Reward points are your money, too
Rewards do not appear out of thin air. Your purchases help pay for the payment system. Choose a card that fits your life and turn its rewards into savings you actually use.
In this guide
Credit card points are often presented as a gift: you make a payment, and the bank rewards you. That story leaves out part of the bill.
Accepting a card costs the merchant money. Those costs can be built into the price of what you buy. You help fund the system even when your receipt has no line for “card fees.”
Reward points are your money, too: value connected to your purchases that deserves to be recovered rather than forgotten. The goal is to choose well and use your rewards, while keeping spending unchanged.
Every payment has a cost
A merchant pays processing fees to accept a credit card. Several businesses are involved: the card issuer, the payment network and the merchant’s payment service provider. The entire bill does not go to a single “credit card company.”
Canada’s Department of Finance explains that interchange, paid to the issuing institution, is the largest component of these fees. It is revenue for the issuer, not an equivalent amount of profit: operating payments and providing rewards also involve costs. Source: Department of Finance Canada.
A bill that can be built into prices
Payment fees are an operating cost, like rent or delivery. A merchant may absorb some of the cost in its margin or account for it in its prices. The amount passed through is neither identical nor measurable on every purchase.
A Bank of Canada staff working paper examines merchant costs passed on to consumers alongside banking fees and rewards. It shows how these can create transfers between consumer groups. When everyone pays the same price, someone receiving no rewards may help fund a system from which others receive more. Source: Bank of Canada, 2021 study.
This does not mean every product costs exactly 2% more because of cards, or that your points precisely refund your transaction’s fees. The economic point is that some costs can be built into prices, while rewards only benefit people who earn and use them.
Earning is only half the job
A growing points balance can feel like growing wealth. Until those points are used, though, they have not reduced a bill.
Points can sit idle because redemption seems complicated, a planned trip never happens or you are waiting for the “perfect” use. Saving points for a specific goal is reasonable. Accumulating them without knowing how they will help you is a different matter.
Rules vary by program and applicable requirements: inactivity, account closure, redemption options and other conditions can affect rewards. Check those rules before switching cards. The Office of Consumer Affairs recommends understanding program terms and highlights the benefit of paying your balance in full. Source: Office of Consumer Affairs.
We do not need to claim that “most people lose their points” to take this seriously. For your budget, the useful question is simpler: how much have your points actually saved you?
Useful value matters more than a points total
Consider a hypothetical example with no promotion or specific card. You have $20,000 in planned annual purchases and pay every statement in full by its due date.
| On the same purchases | Card A | Card B |
|---|---|---|
| Rewards you actually redeem | $200 | $400 |
| Annual fee | $0 | $120 |
| Value retained after those fees | $200 | $280 |
Card B leaves $80 more in your budget despite its fee. But if its points go unused, the $400 benefit does not materialize that year, while you still pay the $120 fee. The points balance may retain future value; it simply has not become a realized saving yet.
This example excludes interest, other charges and additional benefits. It does not measure recovered merchant fees. It illustrates a decision: compare what you can actually use after subtracting costs.
Simple cash back may therefore suit you better than points with a higher theoretical value. Our guide Points or cash back: how to choose can help.
Recover more without spending more
Turn the idea into a few habits:
- Start with your regular purchases. Groceries, transportation and bills: choose for your current budget without increasing it to earn a bonus.
- Look at what remains after fees. A headline rate is not enough; caps and conditions matter too.
- Choose rewards you will use. An easy redemption toward a planned expense is more useful than a trip you do not want.
- Give your balances a purpose. Check your points and their terms periodically. Before closing a card, find out what happens to the balance.
- Compare the final price. A discount for another payment method or an extra charge can change the calculation.
Above all, pay your balance in full by the due date. If you carry a balance, reducing interest should come before chasing points. The Financial Consumer Agency of Canada encourages consumers to choose according to their habits and compare rewards with annual fees. Source: FCAC.
Why explore this with Futello?
Credit cards do not have to become a hobby. Giving them a little attention can help you make better use of money you already spend.
That is Futello’s role: make cards and their trade-offs easier to compare and help you find a strategy suited to your spending. Fees, caps and reward value matter more than a large advertising number. Estimates still need to be checked against issuer terms and your actual redemption options.
Start by finding your strategy, then read our methodology to understand the estimates and their limits.
You already pay for your purchases. Make sure the rewards do something for you.
Frequently asked questions
Are my points really my money?
That describes their economic value. Points are redemption rights governed by a program’s terms, not a bank balance or an exact refund of merchant fees. Using them can still reduce an expense you would otherwise pay.
Should I always pay by credit card to recover that value?
No. A discount for another payment method, extra charges or interest may outweigh the reward. Compare the final cost and stay within your budget.
What if I never use my points?
Cash back that is easy to receive may suit you better. Check your balances, redemption options and inactivity or account closure rules before choosing or switching cards.