Cash back credit cards are a type of credit card that offer you rewards just for using them. Think of it as a little extra perk of spending your hard earned money. In the case of cash back cards the reward is, you guessed it, cold hard cash.
Other rewards cards may offer things like travel points or miles that can be redeemed for flights, hotels, car rentals, or various items. They’re somewhat limiting, since there are typically just a few categories you can choose to spend your rewards on.
Cash back benefits are much simpler: you earn cash each time you use your card and cash out that extra money when you’re ready. Sounds great, right?
We’re big fans of cash back credit cards and that’s why every KOHO card offers cash back. What makes KOHO different from other cash back credit cards is that a KOHO card is a prepaid credit card.
Think of it like a mix between a credit card and a chequing account: you load your own money onto the card but you can use it anywhere credit cards (in our case Mastercard) are accepted.
Cash back cards are a great addition to your personal finance toolkit. They can help automate your savings (or provide a little extra cash whenever you need or want it) in a super simple and seamless way. Think of them as adding an additional revenue stream to your life – one that takes zero effort to make money with since you automatically earn cash back every time you use it.
How Canadian Cash Back Credit Cards Work
How Canadian cash back cards is fairly simple. You use your cash back credit card for purchases and, each time you do, you earn a percentage of cash back. In KOHO’s case, you earn 1% or 2% (depending on the subscription you choose) on purchases.
You can redeem your cash back, whenever you’d like, in the KOHO app. It’s a simple and quick process. We haven’t timed it officially, but we’d be willing to bet it only takes a few seconds.
Benefits of cashback cards
There are tons of benefits to using a cash back card. Here are just a few of them:
No interest: your cash back card is loaded with your own money, so you aren’t using credit. That means you’ll never have a missed payment or hit to your credit score.
Responsible spending: because it’s your money and not credit, you won’t be tempted to overspend and end up with a hefty credit card bill you can’t afford at the end of the month.
Simple rewards: Unlike some other rewards programs that are tied to specific brands or travel, cash back rewards can be used for anything you like. You have the flexibility to use your cash back to pay off debts, save for future purchases, or spend it however you like!
Access to Credit Building: This might be a KOHO-specific benefit, but we’re proud of it, so we thought we’d share. With our cash back cards, you have access to Credit Building tools that will help you build your credit history. This makes our cards great for people with bruised or no credit.
Transparency: Cash back cards have straightforward cash back rates, such as 1% to 2% on purchases. This makes it super easy to calculate your potential earnings.
Ways to redeem cash back benefits
We’ll use KOHO cards as an example since we obviously know them best.
Here’s how redeeming cash back rewards works.
Open your KOHO app
At the top of the app, you’ll see your balance
About half-way down the page, you’ll see the Cash back section
Tap that
There, you’ll see how much cash back you’ve earned
You’ll also see your all-time cash back total
You can check your current cash back rate
And you can even switch tiers to customize the cash back you can earn
Tap “redeem” in the cash back page and your cash back will be deposited to your Spendable account in just a few seconds. Simple, right? Now, you can use that sweet cash back for anything you want – groceries, a new outfit, or maybe a chunk of money to set aside for a rainy day. It’s all up to you.
Not all cash back cards are created equal, though.
Some cash back credit card issuers might limit the amount you can earn over a certain amount of time. Others allow you to earn a set amount up to a certain spending threshold and another amount for any purchases made above that amount. And others restrict how you can redeem your cash back, whether that’s online, in-app, or over the phone, while others set redemption minimums and maximums.
The good news with KOHO is that you can redeem your cash reward whenever you’d like – and as often as you’d like.
Some of our users like to cash out their cash back on a regular basis, probably to treat themselves to something every once in a while, like a meal.
Others choose to let their cash back accrue over a longer period of time, saving hundreds of dollars before cashing out. Free vacation, anyone? Or maybe you’re saving for a big ticket item. With KOHO’s cash back, you can save money over time to help you reach those goals.
Best Cash Back Credit Cards
If your goal is finding cash back cards in canada, here are some things you should look for:
Low or no fees
A simple cash back process
Transparent cash back structure
Annual fee: look for one that aligns with your budget
Benefits you can use, like Credit Building and budgeting tools
Easy to qualify for
Other benefits like no foreign transaction fees, if you travel a lot
What to know before applying for a cash back credit card
Before applying for a cash back credit card you should keep a few things in mind.
If it’s a traditional credit card, keep in mind that the financial institution offering the card will do a credit check before giving you your card. That means your credit score will be impacted, so don’t apply for new credit cards too often.
You don’t have to worry about that if you’re applying for a prepaid cash back credit card like KOHO, since no credit checks are required for our cards.
You’ll also want to investigate how earning cash back rewards works for the specific card you plan on getting. If the process is super complicated, you might not be willing or able to use your cash back as often as you’d like.
Check out all the benefits that are available with the cash back card as well. Make sure you choose one that offers you the most bang for your buck.
Finding cash back cards in Canada is just one Google search away. Or, you can check out our KOHO accounts and choose from four different ones – and all of them offer cash back!
FYI we have four different accounts, each one tailored to a different type of user.
Our Easy account is a no-fee option that gives you 1% cash back on groceries and transportation. You get 0.5% interest on your entire balance with the Easy account.
Our Essential plan offers 1% cash back on groceries, transportation, food, and drink. It also gives you 4.5% interest on your first $500 and 2% on anything after that. You’ll also get 30% off Credit Building. The Essential plan costs $4 a month.
Our Extra account offers 2% cash back on groceries, transportation, food, and drink and 4.5% interest on your first $1,000 and 3% on anything after that. The Extra account comes with a 30% off Credit Building and no foreign exchange fees, making it a great travel companion. The Extra plan costs $9 a month.
Our Everything account costs $19 and gives you the best available benefits. They include 2% cash back on groceries, transportation, food, and drink; 4.5% interest on your entire balance; 50% off Credit Building; No foreign transaction fees
How to Maximize Cash Back Rewards
You can maximize your cash back rewards by choosing one card and using it for the majority of your purchases. Make sure to update all of your subscriptions (think Netflix, Disney+, food subscription boxes, Spotify or Apple Music, and all other paid apps).
Pay for all your groceries and all other spending with the same card and watch that cash back roll in. You’ll also want a strategy for redeeming cash back rewards – if you plan to use your extra cash for everyday items, don’t be shy about cashing out whenever you need it.
However, if you want cash back to play a role in helping you achieve longer-term financial goals, like saving for a trip, try to ignore the cash back for a long period of time. Watch it add up and only cash it out when it’s time to jetset to that faraway place.