Cash Back: Our Strategies for Earning Cash Back Easily

To the point Here are our strategies to earn the most cash back with the least amount of effort and expense!

Cash Back: The Credit cards Welcome Bonus Strategy First round of credit cards Second round

Cash back: the long-term strategy Cash back: the long-term credit cards portfolio Illustrated example of the strategy

There are hundreds of different credit cards on the market to earn cash back rewards for everyday savings.

However, how do you maximize cash back with a small amount of spending?

Here’s a strategy to consider when optimizing purchases in the right categories on each credit card (restaurants, grocery stores, gas, AIR MILES partners, etc.):

the least number of credit card applications
the cheapest way possible
the minimum expenditure required

This strategy is not exhaustive! Come and share your cash back strategies in the Milesopedia Facebook community!

Cash Back: The Credit cards Welcome Bonus Strategy

When you start venturing into the world of credit cards rewards, you quickly realize that the most lucrative strategy is in applying for credit cards to get welcome bonuses.

For beginners, we recommend starting with one or two credit cards, and then spacing out applications by at least 6 to 9 months. Then, once you become more comfortable with credit card management, you can increase the number of credit cards applications and move them closer together over time.

First round of credit cards

The credit cards suggested in the first round of the strategy provide rewards points primarily for travelers. However, these points are indirectly a form of cash back, depending on how you look at the strategy.

Here is the valuation that we obtain after the welcome bonuses following the three application:

Credit card	Bonus	Minimum expenses	Rewards	Annual fee	Final value
TD First Class Travel^® Visa Infinite* Card	115,000 TD Reward points	$5,000	10,000 points	Annual fee reimbursed in the first year	$625
HSBC World Elite^® Mastercard^®	100,000 HSBC Rewards points	$1	3 points	$49 (thanks to the $100 credit )	$500
American Express Cobalt^™ Card	15,000 privilege points	$9,000 spread over the first year	45,000 Membership Rewards points	$155,88	$600
TOTAL	230,000 points	14 001 $	55,003 points	$204,88	1 725 $

This strategy accumulates $1,520 in net value ($1,725 – $205) on $14,001 in expenses, for a return of 10.8%.

Second round

In this second part of the strategy, the suggested credit cards give welcome rewards and cash back bonuses directly:

Credit card	Bonus	Minimum expenses	Rewards	Annual fee	Final value
CIBC Dividend^{^®} Visa Infinite* Card	$250	2,500 over 4 months	–	Annual fee reimbursed the first year	$250
BMO^{^®} AIR MILES^{^®} World Elite^{^®} MasterCard^{^®}	3,000 miles (or $315)	$3,000 over 3 months	750 miles (or $79)	Annual fee reimbursed the first year	$394
Tangerine Money-Back Credit Card	$100	$1,000 over 2 months	–	with no annual fee	$100
TOTAL	665 $	$6,500	79 $	$0	744 $

This strategy yields $744 in net worth on $6,500 in expenses, a return of 11.43%.

Overall

So, with these two rounds of credit cards, an individual’s annual spending of $14, 000 could generate $2,039 in cash back. That’s a yield of 14.5%.

Cash back: the long-term strategy

For a variety of reasons, many people prefer the strategy of arming themselves with a good wallet that has one cash-back credit card, to be kept for the long term with little annual fee to pay.

The credit cards that give the highest cash back rates and good insurance are often not free. Since the changes to the American Express Cobalt^TM Card, it has become one of the best cash back credit cards in Canada.

Second, as a strategy, I recommend that you seek out credit cards to cover expenses where American Express is not accepted, or categories that aren’t boosted.

Cash back: the long-term credit cards portfolio

Card	Spending Category	Cash Back	Welcome bonus	Annual fee
American Express Cobalt^™ Card	Grocery Various gift cards Gas* Walmart Amazon* Furnishings* Restaurants Food delivery Travel	5 %	15,000 Membership Rewards points (i.e. $150)	$155,88
Tangerine Money-Back Credit Card	Recurring bill payments Drugstores Hotels and Motels Home Improvement Restaurants	2 %	$100	No annual fee
BMO^® CashBack^® Mastercard^®*	Grocery	3 %	$100	No annual fee
HSBC World Elite^® Mastercard^®	Travel Foreign currencies	1.5% to 3%	100,000 points (i.e. $500)	$49 (thanks to the $100 credit )

*Gift cards for these businesses can be purchased at grocery or convenience stores for 5% cash back.

Illustrated example of the strategy

Here are some numbers to illustrate the return of this strategy:

Card	Category	Annual expenditures	Rewards earned
American Express Cobalt^™ Card	Grocery store where American Express is accepted	$1,500	$75
BMO^® CashBack^® Mastercard^®*	Grocery	$1,500	45 $
American Express Cobalt^™ Card	Gas	$1,000	$50
American Express Cobalt^™ Card	Restaurants where American Express is accepted	$500	$25
Tangerine Money-Back Credit Card	Restaurants	$500	$10
American Express Cobalt^™ Card	Uber Eats	$700	$35
American Express Cobalt^™ Card	Tim Hortons, Starbucks	$500	$25
Gift cards strategy	Walmart	$500	$25
Gift cards strategy	Amazon	$1,000	$50
Gift cards strategy	SAQ/LCBO	$500	$25
Gift cards strategy	Netflix	$250	$12.5
Gift cards strategy	Cinema	$500	$25
Gift cards strategy	Books and cultures	$500	$25
Tangerine Money-Back Credit Card	Drugstores	$300	$6
Gift cards strategy	Furniture (IKEA, Wayfair, etc.)	$375	$18.75
Gift cards strategy	Minor renovation and maintenance	$375	$18.75
Gift cards strategy	Clothing	$1,000	$50
HSBC World Elite^® Mastercard^®	Miscellaneous (other)	$2,500	$37.5
	TOTAL	$14,000	$558.5

With this portfolio, an individual’s annual expenses of $14,000 could generate $354.62 in cash back after subtracting the annual fees ($558.5 – $155.88 – $49) or 2.53%.

This strategy yields a significantly lower return when welcome bonuses are removed from the equation. However, an average of 2.53% cash back is still excellent.

When you have few credit cards, the best strategy is to make sure you go out and optimize each category of purchase to get the most optimal cash back possible. Therefore, the gift card strategy is essential to master in a cash back perspective.