TLDR
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Loyalty rewards credit cards can help you earn points, cashback or travel miles on purchases.
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Rewards can be redeemed for travel perks, gift cards, merchandise, and more.
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Some cards help you earn points on routine purchases such as groceries and gas.
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Earn additional points with referral bonuses and welcome offers.
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Responsible use of a card helps build your Canadian credit history.
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Earn additional points with referral bonuses and welcome offers.
Starting over in a new country can be overwhelming as expenses can add up quickly. One of the smartest steps you can take early in your journey is to consider a loyalty rewards credit card . These cards can help you build your Canadian credit history and also earn rewards that you can put to good use later.
What are loyalty rewards cards?
Loyalty rewards credit cards let you earn points, cashback or rewards every time you use them to make a purchase. These rewards can be used to save on many expenses: buying groceries, winter clothes, furniture for your new home, car rentals to travel around Canada, booking flights to your home country, and gift cards or discounts at select stores. You can even use them to pay down your credit card balance, and much more.
Why should newcomers consider a loyalty credit card?
Earn rewards for everyday spending
One of the biggest perks of a loyalty card is to get something back every time you use it to make a payment. From groceries to gas, each swipe or tap can help you earn points, cashback or discounts, turning routine purchases into real value.
Building good credit history
Using your credit card regularly and responsibly can help you build good credit history in Canada . A good credit score helps you get better rates for loans to meet your life goals such as renting a home, getting a car, pursuing higher education, or applying for a mortgage to buy your first home.
Earning vs. redeeming credit card points
Earning points
Most rewards cards offer one point on every dollar you spend. This means, every time you make a payment with your credit card, you earn points. Some credit cards require you to reach a certain number of points before you can redeem rewards. Others let you redeem at any amount.
Redeeming points
Loyalty cards generally offer the choice of earning points, travel miles or cashback. Those that offer points can be redeemed for a wide variety of reward options:
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Travel: The more points you earn, the more travel perks you can enjoy. You could use points to book flights, hotels, car rentals, or vacation packages. Some rewards cards let you book flights on specific airlines, while others are more flexible.
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Merchandise: Sometimes, card providers offer a merchandise catalogue, with a list of items to shop with your points, including electronics, appliances, cosmetics, fashion items, and more.
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Gift cards: You could redeem your points for gift cards from major retailers, grocery chains, and restaurants across Canada.
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Investing with points: The best loyalty rewards cards give you flexibility in redeeming points. Some banks let you use rewards points to invest in your registered savings accounts, for example.
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Pay with points: You could use your points to pay off your credit card balance, bills or loans, send Interac e-transfers, or make charitable donations. When you are on a tight budget soon after you arrive, this offers additional value.
Helpful Tip: Loyalty rewards are a great back-up payment option. You could use points to make the minimum payment on your card, or to avoid a late payment fee which could pull down your credit score.
How to earn points faster
Here are five practical ways to earn points and enjoy extra benefits.
Earn points everyday
Paying with your rewards credit card on groceries, food and personal care products such as soap or shampoo helps you top up your points consistently. You may want to consider a card that offers higher rewards on everyday essentials, so you earn points daily.
Pay bills
A phone plan (prepaid or subscription) will likely be one of your first purchases in Canada. You could use your rewards credit card to pay phone and internet bills on monthly or subscription basis to steadily earn more.
Discounts with partner retailers
Loyalty points can be earned by shopping both in-store and online. Sometimes, credit cards offer bonus points on online purchases with partner retailers.
Referral bonuses
Referral programs let you earn bonus points in bulk when your friends or family members apply. This is especially helpful when you’re just starting out in Canada and are looking to set up your home and can’t avoid high expenses.
Welcome offers
Welcome promotions can significantly boost your points balance right when you sign up for an eligible credit card.
Things to consider before applying
Your spending habits
Choose a card that matches your lifestyleand expenses.
Annual fees
Some rewards cards charge an annual fee that you need to consider before you apply. Ensure that the benefits outweigh the costs.
Credit history
Look for a newcomer-friendly or secured credit card if you don’t have a Canadian credit history yet. A financial advisor can help you learn more.
Interest rates
Consider paying your balance in full each month to avoid paying high interest. Alternatively, shop for cards with lower interest rates.
The right loyalty rewards credit card can bring you closer to your financial goals. It’s important to pay on time, keeping balances low and protect your credit score. You also have the option to pick a cashback card. Choose a credit card that aligns with your priorities and offers real value. Learn how to get the most out of your loyalty and credit cards rewards programs.
A simple way to keep track of your expenses is through your mobile app or online banking. A financial advisor can help you explore rewards credit cards and find one that best meets your needs.
Ready to apply?
Talk to an RBC Newcomer advisor about eligible credit cards that are suited for your first steps in Canada.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
