Loyalty Lesson: Credit Card Spending Caps Explained

Last Updated on December 13, 2022


 

We recently posted a Loyalty Lesson that delved into the perplexing 5x points earn rate on the National Bank of Canada World Elite Mastercard. More so, it was a look at the spending cap for the card's 5x points earn rate and really how convoluted it is. That made us think that we should put together a guide on credit card spending caps as they are quite prevalent in the Canadian market across many of the issuers - not just to National Bank.

 

Many of the banks also bury the details of spending caps in the foot notes or terms and conditions of their cards making them hard to find. So you can use this guide as quick reference to see what limitations, if any, you may encounter when getting a card.

Article Quote:


"In other words, why limit yourself to earning extra points or cash back on $500 of monthly spending when you can earn them on $50,000 annually?
"

What is a credit card spending cap?

A credit card spending cap is pretty self explanatory - it is a cap on spending for earning points with a card. They tend to only be in place on cards that offer accelerated or higher earn rates in select spending categories. In almost all cases you will not find a spending cap on the base earn rate for a credit card although there have been exceptions to this rule in the past. The caps are typically put in place to avoid gaming of the system or to save the issuer the expense of issuing hundreds of thousands of points to those people who have the ability to spend tens of thousands of dollars on their cards every month.

Aspects of spending caps

In general there are two aspects to all credit spending caps and those are time and spend.

Time Based

This aspect is how much time you have available to you to hit that spending cap that is in place. There are two types of time based caps, monthly and annual.

Monthly caps are in place for, you guessed it, one month and then they reset. The dollar value of these caps are lower due to the shorter duration of time. For example the BMO AIR MILES Mastercard's accelerated grocery earn rates are capped at $500 per month.

Annual caps, well, are yearly. These are always higher in dollar value since it takes into account spending over a 12 month period. Depending on the card, that can be a calendar year or 12 months from your card anniversary (approval or activation) date. These caps vary greatly depending on the card and range from $10,000 per year per category to $80,000 in total spend on a card and so on!

Spend Based

Spend based is the value of the actual cap that is in place. That is what you can spend on a card to earn the accelerated rate. Once you hit the cap the earn rate drops to the card's base earn rate. Spend based caps can be broken down to three types of caps:

  1. Overall gross spending
  2. Overall accelerated categories spending
  3. Individual category spending

The first, an overall gross spending cap takes into account all the spending you make on your card and when you hit that you'll no longer earn the accelerated earn rates. This is what the National Bank of Canada World Elite Mastercard has in place. The bank has put into place a $2,500 monthly cap on their 5x points on groceries and dining but that is on gross spending for the first $2,500 each month. So if you go out and spend $750 first thing in the month on non-groceries you only have the potential to earn 5x points on groceries purchases within the next $1,750. Confusing. I know.

They aren't the only issuer though with overall gross spending caps. In fact, some of the more popular cards have them but they are set relatively high and are annual so most cardholders don't even hit those amounts. An example is the CIBC Aventura Visa Infinite Card which has an $80,000 annual spending cap - that is if you spend $80,000 in total on your card in less than 12 months you will no longer earn the 1.5x points on grocery, gas station and drug store purchases. Those categories will drop down to 1 point per dollar regardless if that $80,000 was spent only in those categories or on other purchases as well.

Next we have an overall accelerated categories cap. This is a cap that is only placed on the spending made across all the accelerated categories that a card may have. This cap is common on Scotiabank cards, for example the Scotiabank Gold American Express Card has an annual $50,000 cap in total for all their accelerated categories combined. That is, the 6x points at Empire family of grocery stores, 5x points on grocery, dining and entertainment, as well as 3x points on gas, transit and streaming services. So if you spend $50,000 in total in those categories in less than a year the earn rates in all of them will drop down to 1 point per dollar. Any spending made outside of those categories, that is your base 1 point per dollar earn rate does not count towards that $50,000 cap.

