Canadians are sitting on an estimated $13 to $15 billion in unredeemed loyalty points, yet three-quarters of adults used a credit card for essential purchases in the past year — the highest rate in three years. That gap between what people earn and what they actually use tells you most of what matters about rewards programs. The points themselves aren’t the problem. The system that delivers them, and the way most people interact with it, is where the value leaks.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The average cardholder now carries a balance of $3,356, and the payments-to-balance ratio has slipped to 47.70% — meaning more people are rolling over debt month to month. At the same time, the federal government’s interchange fee cuts, finalized in late 2023 and effective fall 2024, are quietly reducing the revenue that funds most rewards programs. The squeeze is gradual, but it’s real. If you’re juggling high-interest debt while chasing points, you’re almost certainly losing money. Here’s what you actually need to know.
Key Takeaways and the One Term You Need to Know
What I tend to notice is that people overestimate what they’re actually getting from their rewards. The redemption value of proprietary points typically ranges from 0.5 to 1 cent per point, and travel redemptions can reach 1.5 cents per point or more through preferred portals. But those upper-end values require specific booking behaviour that most people don’t follow. The gap between the theoretical best value and what most cardholders actually get is where the disappointment lives.
Interchange, APR, and the Real Cost of Carrying a Balance
Let’s walk through the numbers that actually determine whether a rewards card helps or hurts you. The most important figure is the credit card APR, which sits near 20% while the Bank of Canada’s policy rate is only 2.25%. That spread — the gap between what the bank pays to borrow money and what it charges you — is where the profit lives. And it’s also where your rewards can get wiped out.
Take the average card balance of $3,356. At a 20% APR, that costs roughly $55.93 in interest per month. If you’re earning 2% cashback on $2,000 in monthly spending, that’s $40 in rewards. You’re down $15.93 before the month is over. The table below shows how this plays out across different spending and balance scenarios.
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| Monthly spend | Balance carried | Rewards earned (2%) | Interest paid (20% APR) | Net result |
|---|---|---|---|---|
| $1,000 | $0 | $20 | $0 | +$20 |
| $1,000 | $3,356 | $20 | $55.93 | −$35.93 |
| $2,000 | $0 | $40 | $0 | +$40 |
| $2,000 | $3,356 | $40 | $55.93 | −$15.93 |
| $3,000 | $0 | $60 | $0 | +$60 |
| $3,000 | $3,356 | $60 | $55.93 | +$4.07 |
The payments-to-balance ratio of 47.70% means the average cardholder pays off less than half their statement balance each month. That’s down from a peak of 53.02% in early 2025. More people are rolling over debt, and that trend directly devalues the rewards they’re chasing. The interchange cuts only add to the pressure — the 0.95% rate for small businesses means less revenue flows to issuers, which over time will lead to lower earn rates or higher fees on no-frills cards.
Where Cardholders Lose Value
Most of the money lost in rewards programs comes from a handful of predictable mistakes. Here’s what the research reveals about the three biggest gaps.
Carrying a balance while chasing points
This is the single most expensive mistake. The NerdWallet report found that 20% of Canadians used a credit card for essential purchases and did not pay those balances in full each month. At an APR near 20%, the interest on a $2,000 balance is roughly $33 per month. To earn $33 in rewards at 2% cashback, you’d need to spend $1,650. If you’re carrying that balance while spending $1,000 a month, the math simply doesn’t work. What I’d do here is stop using a rewards card entirely until the balance is cleared. The interest is certain; the rewards are not.
Letting points sit unredeemed
The Scene+ / Bond Brand Loyalty report found that 28% of loyalty program members redeem once a year or less, and participants belong to an average of 15 programs. That’s 15 different pools of value that most people are barely touching. The same research shows that 60% of surveyed participants prefer small or medium-value rewards — more than double the share saving for larger redemptions. The friction isn’t in earning; it’s in the complexity of redeeming. If you have points spread across multiple programs, you’re likely leaving money on the table. Pick the one or two programs that match your actual spending and use them regularly.
Choosing the wrong card type for your spending
Only 39% of Canadians feel confident choosing between financial products, and the rewards landscape doesn’t make it easy. Proprietary points programs like TD Rewards, RBC Rewards, and BMO Rewards have redemption values that typically range from 0.5 to 1 cent per point. Co-branded travel cards like Aeroplan can deliver 1 to 2 cents per point, but only for specific redemptions. Cashback cards, by contrast, deliver a predictable return — typically 1% to 4% depending on the category. If you’re not someone who actively manages travel bookings for maximum value, the cashback card is almost certainly the better bet. The importance of rewards (67%) and no annual fees (66%) are nearly equal when Canadians choose a card, which suggests most people want value without complexity.
