Are credit card offers in Canada better or worse than those south of the border? After comparing like to like credit cards in the United States and Canada, the answer is a resounding “worse”.
We compared 4 credit cards, that had both a Canadian and U.S. version. In each case, the U.S. version offered more value to the cardholder.
We’re not entirely sure why American credit cards offer more value than their Canadian counterparts. More competition, different banking regulatory environments and different revenue landscapes may be just a few of the reasons we’ll explore. But regardless of the reason, it’s clear Canadians are getting the short-end of the stick.
How Canadian and American Credit Cards Compare
When comparing Canadian to American credit cards, we thought it made most sense to compare credit cards that had both U.S. and Canadian counterparts. As such, we took a look at the U.S. and Canadian versions of the Costco, Amazon, Marriott and Starwood credit cards. Our comparison found the following:
|Canadian Costco (Capital One)||U.S. Costco (Citi)|
|Costco cashback||Up to 1%||2%|
|Bonus cashback||2% Gas
3% Restaurants & Travel
|Cashback elsewhere||Up to 1%||1%|
The side by side comparison of the Capital One credit card programs in Canada and the U.S. quickly show how much richer the U.S. Costco deal is for Americans. They get more than double the cash back on Costco purchases, double the cash back on gas purchases and they get cashback on travel purchases as well! America takes Gold, Canada Silver.
|Canadian Amazon (Chase)||U.S. Amazon (Chase)|
|Bonus cashback||None||2% Gas, Restaurants, Drugstores|
|Special Perk||No Foreign Transaction Fees||No Foreign Transaction Fees|
|Welcome Bonus||$20 Gift Card||$50 Gift Card|
Here we have the same retail partner and the same issuing bank, and the American version blows the Canadian credit card out of the water. Not only are you earning 50% more cashback at Amazon, and getting more than double the welcome bonus, you’re also getting 2% cashback in 3 bonus categories!
To add insult to injury, Chase also offers an Amazon Prime credit card to U.S. citizens that gives 5% cash back on Amazon purchases and a $70 gift card!
|Canadian Starwood Hotels (American Express)||U.S. Starwood Hotels (American Express)|
|Annual Fees||$120||1st Year Free, $95 thereafter|
|Special Perk||N/A||No Foreign Transaction Fees
Free In-Room Internet
Here again we have a great apples to apples comparison with the same co-brand partner and credit card issuer in each country. Once again, the U.S. offer beats the Canadian offer hands down. The American welcome bonus is almost double the size, and it comes with a first year annual fee waiver. While the minimum spend requirements are a little larger in the U.S., it should be noted that their welcome bonus, during promotional months can get even higher!
Perhaps the biggest difference of all is in the perks. The American SPG card has no foreign transaction fees, while the Canadian SPG credit card charges 2.5% on foreign transaction fees. Only a handful of Canadian credit cards, offer no foreign transaction fees.
|Canadian Marriott Hotels (Chase)||U.S. Marriott Hotels (Chase)|
|Annual Fees||Free first year, $120 thereafter||$80|
This one is actually a little less clear cut. While Chase offers nearly triple the amount of welcome bonus points in the U.S., the Canadian Marriott Rewards credit card waive the first year annual fee. The American version used to do the same, but too many gamers took advantage of the offer. Other than those two differences, both cards seem to be exactly the same.
From our sampling, it seems clear that U.S. credit cards tend to offer cardholders more value than their Canadian counterparts. There could be several reasons that account for the difference.
First, economies of scale. Each U.S. credit card program is significantly larger than their Canadian alternative. As a result, operating expenses per active account tend to be lower, giving U.S. issuers more room to allocate those savings to cardholders.
Second, regulatory environment. U.S. banks may have more lenient capital requirements than their Canadian counterparts, allowing them to lend more profitably. We’re not sure this is the case, but it could account for the difference.
Moreover, while many American credit card practices have been curtailed in the last few years, American banks are still able to charge some fees, such as late fees, Canadian banks simply aren’t allowed to.
Third, competition. With the size of the prize so much larger in the United States, banks may be willing to outbid one another on lower margin. Although lower margin deals are riskier, the sheer size of the absolute dollars make the deals exceptionally appealing in the U.S.
All said, Canadians should feel especially happy when comparing themselves to the rest of the world. The U.K, European Union and Australia have all but watched their credit card rewards programs vanish, as regulators capped credit card merchant fees. Canadians still enjoy some of the most outstanding credit card products and offers worldwide!