RRSP and FHSA: Maximize Your Tax Refund With Reward Points

Updated Feb 11, 2025
Fact checked by
Vincent Morin
Vincent Morin Vincent Morin
Vincent achieved financial independence and retired early (FIRE) at the age of 35. After a career in financial technologies for a large American investment bank, he founded Retraite101, a personal finance site that reaches more than 350,000 unique visitors per year and has more than 30,000 subscribers on social media. Passionate about personal finance, cycling, reading and gardening, he continues to write to inspire and motivate Quebecers to take charge of their finances.
All posts by Vincent Morin
Famille souriante profitant d'un moment ensemble dans le salon. Les parents lisent avec leur fille sur le canapé tandis que le fils joue au sol avec ses jouets.
To the point Find out how to use RRSP and FHSA with credit card rewards points to get a tax refund (and more).

It’s often said that the best use of reward points is for travel. However, if we play our cards right, an RRSP or FHSA contribution can easily beat travel rewards redemptions.

RRSP and FHSA

First, the RRSP is a savings vehicle for retirement or to finance the purchase of a first home (HBP). The main advantages are:

  • Returns grow tax-free;
  • RRSP contributions can reduce taxable income (generating tax refunds, family allowances, various credits, etc.).

The FHSA is a savings account created in 2023 to help you buy your first home. The main advantages are :

  • Contributions reduce taxable income in the same way as RRSPs, which offer the same range of tax benefits;
  • Earnings are not taxed like the TFSA;
  • No obligation to repay the money withdrawn from the FHSA unlike an RRSP;
  • Up to $8,000 per year, $40,000 total contribution limit.

When we talk about a tax refund, we are talking about a tax savings. In fact, when deductions are made for RRSP or FHSA, the tax payable is recalculated at a lower rate, since income is lower.

Since the tax deducted from each paycheck does not take these deductions into account, we get a tax return (refund).

An RRSP or FHSA is a type of account. Within these, you can put whatever product you want, whether it’s a standard savings account, GICs (Tangerine GICs or EQ Bank GICs), mutual funds, exchange-traded funds, stocks, and so on. The return on your account will be the fruit of what you have sown. Make sure you sow what you want to obtain and what you are capable of maintaining: that’s risk management and risk tolerance!

money-1604921_1920

Invest in an RRSP or FHSA with Credit Card Points

Many institutions offer the possibility of using your reward points to invest directly in your RRSP or TFSA:

At the time of writing, it is not possible to invest directly in the FHSA with points, except with RBC. In the meantime, you can use the points to save on a daily basis and put the money saved into your FHSA. In this way, you invest indirectly with points and can benefit from the same tax refund as with an RRSP.

Using Reward Points to Maximize Tax Returns

Getting a Tax Refund With Credit Card Points

Let’s take the example of the National Bank of Canada rate to calculate the real return when we use our points to contribute to an RRSP and invest with the points.

With 60,000 reward points NBC, they can be exchanged for a $500 contribution to an RRSP account.

Employment income $30,000
Marginal tax rate 26,53 %
Tax savings $133
Investir REER BNC

So with 60,000 points, you can actually get $633, which is better value than 60,000 points for $600 in travel credit!

The higher your income, the higher your marginal tax rate, and the higher your return.

Then, by injecting the $133 tax savings into a child’s RESP (Registered Education Savings Plan), you can take advantage of an additional grant of 30% or $39.90.

Your 60,000 rewards points can add up to $672.90 if you also contribute to an RESP!

Get a Return With Points

Your new $500 RRSP contribution will start to grow depending on the product you choose.

For example, I bought $500 worth of Air Canada shares on February 9, 2021, and have had a 15.30% gain since purchase. My RRSP account shows $576.50 on February 9, 2022.

Actions Air Canada

So, with 60,000 NBC reward points, I was able to obtain $749.40($500 contribution + $133 tax return + $76.50 return) in addition to the RESP grants.

