference to the idea that my ideal no-fee cash-back credit card has been crafted from the parts of at least four other credit cards. Hence, The ‘Frankenstein Mastercard’.
So, without further ado, my choices…
To cover two or three different categories, I would go with the Tangerine Mastercard; by default you get to choose two categories that will net you 2% cash back, however if you have a Tangerine bank account you get to choose a third 2% category. The categories I recommend to choose from are ones like gas, restaurants, pharmacies and entertainment since they are more likely to be regular spending categories compared to something like travel or furniture which might not be as relevant on a regular basis for most.
For your grocery purchases, I recommend the RBC Cashback Mastercard, which will net you a further 2% when you use it to pay for grocery store purchases.(this also frees up a category on your Tangerine card)
Now as a ‘catch-all’ for the rest of your daily credit card purchases, I would recommend the Fido cashback Mastercard which offers a flat 1.5% cashback rate on all domestic purchases and a very nice 4% on all foreign transactions. (whether online or at a brick and mortar retailer) This higher rate is basically the same as having a card that waves the foreign transaction fee (FTF) since the 4% minus the standard 2.5% credit card FTF leaves you with the same 1.5% cashback rate as you are getting with domestic purchases.
An alternative to the 2% back on gas I would offer here is the PC Financial Mastercard. The reason I mention this card is because (at least in Western Canada) when you use this card to pay for your gas purchases at a Great Canadian Superstore gas bar location you earn $0.07/litre back in PC Optimum points if you have your card linked to your PC Optimum account. At current gas prices around here, that’s a return of roughly 5%. Granted it’s in points and not directly cash back but it is as good as cash at superstore, AND you get the points added to your account instantly with no waiting for your next redemption period. I am currently using a PC Financial MC to benefit from this higher reward rate.
Lastly, I admit that all of the above-mentioned cards offer either limited (or in the case of the Fido MC literally no) insurance perks and there will be those times when you want to make a sizable purchase on your card for an item like say electronics, for which it would be nice to have the added security of purchase insurance through the card. For these occasions I would recommend the Capital One Aspire Cash Platinum Mastercard. This card gives a straight 1% cash back on all purchases which is quite average, however the card includes a bundle of purchase insurance perks that I believe are almost unmatched by any other no fee cash back card. As posted on their site, the Capital One card includes:
Price Protection Service
When you use your Capital One credit card to buy a new item in Canada that is offered for sale at a lower price within 60 days of purchase, Price Protection Service pays you the difference up to $100 per item and $500 per calendar year.
Most personal items purchased are automatically insured against theft, loss or damage anywhere in the world for 120 days from the date of purchase when the full cost of the item is charged to your Capital One credit card. Covered items will be replaced or repaired or the purchase price will be reimbursed at the insurance company’s discretion.
When you use your Capital One credit card to purchase most personal items (and the full cost of the item is charged to your card), Extended Warranty coverage automatically doubles the original manufacturer’s warranty for up to two years.
It is worth noting here that they are offering the “price protection service” which is a rarity for no fee cards, also they are offering terms of coverage in both their purchase assurance and their extended warranty that are apparently double the market standard: their purchase assurance is 120 days instead of 60, and their extended warranty is two years in stead of the more common one year. Curiously, I have noticed a few credit card blogs out there recommending the MBNA Rewards Mastercard for both its 1% cash back rate and its included benefits-even though they are not as impressive as the Capital One card benefits. I suspect that these sites are ranking the MBNA card ahead because MBNA offers a bigger affiliate commision to any website owners that send them any new sign ups. (to get an idea of the sign up bonuses available for signing up for an MBNA card, just check out the site greatcanadianrebates.ca)
So there you go. The new Frankenstein Mastercard: The best no-fee cash back card NOT on the Canadian market! But that’s great news for you. Why? Because, that means you get to go and play Dr. Frankenstein yourself by creating your own monster by gathering the cards mentioned in this post!