Finally you have the individual category spending cap. This is a cap that placed on each individual accelerated spend category that card may provide. For example, the American Express Cobalt Card has an annual $30,000 limit on their 5x eats and drinks accelerator but no cap on their 3x and 2x points accelerators. Or a card like the BMO Ascend World Elite Mastercard which has a $15,000 cap on its accelerated travel purchases category and then $10,000 each on dining, entertainment and recurring bills payments. In other words, spending in the dining category on the BMO Ascend Card will not affect the separate spending cap on travel or the caps on entertainment or recurring bills.

The potential to lose out on maximizing the points you earn

The cards that have the overall caps create a situation where you can potentially lose out on earning the most miles or points possible. For example if you can and do spend more than $80,000 on your CIBC card, every purchase between $0 and $80,000 that isn't gas, groceries, drug stores is taking away from your potential of earn 1.5 points. What this basically means is that in a perfect world you would spend the first $80,000 on CIBC Aventura Visa Infinite Card in those three categories so that you would earn 120,000 points. Any 1x point spending within that first $80,000 will keep you from reaching that maximum 120,000 points you could earn.

Same goes for the Scotia cards, any spending made that earns 3x points within your first $50,000 of spending effectively removes potential of earning 5x or 6x points on the entire $50,000 limit.

Suffice to say, outside of several BMO, MBNA and National Bank of Canada cards this factor isn't much of a concern for most Canadians. It is good knowledge to have though if you are someone who can spend a lot more on your card where these caps would come into play.

(Special thanks to that one reader of ours who reminded of this potential 'overall spending cap' issue several years ago - I don't remember your name but hopefully you are reading this and see that we haven't forgotten about your note to us!)

Ways to get around spending caps

You can't actually game the system to get around spending caps on your credit card. What you can do is get multiple credit cards - whether they are the same card or different. For example, in the Rewards Canada household we run with two American Express Cobalt Card accounts. My wife's and mine. That way we can technically spend $60,000 each year on the 5x points eats and drinks category (each card has that $30,000 cap). Do note: these are separate accounts, not additional/supplementary cards as additional cards fall into the primary card's spending cap.

If you don't have a partner where you can each get the same card and are flying solo in the points and miles world then your way around the caps is to get two different cards. For example, you could get the Cobalt Card and the MBNA Rewards World Elite Mastercard to enjoy 5x points earning on a lot of spending. You'd have the Cobalt's $30,000 cap and then the MBNA card which has individual $50,000 caps on its five 5x points categories.




 

Spending Caps by Credit Card

Now let's take a look at the actual spending caps that are in place! We won't list every single card in the market but look at the more popular cards from the major card issuers. If you don't see the card you have or the card you are interested in listed below you can go to the issuer's website and the spending cap details should be in the legal footnotes.

American Express


American Express Cobalt® Card

Type of cap: Annual / Individual Category

This is one of the caps that was put in place to stop gaming. The Cobalt Card was Canada's first 5x points card and some cardmembers took advantage of this when the card was introduced by simply buying prepaid credit cards at grocery stores to earn 5x points and then cashing out those prepaid cards to pay down their balance on their Cobalt Cards. Sure, there are costs associated with prepaid cards but the 5 points per dollar were (and to this day still are) worth more than those costs. So what did Amex do? They put a $30,000 annual cap on the Cobalt Card's 5x points accelerated earn rate category. The 12 month spending period for this category runs based on your card anniversary date. The other accelerated earn rates of 3x points and 2x points do not have caps in place and thus are unlimited. All 1x/2x/3x spending on the card does not affect the cap placed on the 5x points category.

American Express Business Edge™ Card 

Type of cap: Annual / Overall Accelerated Categories

Amex's small business equivalent of the Cobalt Card, the Business Edge card also has a cap on its 3x points accelerated earn rate categories. The card earns 3x points on office supplies & electronics, rides & gas and eats & drink. The cap is listed as a maximum of 75,000 points that can be earned in those categories annually. What this really means is that you can spend $25,000 annually to earn 3x points. All 1x point spending on the card does not affect the cap.

