Choosing a credit card can be an overwhelming process, and there are several factors to consider when deciding which is the right one for you. A ranking focused on the features and benefits of various credit cards provides valuable guidance in helping you navigate options like rewards programs, interest rates, and fees.
The Globe and Mail offers readers the inaugural edition of the Big Guide to Credit Cards, providing a structured approach that helps users find a card aligned with their financial goals and lifestyle. Our goal is to make the decision-making process clearer and more informed. This edition features three types of credit cards: 37 Cash Back cards, 11 Balance Transfer cards, and 43 Travel cards. All card and promotion information was collected as of Sept. 20, 2024. Unlike many competing guides, ours wasn’t sponsored by a credit card company or bank and we don’t receive any financial compensation if you decide to apply for one of the cards on our list.
We considered various aspects for each type of card. While the goal for Cash Back and Travel cards is to maximize the value of rewards, the inclusion of Balance Transfer cards aims to help those looking to manage their debt and pay it off quickly.
Before we could start, we needed to understand the spending habits of Canadian consumers and the common spending categories associated with credit cards. According to Payments Canada, the average monthly spending on credit cards is $2,100. This amount was allocated to the identified spending categories based on the credit cards, using the 2023 basket weights of the Consumer Price Index provided by Statistics Canada.
We allocated monthly spending as follows: 20 per cent to groceries; 10 per cent each to gas, dining and takeout, and travel booking; 8 per cent each to recurring bills and drug store purchases; 7 per cent to retail purchases; 6 per cent to online purchases; 5 per cent to transit; 2 per cent each to alternative transit, EV charging, and entertainment; and 10 per cent to miscellaneous expenses. Cardholders were assumed to spend the same amount each month and to keep spending categories consistent. As part of our assumptions, we considered that Cash Back and Travel card cardholders would pay their monthly bill of $2,100 in full and on time, so late fees and interests were not factored in. For Balance Transfer cards, we assumed a minimum payment of 3 per cent to maintain the promotional balance transfer rates; however, this was not included in the annual cost of carrying the balance.
Cash Back
Cash Back cards were ranked based on net gain, with higher net gains leading to higher rankings. We calculated three-year and five-year net gains based on cash back value, annual fee, and sign-up bonus. For example, a Cash Back card offers a $60 sign-up bonus, 3 per cent cash back on all spending, and a $100 annual fee per year. The three-year net gain is calculated as follows: (2,100 x 12 x 3% - 100) x 3 + 60 = $2,028. Perks and insurance are displayed on our page but are not factored into the ranking.
Balance Transfer
For Balance Transfer cards, we evaluated those with a promotional balance transfer interest rate ranging from 0% to 2.99%, typically lasting six to 12 months, based on the total cost of carrying an outstanding balance over the course of a year. After the promotional period ends, a higher rate, ranging from 13.99% to 22.99%, will be applied to the outstanding balance. Any new purchases made on the card will be subject to the full purchase interest rate, which ranges from 12.99% to 20.99%.
We assumed that a cardholder transfers a balance of $4,215.80 – the average credit card balance in Canada, according to Equifax – from a high-interest credit card to a low-rate card to minimize interest charges. The cardholder would pay 3 per cent of the balance each month as the minimum payment to maintain the lower interest rate, without making any new purchases on the card. Interest was compounded daily in our calculations, and balance transfer fees and annual fees were also included in the total cost. Cards were ranked based on their total costs, with the card incurring the lowest cost receiving the highest ranking.
Travel
Evaluating travel cards meant weighing various factors to reflect the preferences and typical habits of cardholders. We identified four key factors for a weighted ranking: the value of points spent on flights (50 per cent of the total score), redemption flexibility (30 per cent), travel-related perks (10 per cent), and insurance (10 per cent).
Travel cards offer rewards in points or miles that can be redeemed through various channels, with fluctuating values. For each card, we calculated the points or miles earned based on hypothetical spending, assuming cardholders would book all flights and vacations through the credit card’s designated platforms to maximize points. We also assumed cardholders might temporarily increase their spending to qualify for bonus points if their regular spending was insufficient.
Next, we converted these points or miles into monetary value using a point-to-dollar redemption ratio. These ratios were gathered directly from card issuers or their official websites when available. In some cases, we calculated an average redemption ratio based on flights between major Canadian cities and popular domestic or international destinations. Ticket prices and points needed were sourced in August, 2024. We then calculated the three-year and five-year net gains by adding the value of points and sign-up bonuses, and subtracting the annual fee.
Our evaluation focused solely on flight redemptions and did not consider merchandise or other travel products. This approach helps you estimate the best value from your travel points, though it may skew toward higher redemption values since flights generally offer the best return.
The redemption process can involve travel portals or transfers to loyalty programs, each offering different value. We assessed redemption flexibility by categorizing it into three levels: high flexibility, where the program imposes no restrictions on booking platforms, airlines, or travel dates/times, or uses a third-party platform that allows bookings with any airline at any time; medium flexibility, which restricts users to flights and dates available through the program’s redemption platform, with some limitations on airlines and travel options, though users still have a range of choices; and low flexibility, which confines users to redeeming points through the program’s platform with either a single airline or a specific airline alliance, and may include caps on the number of points that can be redeemed.
We also assessed the number of travel perks (e.g., airport lounge access, car rental discounts) and insurance coverage, awarding higher scores for more extensive offerings.
You can also tailor rankings to your preferences using our interactive tool, which allows you to filter based on network, individual or household income requirements, and whether there is an annual fee.
More from The Big Guide to Canadian Credit Cards
Introducing The Globe’s first ever Big Guide to Canadian Credit Cards
How to choose the right Canadian credit card for your financial needs