How to Pick a Rewards Card That Actually Works for You
The goal isn’t to maximise points. It’s to maximise net value after costs. Here’s how to approach it.
Start with whether you carry a balance
If you ever carry a balance month to month, the priority is clear: find the lowest-interest card you can, not the one with the best rewards. Every dollar of interest you avoid is worth more than any dollar of rewards you could earn. The average card balance of $3,356 at 20% APR costs $671 per year. Even a 4% cashback card would require $16,775 in annual spending to offset that interest. If you’re in this position, a low-interest card or a balance transfer option may be worth exploring before you chase any rewards program.
Match the rewards type to your habits
Cashback cards are the simplest. The Scotiabank Momentum Visa Infinite earns 4% on groceries and recurring bills, 2% on transit and gas, and 1% elsewhere. No-fee options like the RBC Cash Back Mastercard offer a simpler structure with no annual cost. If you’re willing to manage a points program, the Scene+ program has a clean value proposition: 1,000 points = $10 for most redemptions, and members redeem at least once per month on average. That’s a program designed for regular use, not for hoarding.
Watch for the annual fee trap
A card with a $120 annual fee needs to deliver at least $10 per month in extra value compared to a no-fee alternative. If you’re earning 2% on a no-fee card and 4% on a fee card, you need to spend $500 per month on the bonus categories just to break even on the fee. Many people don’t. The interchange cuts are also likely to make premium card economics tighter over time, with issuers expected to defend premium card perks rather than expand no-fee generosity. If you’re not sure a fee card pays for itself, start with a no-fee option and track your spending for six months.
Where things are headed
The interchange rate cuts are estimated to save businesses about $1 billion over five years. That money comes out of the revenue pool that funds rewards. Analysts expect issuers to protect premium card benefits while gradually reducing earn rates on no-fee and lower-tier cards. The Bond Loyalty Report shows that perceived ease of redeeming rewards rose to 73% in 2026 from 69% in 2025, and program appeal rose to 67% from 62%. Programs are getting better at the redemption experience, but the underlying economics are getting tighter. If you’re relying on a no-fee card for rewards, expect the earn rate to drift downward over the next few years.
Frequently Asked Questions
What happens to my rewards if I close my card? ▾
Do all rewards cards charge the same interest rate? ▾
Can I get rewards on a secured credit card? ▾
How do interchange cuts affect my existing rewards? ▾
Are travel rewards worth it if I only fly once a year? ▾
What’s the best way to redeem points for maximum value? ▾
What the Squeeze on Rewards Means for Your Wallet
The direction of travel is clear. Interchange revenue is shrinking, card balances are growing, and the spread between what you earn and what you pay in interest is tightening for anyone who doesn’t pay in full. The $13–15 billion in unredeemed points isn’t a sign that rewards are broken — it’s a sign that most people aren’t matching their card choice to their actual behaviour. Programs that make redemption simple, like Scene+ with its 1,000 points = $10 structure, are gaining ground because they remove the friction. The programs that survive this squeeze will be the ones that deliver value without requiring a manual. If you’re carrying a balance, the first step isn’t choosing a better rewards card — it’s choosing any card that stops the interest bleed.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Understanding Coverage for Pre-Existing Conditions in Canada.
Sources and Further Reading
Understanding Credit Card Rental Insurance Overlap — Explains the insurance benefits that often come with premium credit cards, which can add real value beyond points and cashback.
Tips for Saving Big at Discount Pharmacies in Canada — Practical strategies for cutting everyday costs, relevant when rewards aren’t the only way to stretch your budget.
NerdWallet (2026). 2026 Canadian Consumer Credit Card Report. 🔗
Canadian Credit Cards (2026). State of Canadian Credit Card Rewards 2026. 🔗
FICO (2026). Canada Bankcard Industry Benchmarking Trends – Q1 2026. 🔗
MoneyRanked (2026). Credit Card Rewards Explained. 🔗
BNN Bloomberg (2026). Canadians Are Rethinking Loyalty as Everyday Rewards Take Priority. 🔗