SimplyCash® Preferred Card from American Express

Type of cap: Annual / Individual Category

The SimplyCash Preferred Card from American Express recently underwent a revamp and that included some new accelerated earn categories. One of those categories is groceries where the card earns 4% cash back. It is only this category that is capped and that cap is $1,200 cash back annually or $30,000 in spending. After that groceries drop down to the base earn which just happens to be an excellent 2%.

There are other American Express cards that also have caps in place including the SimplyCash® Card from American Express and American Express®  AIR MILES* Platinum Credit Card.


BMO Bank of Montreal


BMO AIR MILES®† World Elite®* MasterCard®*

Type of cap: Monthly / Individual Category

The BMO AIR MILES World Elite Mastercard recently had a new category accelerator added to it due to the AIR MILES program losing many of its grocery partners. That 2x miles category accelerator is for purchases at any eligible grocery store that isn't an AIR MILES partner. This new category has a monthly cap set at $500. All the other spending on this card does not affect that $500 cap.

BMO AscendTM World Elite®* Mastercard®*

Type of cap: Annual / Individual Category

The BMO Ascend card has several accelerated earn rates categories and each of them has their own annual cap. The travel earn rate of 5 points per dollar is available on the first $15,000 of spending annually. The 3x points earn rates on dining and entertainment purchases and recurring bill payments each get their own $10,000 annual cap. Any spending outside of those categories does not affect those caps. This card's annual caps are based on a calendar year, that is they reset on January 1st.

BMO CashBack® World Elite®* MasterCard®*

Type of cap: Monthly / Individual Category

The BMO CashBack World Elite Mastercard has several accelerated earn rate categories and each has their own monthly cap. The 5% back on groceries is capped at $500 spending per month, the 4% on transit is set at $300, the 3% on gas is set at $300 while the 2% for recurring bills is $500. That's a lot a different spend rates and caps to keep track of! Not to mention those are some really low spending caps for a card that is considered a premium card and requires $80,000 personal or $150,000 income. Canadians at that income level will easily spend more than that in a month in any or all of those categories. Spending outside of those categories will not affect those caps. The month time frame is based on your card statement cycle.

BMO eclipse Visa Infinite* Card

Type of cap: Annual / Overall Accelerated Categories

BMO's eclipse Visa Infinite Card has accelerated 5x points earn rates for groceries, dining, gas and transit. They have an annual cap in place for all four combined at $50,000. All other spending on the card, which is 1 point per dollar does not affect that cap. It based on a calendar year that resets on January 1st of every year.

There are other BMO cards that also have caps in place including the BMO AIR MILES®† MasterCard®*, BMO CashBack® MasterCard®* and the BMO eclipse Visa Infinite Privilege* Card


CIBC


CIBC Aeroplan® Visa Infinite* Card

Type of cap: Annual / Overall gross spending

The CIBC Aeroplan Visa Infinite Card offers a 1.5x points accelerator on Air Canada, gas and grocery purchases. These are capped at $80,000 per year however that is a gross spending cap. That means all spending, even those that earn 1x points count towards that cap. This cap resets to zero on the day after your December statement is printed.

CIBC Aventura® Visa Infinite* Card

Type of cap: Annual / Overall gross spending

Just like the Aeroplan card, the Aventura Visa Infinite card has an $80,000 annual cap that is based on gross spending. The card earns 1.5x CIBC Rewards points per dollar spent on gas, groceries and drug store purchases and 1x point on all other spending. All spending combined counts towards the $80,000 annual cap and that cap resets to zero on the day after your December statement is printed.

CIBC Dividend® Visa Infinite* Card

Type of cap: Annual / Overall gross spending / Overall Accelerated Categories

The CIBC Dividend Visa Infinite Card goes a step further than most cards as it has two of the spend based rules in place for its accelerators! Firstly it has an overall accelerated category cap - that is it caps the 4% cash back earning on gas, groceries and 2% on dining, transportation and recurring bills at $20,000 in total across all those categories. On top of this it also has the same rule in place as the other CIBC cards and that is an $80,000 gross spending cap. That means if you have not reached the first $20,000 cap in the accelerated categories but do reach $80,000 in total spending you will no longer earn the accelerated cash back in those said categories. Also like the other CIBC cards the caps reset the first day after your December statement is printed.

