Cash back credit cards: the ultimate flow chart

So, I haven’t written anything in a month.  Apologies.  We have a new baby in the house and my spare time consists of sustaining hearing damage and discussing the finer points of poop.  But I wanted to finish my thoughts on picking the optimal cash back credit card strategy.

Back in early January I had written a post on cash back credit cards.  I received an interesting email from a reader asking about the PC World Elite card, which I hadn’t included because the special 3% grocery cashback rate wasn’t nearly good enough to counteract the crappy 1% base cashback rate.

This did get me thinking, however.  I had only entertained dual cash back card strategies — what if we took this a step further and looking at how trios of credit cards would perform.  After all, we’re looking for the optimal cash back card strategy.  With an extra card you could really juice out those last ounces of free money.

In the few free moments I’ve had, I’ve put numbers behind all permutations of three-card setups.  If you want to read my methodology I encourage you to click on the above link to my previous post.  Basically, I use consumer spending data to estimate spending in various categories by annual spend level and the resulting annual cash back you could receive by different credit card combinations.  Because there are a ton of different three-card combos, I will avoid posting massive tables of results.  But let’s review some of the cards involved in this post today:

Features of selected cash back credit cards

FeaturesPC World EliteAmazon.caMBNA World EliteRogersTangerineScotia Momentum
Base rate1%1%2%1.75%1%1%
Special rate3% at Superstore, No Frills, Shoppers2% on Amazon.canonenone2% in 3 categories4% in groceries and gas
Annual chargenonenone$89$29 (waived if Rogers customer or if ask nicely)none$99
Net Foreign Exchange-1.50%1%-0.50%1.50%-0.50%-1.50%
CashBackRedeem in $20 increments off groceriesAutomatic $20 statement creditsOn demand, transferrable to any account in $50 blocksOn demand in $20 for Rogers products, or annually applied against statementMonthly, to savings or against CC statementAnnual, applied to balance
Bonus Offernone$20 up front1st year free, $100 up front1st year free, $25 up front4% in chosen categories for 3 months1st year free
Income Required$80,000 or $150,000 household$15,000+$70,000 or $120,000 household$15,000+$15,000+$60,000 or $100,000 household
Additional Cardsfree??freefreefree$30

Some are included because of awesome base rates (MBNA and Rogers), some are included because of good foreign transaction characteristics ( and Rogers), while some are included because of interesting rates on selected spending categories (PC, Tangerine, Scotia).

What are some of the major characteristics that differentiate the ‘cash back’ you can receive from various cards?

  • Base rate – what really drives your cash back
  • Special rates – perhaps some higher rates in special categories can tip the balance
  • Foreign transaction fees – a select few cards do not charge this, usually -2.5%
  • Redemption schedule – can you unlock the cashback quickly or do you have to wait until the end of the year?  This impacts the model through the time value of money (invest all cash back ASAP).
  • Annual fee – any card that charges a fee will need to offer a marginally higher rate that is worth carrying this fixed cost

The hypothesis here is that combining cards that have complementary strengths can increase your overall level of cash back.  What’s the best combination for you?  I’ve crunched all the numbers and come up with my estimates for what the optimal strategies are.  Without further adieu, here is the ultimate cash back credit card flowchart.

Each branch of this flow chart ends in a certain credit card setup.  Let’s review each in detail:

Setup A: Rogers + Tangerine

Daily Driver: Rogers

Foreign Currency: Rogers

Special Spending Categories: Tangerine for groceries, gas, restaurants

In Setup A, you will take advantage of a free and nearly free card (Rogers has an annual $29 fee for non-customers, but I’ve read that you can get this waived once if you call and ask nicely).  Rogers’ card has a base 1.75% cash back rate and the best net 1.5% cashback on foreign transactions.  Negative points is that non-Rogers customers have to settle for an annual statement credit, which kills the time value of the cashback a bit.

Tangerine allows 2% cashback on three spending categories if you have a free Tangerine savings account (hey, why not?).  I’m guessing the top three base categories in spending for most people would be groceries, gas, and restaurants, so go for those.

Because this setup is targeted at people who make less than $80,000, these cards have low minimum income requirements.  If you make between $70,000 and $80,000 per year, I would encourage you to follow the right branch of the flowchart to see if you end up with any setup involving MBNA World Elite, which has a $70,000 minimum income requirement (I didn’t want to make this chart needlessly complex).

Setup B: Rogers + Tangerine + PC

Daily Driver: Rogers

Foreign Currency: Rogers

Special Spending Categories: Tangerine for gas, restaurants, and entertainment, PC for any non-Costco groceries

Similar to Setup A, Setup B adds PC World Elite for a third card.  PC has a minimum income requirement of $80,000, which makes this a pretty select add-on card.  It’s also pretty boutique in that it’s only going to be good for non-Costco grocery spending at a special rate of 3% cash back, and it forces you to spend those dollars at Superstores or No Frills.

