The number on the advertisement is the best rate the card pays, on one category, up to a limit. The number that decides what the card is worth to you is that rate averaged across everything you actually buy, after the limit is reached. They are rarely close.
Caps Are the Part That Goes Unmentioned
A bonus rate almost always stops somewhere. Sometimes the cap is monthly, sometimes annual, sometimes per category, and sometimes it is on the reward rather than the spending, which is a different thing again.
- BMO CashBack World Elite pays 5% on groceries, and the bonus rate stops after $19,200 of spending in a year. After that groceries earn the base 1%.
- American Express Cobalt pays 5 points a dollar on food and drink, capped at $30,000 of spending a year.
- Tangerine Money-Back pays 2% on categories you pick and has no cap at all, which is why it rates well here despite a rate that looks unremarkable next to a 5%.
A card with a 5% rate and a $6,000 annual cap pays at most $300 in that category. A card with a 2% rate and no cap passes it the moment your grocery spending goes past $15,000 a year. Neither fact is on the front of the advertisement.
The Base Rate Is the Rate You Mostly Get
Look at what the card pays on everything outside its bonus categories, because for most households that is the majority of the spending. A card paying 5% on groceries and 0.5% on everything else is a grocery card and nothing else. If your spending is spread out, a flat card that pays the same rate everywhere often wins on the total even though it never has a headline number worth advertising.
Points Are Not Percentages Until You Convert Them
Five points a dollar sounds like five times better than 1% back. Whether it is depends entirely on what the point is worth, and that is a judgement rather than a fact. We publish ours: transfer programmes like Membership Rewards and Aeroplan are valued at two cents, fixed value programmes like Scene+ and Avion at one cent because that is what the issuer pays, and four programmes are left unvalued because nobody publishes a rate for them.
At two cents, five points a dollar is 10% back. At one cent it is 5%. The card did not change; the assumption did. That is why how we value points exists as its own page, and why the comparison has a switch that reranks everything at cash out value in one click.
How to Read Any Card in About a Minute
- Find the base rate. That is your floor.
- Find the bonus categories and check whether you actually spend there.
- Find the cap on each bonus category and divide it by twelve. If your monthly spending in that category is above the result, the headline rate is not the rate you will get.
- If the card pays points, convert them at a rate you believe rather than the one in the marketing.
- Subtract the annual fee last. A fee is not a reason to reject a card, it is a hurdle the card has to clear.
Or put your monthly spending into the comparison and let it do all five steps across 98 cards at once. It shows the caps on the card page for every card that has one, because a rate without its cap is not a fact, it is an advertisement.
The Benchmark Weekly
One email a week. Elevated welcome offers while they are still open, new cards and accounts as they arrive, and any fee, rate or earn rate that moved, with the old figure and the new one. A quiet week gets no email.