There are other CIBC cards that also have caps in place including the CIBC Aventura® Gold Visa* Card, CIBC Aventura® Visa* Card, CIBC Dividend Platinum® Visa* Card and the CIBC Dividend® Visa* Card.


Desjardins


Desjardins does not have spending caps in place on their various credit cards that offer accelerated earn rates.


HSBC


HSBC World Elite® Mastercard®

Type of cap: Annual / Individual Category

The HSBC World Elite Mastercard only has one accelerated earn category and that is for travel purchases. The card earns 6 points per dollar on travel purchases and this category alone has an annual $50,000 cap assigned to it. All other spending does not affect the spending cap. The HSBC's spending cap is based on the calendar year so will reset on January 1st each year.

This same spending cap also applies to other HSBC cards like the Jade World Elite and Premier World Elite Mastercards.


MBNA


MBNA Rewards World Elite® Mastercard®

Type of cap: Annual / Individual Category

The MBNA Rewards World Elite Mastercard is one of the strongest points earning cards in the Canadian market with a broad set of 5x points earning categories. The 5x points categories are restaurant, grocery, digital media, membership, and household utility purchases. Each category receives its own $50,000 annual spending cap which makes this card ideal for people who have a lot of expenditures across these categories. All other spending outside of those categories do not affect the caps. These caps are also based on the calendar year from January 1 to December 31.

MBNA Smart Cash® World Mastercard®

Type of cap: Monthly / Overall Accelerated Categories

The MBNA Smart Cash World Mastercard offers accelerated cash back earn rates on gas and grocery purchases. Those purchases are capped monthly at $500 in spending across the two categories. All other spending outside of those categories do not affect the caps. The cap is based on calendar month and not your monthly statement cycle.

There are other MBNA cards that also have caps in place including the MBNA Rewards Platinum Plus® Mastercard® and the MBNA Smart Cash Platinum Plus® Mastercard®.


National Bank of Canada


National Bank of Canada World Elite Mastercard

Type of cap: Monthly / Overall gross spending

Already a point of frequent discussion in this loyalty lesson and others, the card that triggered the topic has a monthly overall gross spending cap in place. That is, the 5x points on groceries and dining is capped at $2,500 of overall spending made each month on the card. Other spending does affect it as it is an overall gross spending cap. So any non 5x purchases made within that first $2,500 takes away the potential to have earned 5x points.

National Bank of Canada ECHO Cashback Mastercard

Type of cap: Annual / Overall Accelerated Categories

The ECHO Cashback Mastercard earns accelerated cash back of 1.5% on online shopping purchases, gas and grocery purchases. That accelerated earn rate for these three categories combined is capped at $25,000 annually. All other spending on the card does not affect this annual cap.

There are other NBC cards that also have caps in place such as the National Bank of Canada Platinum Mastercard.


RBC Royal Bank


RBC Cash Back Preferred World Elite Mastercard

Type of cap: Annual / Overall gross spending

The RBC Cash Back Preferred World Elite Mastercard has a $25,000 annual cap on its overall 1.5% earning. That is, you'll earn 1.5% cash back on your first $25,000 annually then all spending after that will earn 1%. This cap is based on the calendar year from January 1 to December 31.

The RBC Cash Back MasterCard also has spending caps in place while RBC does not have spending caps on their Avion Rewards credit cards that offer accelerated earn rates such as the RBC ION+ Visa or the RBC ION Visa.


Scotiabank


Scotiabank Gold American Express Card

Type of cap: Annual / Overall Accelerated Categories

One of the best cards in Canada the Scotiabank Gold American Express card is not immune from spending caps! The card has an annual $50,000 spending cap in place across all of its accelerated earn rate categories. That is all spending combined from its 6x points on select grocery store purchases, 5x points on other groceries plus dining and 3x points categories of gas and transit all get lumped into the $50,000 cap. All other spending at the 1x base earn does not affect the cap that is set. The cap is based on the calendar year from January 1 to December 31.