And all the while, my child’s RESP has been growing too!

Contribute to an RRSP or FHSA with a Low-Tax Income

We often hear that you shouldn’t contribute to an RRSP when your income is low. This is not entirely true. Of course, it’s best to maximize the TFSA before topping up the RRSP in these situations, but when buying a home, it may be worthwhile to turn to the RRSP.

real-estate-6688945_1920

Also, it is possible to defer the deduction of the RRSP contribution. You won’t get the tax refund right away, but you’ll be able to earn tax-sheltered returns right away.

The same applies to the FHSA which allows money to grow and be withdrawn without being taxed on the return.

For example, an 18-year-old student has saved $7,500 with their summer jobs since they were 15. They can maximize their TFSA to $7,000 and use the excess to contribute to their RRSPs, depending on their contribution room. Then they can wait until they return to work to maximize their tax refund.

How Can You Easily Earn Points to Invest in Your RRSP or FHSA?

The various institutions mentioned at the beginning of this article offer reward points as a welcome bonus. So it’s possible to earn points towards an RRSP contribution almost free of charge with these credit cards!

Following on from the examples illustrated in this article, let’s take a look at what National Bank is currently offering as a welcome bonus.

National Bank’s three flagship products earn NBC rewards points NBC. That means money contributed to an RRSP!

These cards also award between 1 and 5 points per dollar on all your purchases, depending on the card and purchase category. This can add up to a 5% return on your next RRSP contribution.

For students or individuals with modest incomes, it is possible to obtain these points with the National Bank Platinum Mastercard®.

Then, for those who qualify for the National Bank World Elite Mastercard, you can enjoy a host of other benefits, such as access to the NBC lounge and up to $150 in travel credit.

Bottom Line

In short, credit card reward points are extremely flexible. They allow us to save on everyday living, to travel better, to travel more and to get richer: for example, by investing in an RRSP or FHSA to get a tax refund.

Frequently Asked Questions

What's the difference between a TFSA and a FHSA?

The TFSA is a multi-purpose savings account that allows you to invest $7,000 per year (for 2025, and the amount is revised each year) in any type of project. The FHSA, with an $8,000 annual limit, is reserved exclusively for saving for a first home. Unlike the TFSA, which allows flexible withdrawals, the FHSA imposes strict conditions on the purchase of real estate.

What is the maximum amount for a FHSA?

The maximum amount of a FHSA is $40,000 for life, with an annual contribution limit of $8,000.

What is the maximum amount I can contribute to an RRSP?

For 2024, the RRSP contribution limit is set at 18% of your earned income in 2023, to a maximum of $31,560. This limit is in addition to any unused contribution room from previous years.

What are the advantages of FHSA?

The FHSA offers attractive tax advantages for future first-time buyers: contributions are tax-deductible, investments grow tax-free, and withdrawals for property purchases are tax-free. This account can be used in conjunction with the HBP to maximize your down payment, while offering the option of transferring funds to an RRSP if necessary.

What are the advantages of an RRSP?

RRSPs offer three main advantages: immediate tax relief through tax-deductible contributions, tax-sheltered investment growth until withdrawal, and the ability to defer taxes until retirement, when tax rates are generally lower. It also provides access to programs such as the Home Buyers’ Plan (HBP) for first-time homebuyers and the LLP for returning to school.

Come to discuss that topic in our Facebook Group!
Aline Nguyen
Aline Nguyen
Aline, an experienced traveler and avid photographer, is an Avgeek, a foodie at heart and a mother to two children. An expert in credit cards & rewards programs, including Aeroplan, Marriott Bonvoy, American Express Membership Rewards, CIBC Aventura, and RBC Avion, she uses points to travel affordably and save in daily life. Having explored all 7 continents and 78 countries, Aline shares her travel passion and insights to help others make the most of loyalty programs.
All posts by Aline Nguyen

Suggested Reading

Receive our newsletter every week!

Savings are here:

Milesopedia