Worked Examples and Checklists
Compare two rewards credit cards on your own spending: a Canadian worked example
A flat cashback card and a points card with a fee, compared category by category for one couple's budget, with foreign transaction fees and the break-even value per point.
To compare two rewards cards properly, run both on the same 12 months of your spending, convert everything to dollars, subtract each card's fees and find the point value at which they tie. In this illustrative example, a couple spending $2,000 a month compares a no-fee card paying a flat 1.5% with a points card charging a $156 fee. The flat card returns $285 after foreign transaction fees; the points card returns $588 if points are worth 1 cent and $290 if they are worth 0.6 cents. The two cards tie at about 0.59 cents per point, so the decision comes down to one question: will this couple redeem at better than 0.6 cents a point?
This guide belongs to the rewards card worked examples. The cards are illustrative structures, not real offers.
Step 1: the spending profile
| Category | Monthly | Yearly |
|---|---|---|
| Groceries | $600 | $7,200 |
| Restaurants and delivery | $350 | $4,200 |
| Public transit and rideshare | $150 | $1,800 |
| Travel (flights, hotels, averaged) | $250 | $3,000 |
| Phone, internet, streaming | $120 | $1,440 |
| Everything else | $530 | $6,360 |
| Total | $2,000 | $24,000 |
The couple also spends about $3,000 a year in foreign currencies, mostly on one trip.
Step 2: the two card structures
| Card X | Card Y | |
|---|---|---|
| Type | Flat cashback | Points |
| Earn rate | 1.5% on everything | 5 points per dollar on groceries and restaurants; 2 on transit and travel; 1 elsewhere |
| Annual fee | $0 | $156 |
| Foreign transaction fee | 2.5% | None |
| Redemption | Cashback, once a year | Travel at 1 cent a point; statement credit at 0.6 cents a point |
Step 3: rewards in dollars
Card X. $24,000 × 1.5% = $360. Foreign transaction fee: $3,000 × 2.5% = $75. Net $285.
Card Y.
- groceries and restaurants: $11,400 × 5 = 57,000 points
- transit and travel: $4,800 × 2 = 9,600 points
- bills and everything else: $7,800 × 1 = 7,800 points
- total 74,400 points
| Point value | Rewards | Minus fee | Net |
|---|---|---|---|
| 1.0 cent (travel) | $744.00 | −$156 | $588.00 |
| 0.8 cents | $595.20 | −$156 | $439.20 |
| 0.6 cents (statement credit) | $446.40 | −$156 | $290.40 |
Step 4: the break-even point value
Card Y ties with Card X when 74,400 × value − $156 = $285.
Value = $441 ÷ 74,400 = 0.593 cents per point.
If the couple books travel through the program at 1 cent a point, Card Y is worth about $303 more a year. If they would take the statement credit, the cards are practically equal, and Card X is simpler.
Step 5: stress-test the assumptions
Change one thing at a time:
- Restaurant spending falls to $150 a month. Card Y earns 12,000 fewer points (2,400 × 5): 62,400 points, $624 at 1 cent, $468 net. Card X earns $36 less: $249 net. Card Y still leads at 1 cent; the break-even rises to about 0.65 cents.
- The trip is spent at home instead. Same total spending, but no foreign transaction fee: Card X nets $360 and Card Y is unchanged at 74,400 points. Break-even rises to about 0.69 cents.
- The couple carries a $1,500 balance for 3 months at 20.99%. Interest about $79 on either card. It does not change which card wins, but both results fall by that amount: Card X to about $206 and Card Y at 1 cent a point to about $509. Interest of that size is worth more attention than the choice of card.
- Card Y has a $30,000 annual cap on its 5x categories. Not reached by this couple at $11,400, so no effect; a household spending $3,000 a month on groceries and restaurants would be capped.
Step 6: things that are not in the numbers
- Merchant coding. Is the couple's grocery store coded as a grocery merchant? Check a statement.
- Acceptance. If Card Y's network is not accepted at their grocery store, the 5x rate is worthless there.
- Insurance and perks. Count them only if the couple would otherwise buy that coverage; see the annual fee guide.
- Welcome bonus. One-time; see welcome bonus math.
- Time. Points need planning; cashback does not.
Repeat it with your own numbers
- Build your spending table from three months of statements.
- Calculate each card's rewards by category, respecting caps.
- Convert points at two values: the one you will certainly get and a realistic best case.
- Subtract fees, including foreign transaction fees and fees for additional cards.
- Find the break-even point value.
- Enter the final numbers in the rewards value calculator and check the terms with the checklist.
Frequently asked questions
What if the two cards are from different networks?
Compare them the same way, but check acceptance at the merchants where you spend most. Some households keep a second card on a widely accepted network as a backup.
Should I use both cards?
Using Card Y for its 5x categories and Card X elsewhere would earn more, but you would pay Card Y's fee and manage two due dates. Recalculate with the split.
Do points on Card Y expire?
That depends on the program. Read the program terms and see points expiry.
Is the break-even approach reliable?
It is reliable for the inputs you give it. The weak point is usually the point value, so be conservative.
Sources
- Financial Consumer Agency of Canada — choosing a credit card and comparing features
- Justice Laws Website — Financial Consumer Protection Framework Regulations: annual fees and foreign currency conversion in the information box
- Office de la protection du consommateur — Quebec rules on credit card contracts
