Cash Back
Cash back is a credit card reward type that returns a percentage of your eligible spending to you as real money, rather than as points or miles. The appeal is simplicity: 1% cash back on $1,000 of spending is always worth $10, with no redemption complexity, partner transfers, or blackout dates. Cash back can be distributed as a statement credit (reducing your balance), a cheque mailed to you, or a direct deposit to a bank account depending on the card issuer.
Earn rates vary by spending category. Most cards offer a flat rate on all purchases (0.5%–2%), while category cards offer elevated rates on groceries, gas, dining, or drugstores (3%–5%) to reward everyday spending.
Quick Facts
| Detail | Value |
|---|---|
| Typical flat rate | 1% – 2% |
| Best category rates (Canada) | 3% – 5% on groceries, dining, gas |
| Payment method | Statement credit, cheque, or direct deposit |
| BMO / Rogers cards | Paid monthly |
| CIBC / TD cards | Paid annually (or on request) |
| Minimum redemption | Often $25 or no minimum (varies by issuer) |
Canadian Context
Cash back credit cards in Canada pay out differently depending on the issuer — some (BMO, Rogers) automatically credit your account monthly, while others (TD, CIBC) accumulate rewards and pay out annually in November or on request. Cash back is generally taxed as a reduction of cost basis rather than income in Canada, though the CRA’s position on large cash back amounts in a business context can be nuanced. Unlike the US market, Canadian cash back rates top out around 4%–5% in the best categories; few Canadian cards match the 5%–6% grocery rates sometimes seen in the US.
Related Glossary Terms
Information on this page is provided for general educational purposes. Card terms, earn rates, and payout schedules change frequently — always verify details directly with the card issuer before applying.