Using Credit Card Points Toward RRSPs Revisited

One year ago I wrote my first post on this blog. It was a simple little post about using reward points on RBC or National Bank credit cards toward RRSPs held with those banks. I don’t think anyone read that post for months.

Starting this past January, however, that first post of mine has seen a massive spike in traffic generated from search engines, as people think about making their RRSP contributions. I thought I would repost for those thinking of getting a start on this coming year’s contributions. Remember, by contributing earlier in the year, you have more time to compound your money on a tax deferred basis.


If you have a Royal Bank or National Bank of Canada credit card that accumulates points, you can redeem those points for much more than a new desk lamp.

While certain TD, Scotia, BMO and CIBC cards give “cash back” credit of 0.25% – 2% of your yearly spending, RBC and National Bank of Canada encourage saving and lowering debt with their point system by allowing those points to be redeemed for “financial rewards” coupons.

At RBC points can be redeemed for vouchers that can then be deposited into your Royal Bank RRSP, TFSA, or RESP account. If you hold your mortgage or line of credit with the bank, you could also apply your points to the principal of those loans.

Redemptions start at 12,000 points for a $100 voucher, and move in increments of $25 per 3000 points. At these numbers, and assuming 1 point per dollar charged, it works out to a bonus of 0.83% of your credit card spending.

National Bank of Canada cards work out to a little higher (0.91%) but have slightly different options. Like at RBC, points can be redeemed toward your National Bank RRSP or TFSA account, but they do not seem to have an RESP option.

Points can also be used to pay down your mortgage or other loans held at National Bank, and if you are a Quebec resident, they can even be used for a rebate on your car or home insurance.

Redemption starts at 11,000 points for $100, and can only be redeemed in amounts of $100 (ie. 11,000 points, 22,000 points etc.)

Though it’s too late to use your points for the 2010 tax year, you can redeem anytime and get a good start on this year’s contributions.

After a few years of compound interest, I’m sure that the tax sheltered cash will be worth a lot more than the frying pan you could have had.

Related Posts:
  1. Using Cash Back Cards Toward RRSPs etc.


8 responses to “Using Credit Card Points Toward RRSPs Revisited

  1. MasterCard, through the credit union system, does the same thing.. Just to be fair competitively.

  2. Hi Marc,

    That is great information! When I wrote the post, I had only looked at the major bank cards. I didn’t even think of looking at credit unions, to tell you the truth. I’ll do a little research and write an update in the future.

    Thanks for your comment.

  3. Pingback: Weekend Reading: Oil Edition | Invest It Wisely

  4. I think the best redemption value for the RBC Reward points is to convert the Reward points to Esso Extra points, then use the Esso Extra points to buy lottery tickets at an Esso gas station. 15000 Reward pints would be converted to 25000 Esso Extra points. You can buy lottery tickets at a Esso station at the rate of $1 ticket for 160 Esso points. So 25000 Esso Extra points would buy $156.25 of lottery tickets. It is better than $125 for RBC financial products. Off course it assumes you are going to buy lottery tickets in the first place.

  5. Edward Jones Investments has offered a credit card like this for years, but their bonus is a full 1%… go to them if you’re considering these cards.

  6. Martin – Yes… it also assumes that you will win, or that you value the satisfaction of buying the tickets. In my eyes, you’re comparing $125 that will compound over time, to $156.25 that has a high probability of becoming zero very quickly. I’m guessing your comment was slightly tongue in cheek, however.

    You raise a very good point, though: there are various “exchange rates” for these points. When I was first looking my accumulated points, I realized that I could buy products for less cash than the points equalled.

    I think the power of this really does come from the tax deferred compounding.

    Thanks a lot for your comment.

  7. Hi David. Thanks for the comment.

    I’ve been trying to find information on the card you mentioned. All I can find is a card from them that gives 1 point for every $2 spent. I can’t seem to find a table how many points are required to get cash back, however. Do you have a link for that?

    Also, what are the fees etc. required to have an account with them? Their site is very vague, but given that they seem to be a sales-force investment company, I would be guessing that a good chunk of money is being paid in loads etc. If so, one would have to question if 1% is worth the expenses.

    As an aside: based on your email address… you wouldn’t at all be the Edward Jones employee of the same name, would you?

  8. I recently wrote a post on how I maximize my points and redemptions of RRSP certificates. I’m always interested in finding new ways to increase my point collecting efficiency if you have any tips to share 😉

    My process can be found below

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