Recurring Payments: The Best Credit Cards

Recurring payments are an important part of our daily lives, whether for subscriptions, insurance or telephone services. Using a credit card tailored to these monthly expenses can offer significant benefits, such as cash back or reward points for travel.

This article explores the best credit cards in Canada for optimizing your recurring payments.

A recurring payment is a direct debit made at regular intervals (monthly, quarterly or annually) for services such as subscriptions to streaming platforms (like Netflix, Disney+, etc.) or a gym membership, mobile services, internet bills, insurance or even rent payments.

These payments are often referred to as “pre-authorized payments” because they require you to set up your credit card as the payment method with the merchant and authorize them to make withdrawals on specific dates. These transactions are recurring and allow you to benefit from automated payments without having to take action at each due date.

Another example of a major recurring payment might be rent. With services like Chexy, it’s possible to pay your monthly rent, recurring bills or taxes via credit card, although this may entail a small surcharge. This option allows you to earn points or cash back on a recurring expense as important as rent.

However, for a payment to be considered recurring, it must first be authorized by the merchant. You must have set up a recurring payment, which means that it will be automatically debited from your card. It’s always wise to check with the merchant or run a test to make sure that the payment will be classified as recurring.

Opting for a credit card for your recurring payments offers several advantages.

Many credit cards offer attractive rewards, such as loyalty points, cash back for every dollar spent. There are credit cards that specifically give more points for the “recurring payments” category of purchases. By centralizing your recurring payments on such a card, you maximize your earnings automatically. This can accelerate your accumulation of points or cash back, helping to finance future trips or purchases.

Grouping all your recurring payments on a single card also allows you to centralize your spending, making it easier to monitor and manage your budget. You can view all your transactions in one place, reducing the risk of forgetting a bill or making a late payment. It also allows you to better plan your monthly finances and ensure that your payments are made on time, avoiding late fees or service interruptions.

Some credit cards offer additional protection and insurance that may prove useful for your recurring payments. For example, by paying your cell phone bill with certain cards, you may benefit from coverage for repair or replacement of your device in the event of damage or theft.

First, let’s talk about the best cash back credit cards for recurring payments. At the top of the list, the Scotia Momentum Visa Infinite Card stands out with its generous 4% cash back, an unrivaled offer in this category. No other card does a better job of maximizing your rewards on these fixed expenses.

Right behind it, the TD Cash Back Visa Infinite* Card offering a solid 3% on recurring payments, an excellent option for those looking for a high-performance alternative.

Then there’s the CIBC Dividend^® Visa Infinite* Card and the Tangerine World Mastercard, both at 2%. If your priority is recurring payments only, the Tangerine World Mastercard is a strategic choice, since it has no annual fee. While the CIBC Dividend^® Visa Infinite* Card offers better discounts on other categories, such as groceries, the Tangerine World Mastercard can be used exclusively for recurring payments free of charge, while optimizing your other spending with cards better suited to your accumulation strategy.

Secondly, some credit cards offer rewards in the form of points, often travel points, which can be used to reimburse travel-related expenses (via an account credit). The value of these points varies depending on how you use them. For example, Scene+ points can be redeemed for any travel-related expense or even grocery purchases at a value of 1 cent per point. However, if you opt for an account credit to pay down your card balance, the value of the points will be lower. So, for a card like the Scotiabank Gold American Express^® Card, which awards 3X Scene+ points on recurring spending, this can translate into a return of up to 3%, depending on how you use your points.

MBNA Rewards points can be flexibly redeemed for a variety of goods, gift cards, statement credits and more. However, to maximize their value, we recommend using them via the MBNA travel portal, where each point is worth the equivalent of 1 cent. Depending on your usage, this could earn you up to 5 cents per dollar spent with the MBNA Rewards World Elite^® Mastercard^®, including recurring payments for digital media, subscriptions and household utilities.

For the TD First Class Travel^® Visa Infinite* Card and the National Bank World Elite Mastercard respectively, they offer 4X and 2X points on recurring payments. According to Milesopedia’s value estimates, these two cards offer a return of around 2% on this category.

Finally, the American Express Cobalt^® Card which awards 3X points for streaming services (like Netflix, Disney Plus, Spotify, etc.), does not award these points for traditional recurring payments, such as internet or insurance bills. However, these points are highly sought after by travellers, as they can be transferred to a wide range of partners. In fact, while Membership Rewards points have a minimum value of 1 cent, they can reach a much higher value depending on how well you optimize their use. This means you can get a guaranteed minimum return of 3% on your streaming services or even more!

When choosing a credit card to manage your recurring payments, several criteria must be taken into account to maximize the benefits and optimize the management of your finances.

Some credit cards offer enhanced rates specifically for recurring payments, such as monthly subscriptions or utility payments. A card with a higher multiplier in this category allows you to earn extra rewards or higher cashback, which can lead to significant savings or valuable points for your travels on your recurring bills.

Before committing to a credit card, it’s essential to assess whether the benefits and rewards offered justify the card’s annual fee. Some cards charge an annual fee, but offer substantial rewards in return. However, it’s important to ensure that these benefits outweigh the cost of the fee.

For example, if you only have twelve annual payments of $30 in this recurring payment category, 4% rewards with the Scotia Momentum Visa Infinite Card wouldt amount to less than $15. In this case, it might be more beneficial to choose a no-annual-fee card like the Tangerine World Mastercard, even though it only offers a 2% cashback rate, as the overall gain could be more worthwhile in the long run. Ultimately, it’s up to each individual to do the math and compare available options to find the most cost-effective solution.

Choose a credit card with a rewards program that matches your goals and preferences. For example, if you’re a traveler, a card that offers points toward airline tickets or hotels could be a wise choice. If you don’t travel much and prefer cash back, opt for a card that allows you to earn a percentage of your recurring payments.

*For streaming services only.

Recurring payments make up a significant part of our monthly budget. By choosing a credit card that offers rewards on these expenses, you can earn points or cash back easily. Depending on your preferences, some cards will be more advantageous than others. Take the time to analyze your spending profile and choose the card that’s right for you.