One of the easiest ways to save money and quickly get to FI is to use a good credit card and make as many of your purchases on this card. By putting $15,000 to $25,000 of your regular family expenses (that you would make anyways) on a credit card with a generous rewards program you can benefit from up to $500 in savings per year. For this reason I regularly review all the Canadian credit cards and banking options to make sure we are always using the most competitive options.
When analyzing credit cards I will often refer to the annual Money Sense Credit Cards Review. This review tends to analyse to many different frills of Canadian credit cards. Ultimately what I am looking for is the card that will generate the most monetary benefits long term when accounting for rewards, annual fees and bonuses regardless of frills and interest rates.
As a family, we try to put everything on our credit card to maximize as much points as we can get. We always fully pay the credit card every month so to never ever pay any crazy high interest on these. I still find that our best option is the Capital One Aspire Travel World Elite Master Card. Yes I know, that is a long name. This credit card does have a $150 annual fee however it’s one of the only Canadian credit cards that pays 2% back in rewards on every purchase.
The rewards need to be redeemed on any travel related purchases. But you are free to purchase your travel anywhere using your card. Using the online account, it is very easy to just wipe out any travel expense from the bill. And they are pretty flexible on travel related expenses. It can be hotels, flights, UBER, bus passes etc. You can also use your rewards points on gift cards and merchandise. However you don’t get the same 1 to 1 value as redeeming on travelling. For example, if you made $20,000 of purchases in one year, you would have $400 (2%) of rewards points eligible to wipe out travel expenses from your bill. When you redeem on gift cards, you will get a $50 gift card for approximately $65 worth of points.
Now the biggest catch on this card is the $150 annual fee, however, here is the bonus. You get 40,000 points for signing up which is the equivalent of $400 of travel. This essentially pays for your card for nearly 3 years. By which time, there will probably be an even better rewards card out there…
Other Good Options
Other Canadian credit cards that I have seriously considered are the Tangerine Money Back Master Card and the Scotiabank Gold American Express Card. With the Tangerine card you get to choose 2 categories of purchases to get 2% cash back on (3 categories if you have a bank account with them as well). You get 0.5% on all other purchases. The Scotiabank Gold is pretty awesome mostly because you get the equivalent of a $300 sign up bonus plus the first annual fee waived. It’s always worth reevaluating your credit card every year to make sure it’s the best option for you.
For banking, there are a lot of free bank account options out there. Including Tagerine and PC Financial. These banks are great as they offer free accounts and access to just as many ATMs as most banks. The only downfall is that these banks tend to not have day-to-day banking services available. For example, if you need a bank draft, you generally have to order it online from them and get it a few days later. Compared to a traditional bank where you could pretty much get anything the same day by visiting a branch.
My preferred bank account is the RBC Day to Day Bank Account. This account has a $4 monthly fee but is waived if you also have an investment of any kind with RBC as well as a credit card with an annual fee with them. I also manage my TFSA account through RBC Direct Investing as I find they have a pretty easy to use platform and very comparable rates ($9.95 flat fee per trade). I also hold their cheapest annual fee credit card at $39/year. This all adds up to my banking fees being $3.25/month. Another great advantage is that RBC does not charge to send or receive email money transfers to anyone (regardless of bank they are with).
I’m not 100% sure RBC is the best banking option out there but it does provide a pretty good package for us right now. In the years to come with less and less need for in person services, I would seriously consider switching my account to Tangerine as I have heard very positive reviews on that service.
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