The top 5 credit cards in Canada for travel rewards

The RewardsCanada.ca blog has once again ranked the top credit cards in Canada for travel and hotel rewards.

In the researchers’ seventh annual rankings, BMO’s World Elite MasterCard emerges as the best value out of a credit card landscape consisting of some 80 cards issued by the big banks and other Canadian financial institutions.

Despite concerns that perks would be scaled back in light of a recent decision to cut transaction fees, loyalty rewards haven’t taken a hit this year. “We have not seen this happen yet,” Patrick Sojka, founder and principal at RewardsCanada, said (more on that below).

Annual fee cards

BMO’s premium card is tops in the annual fee category, “what we would consider to be the most popular category of cards for Canadians,” the blog says. The $150 annual fee is waived for new sign-ups, who are also credited with $300 worth of rewards upon successfully applying for the card.

The rate of return on rewards is two per cent on all purchases, meaning for $100 spent cardholders get $2 in value that can be used through BMO Rewards, the bank’s own program. You’d better have a fairly comfortable individual or household income though, with only those earning $70,000 a year or with household income exceeding $120,000 qualifying for the card.

BMO’s World Elite card beat out last year’s winner in the category, the Capital One Aspire card, which provides $100 in rewards for new sign-ups as well as a similar dollars spent-to-rewards ratio. Both cards offer an “excellent suite” of travel insurance and benefits, RewardsCanada says.

No fee cards

The Capital One Aspire card also carries elevated income requirements, like many premium cards in the annual-fee category.

For those looking for some perks without the fees, the blog rankings suggest the American Express Blue Sky credit card is best. Cards in this category don’t cost a hefty annual fee, but also don’t pay out nearly as much in rewards, with 1.25 points on the Blue Sky card awarded for every dollar spent.

Did we mention that 10,000 points amounts to $100 in value? Cards in the no-annual-fee category all generally deliver a far smaller return to the cardholder — but with no fee helping to fund the rewards program, that shouldn’t be altogether unexpected.

Here’s the top five fee and no-fee credit cards:

Annual fee:

1. BMO Rewards World Elite MasterCard ($150)
2. Capital One Aspire Travel World Elite MasterCard ($120)
3. Scotiabank Gold American Express ($99)
4. TD First Class Travel Visa Infinite Card ($120)
5. CIBC Aventura Visa Infinite Card ($120)

No annual fee:

1. America Express Blue Sky Credit Card
2. Capital One Aspire Travel Platinum MasterCard
3. American Express Air Miles Credit Card
4. BMO Air Miles MasterCard
5. CAA Rewards MasterCard

Perks intact

Credit-card industry watchers had been expecting card reward programs—notably premium ones offering juicy perks— to take a hit this year. That’s because, with Ottawa looking over their shoulders, MasterCard and Visa Canada agreed to slash the fees they charge merchants on credit-card purchases.

MORE: Visa, MasterCard Canada agree to slash transaction fees

Those transaction fees help pay for the raft of loyalty programs out there now, but have multiplied as the number of programs have. Starting next month, Visa and MasterCard will cut the fees to 1.5 per cent of the transaction value of purchases, down from 3 per cent or more currently.

The card companies have agreed to lower the fees as Ottawa – joining other governments – expressed concern the fees were imposing a tax of sorts on all shoppers as merchants flowed the fees into their prices.

That fee cut will amount to a 10 per cent hit to the amount the banks and card issuers collect – a hit that could cut into rewards. But so far, cards haven’t seen any adjustment in reward levels.

“We have not seen this happen yet as it seems the banks are taking a wait and see approach to see how the change affects their bottom line,” Sojka said.

If a hit to rewards happens, it’s likely to fall on the less lucrative customers using no-fee cards, Sojka said.

“We now may not see any changes to rewards cards for perhaps six or more months and in most cases we believe it will affect lower end (no fee etc.) cards rather than premium cards.”