Though this sounds trivial, that extra cash back in groceries could net you between 9% and 13% extra cashback over the year, depending on how much you spend overall.  For an average spender, this translates into about $70 extra cashback per year.  If you can shop at Superstore without changing your routine much, this Setup is recommended.

Setup C: MBNA World Elite + + Scotia Momentum

Daily Driver: MBNA

Foreign Currency:

Special Spending Categories: Scotia Momentum for groceries and gas

This Setup is best for people who are relatively high spenders who do not buy groceries at Costco or Wal-Mart.  Why not people who shop at Costco or Wal-Mart?  They aren’t termed as grocery stores by the credit card companies, so do not qualify for the special rate of 4% cash back on groceries that Scotia Momentum provides.  Because the Scotia card is quite pricey to own at $99 per year, if you do a lot of grocery shopping at Costco or Wal-Mart, you probably won’t shop at other stores enough to pay yourself back that $99.  But Scotia has the benefit of allowing shopping at most grocery stores (so is not as restrictive as the PC card, which forces you to buy groceries at Superstores).

MBNA is probably my favourite card.  It has a high annual fee at $89, but its base 2% cashback rate and flexible redemption options are the best in Canada. is a great complementary card to the MBNA, to be used for all foreign currency transactions (it has no foreign charges) and all purchases (it has the same 2% cashback on Amazon purchases as you’d get with MBNA, but the higher spending on the Amazon card will allow you to get to the $20 cash back allotments faster).

Setup D: MBNA World Elite + + PC

Daily Driver: MBNA

Foreign Currency:

Special Spending Categories: PC for non-Costco groceries

For any relatively big spenders who shop at Costo or Wal-Mart, this is the best setup.  For any shopping at Costco or Wal-Mart, you will use your MBNA card and its 2% cashback rate.  For any non-Costco or Wal-Mart grocery spending, do it at Superstore or No Frills to get the 3% cashback rate.   If you do not like to shop at Superstore or it’s not near you, I’d recommend just dropping the PC card from this setup.  But for most people, this may involve no new behaviour or a simple switch of stores.

Setup E: Rogers + Tangerine + Scotia Momentum

Daily Driver: Rogers

Foreign Currency: Rogers

Special Spending Categories: Scotia Momentum for groceries, gas, and pharmacies, Tangerine for restaurants, entertainment, and furniture

This Setup is for moderately-spending Rogers customers who do not shop at Costco or Wal-Mart.  You will use your Rogers card for base purchases and foreign transactions.

However, you’ll be using the Scotia and Tangerine cards for a lot of specialized shopping.  Scotia has a 4% cash back rate on groceries and gas and a 2% rate on pharmacies (better than Rogers 1.75% base rate).  You’ll then use your Tangerine card for spending on restaurants, entertainment, and furniture (or whatever else is your next highest spending category available from Tangerine!).

This may seem like a lot of gymnastics, but for moderate spenders who are Rogers customers, it is absolutely the optimized strategy.


To get a sense of how these different strategies would play one for just one scenario, here’s the estimated cash back you’d receive for $35,000 annual credit card spend, for a non-Rogers customer who doesn’t shop at Costco:

This graph suggests that under these parameters, the optimal strategy is to pursue Setup C: MBNA + Amazon + Scotia.  This results in a net cash back (after annual fees, time value of money factored in, etc) of $711.

If you refer to the flow chart, you’ll notice that if you follow this set of parameters, you’ll also arrive at the branch that suggests Setup C.  This gives you a sense of how each of the recommended Setups were constructed and how the boundaries between recommendations were defined.

2 thoughts to “Cash back credit cards: the ultimate flow chart”

  1. i had read your previous post on cash back cards and I was going to ask you if you had looked at the PC World Elite.

    If you link your PC Plus card to your World Elite card, you get extra points, so bear with me as I get into it. The following numbers are only if you link your World Elite and PC Plus Points cards.

    You get 7% (cash back in points) on fuel at Superstore gas bars. So, if you spend $200 per month on fuel, you would get 14,000 PC Points per month.
    We spend over $500 a month on groceries at Superstore. So take that $500 x 30 points per $ = 15,000 Points per month.
    That’s 29,000 points for $500 in groceries and $200 in fuel a month, multiplied by 12 months = 348,000 points ($348).
    One week (sometimes two weeks) a month they offer 25,000 bonus points for spending $250, plus we probably earn (about) another 5,000 points a month on points for random bonus items. So that is 30,000 more points per month.
    We can earn (59,000 per month) 708,000 points annually, which is $708 per year for an $8,400 annual credit card spend. What they don’t tell you, is that if you take a re-loadable credit card off of the gift card rack and take it to the till, you can get that $708 put on the card and go spend it wherever you like.

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