Scotia Momentum® VISA* Infinite card

Type of cap: Annual / Overall Accelerated Categories (sort of...)

The Momentum Visa Infinite Card offers 4% cash back accelerated earn rates on groceries and recurring bill payments as well as 2% on gas and transit. The gas and transit 2% category has their own combined annual cap of $25,000 in spending while groceries and recurring bill payments also get lumped together with their own quasi-overall accelerated category of $25,000 in spending as well. So you have two $25,000 caps spread across the four categories. All other spending made on the card does not affect these caps.

Scotiabank Passport Visa Infinite Card

Type of cap: Annual / Overall Accelerated Categories

Just like the Gold American Express card the Passport Visa Infinite gets the same spending cap. The card has an annual $50,000 spending cap in place across all of its accelerated earn rate categories. That is all spending combined from its grocery stores, dining, entertainment purchases and daily transit purchases accelerated earn rates get lumped into the $50,000 cap. All other spending at the 1x base earn does not affect the cap that is set. The cap is based on the calendar year from January 1 to December 31.

Other Scotia cards that have spending caps in place include the Scotiabank American Express Card and the Scotia Momentum® Visa* card


TD


TD® Aeroplan® Visa Infinite* Card

Type of cap: Annual / Overall Accelerated Categories

The ever so popular TD Aeroplan Visa Infinite Card also has a spending cap on it. Its annual cap is $80,000 like CIBC, however unlike CIBC whose is based on gross overall spending, TD's is set to only the combined spend across the accelerated earn rate categories of Air Canada, gas station and grocery store purchases. All other spending does not affect the $80,000 limit. The cap is based on the calendar year from January 1 to December 31.

TD First Class Travel® Visa Infinite* Card

Type of cap: Annual / Individual Category

Recently revamped to now have accelerated earn rates in select categories, the TD First Class Travel Visa Infinite Card also has spending caps assigned to it. It benefits from having separate caps of $25,000 per category per year. So you get a $25,000 limit on groceries, $25,000 on restaurants and $25,000 on pre-authorized purchases. There are no caps in place for the accelerated earn rate for ExpediaForTD purchases. All other spending does not affect the individual $25,000 limits. The terms and conditions for this card do not state if it the caps are based on a calendar year or 12 months from your card anniversary date (if any one knows please let us know and we'll update this!)

TD Cash Back Visa Infinite* Card

Type of cap: Annual / Individual Category

The TD Cash Back Visa Infinite Card is another card the benefits from separate caps per category per year. The card has a $15,000 cap on each of its individual earn rate accelerators which are gas, grocery Purchases and pre-authorized payments. All other spending does not affect those three $15,000 limits. The terms and conditions for this card do not state if it the caps are based on a calendar year or 12 months from your card anniversary date (if any one knows please let us know and we'll update this!)


Wrapping it up

We hope you enjoyed our Loyalty Lesson on credit card spending caps and found it educational! It is a topic that tends not to be discussed in very much detail in our world of points, miles and credit cards blogs and websites. Nor do credit card issuers really make them front and centre in their advertising or on their card landing pages.

Yet, they can be a real bone of contention on some cards like a bevy of BMO cards being limited to $500 per month for groceries or the card that kicked off this loyalty lesson, the National Bank of Canada World Elite Mastercard and it's $2,500 monthly gross spending cap.

While on other cards it really isn't a matter at all, such as the MBNA Rewards World Elite Master card and its $50,000 limits per category which is way more than enough for the vast majority of Canadians.

In other words, why limit yourself to earning extra points or cash back on $500 of monthly spending when you can earn them on $50,000 annually?

Ultimately not knowing that cards have spending caps can put a serious dent in how many points or miles you could expect to earn! By having this knowledge beforehand it can help you make the right decision as to which card or cards to apply for and ensuring you are using the best one for your spending habits.


 

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