Best Credit Card in Canada 2020

 
What is the best credit card in Canada in 2020?  In reality, there is no one-size-fits-all credit card; the best option for you depends on your goals and lifestyle. Our experts at myratecompass.ca have compiled a list of the best cards in Canada in each major category, from cash back and travel rewards to balance transfers and more. Explore our top picks from our partners and find the best credit card option in 2020 for you.


 

 

Best Credit Cards in Canada 2021 by Category


1-Best Cash Back Credit Card:Scotia Momentum Visa Infinite Card

2-Best Low Interest Credit Card: HSBC Rewards Mastercard

3-Best Balance Transfer Credit Card: Scotiabank Value Visa Card

4-Best No Annual Fee Credit Card: Tangerine Money-Back Credit Card

5-Best Credit Card for rebuilding credit: No Fee Home Trust Secured Visa Card

6-Best Travel Credit Card: American Express Cobalt Card

7-Best Travel Insurance Credit Card: Scotiabank Passport Visa Infinite Card

8-Best No Foreign Exchange Fees: HSBC World Elite Mastercard

9-Best Rewards Credit Card: American Express Cobalt Card

10-Best Aeroplan Credit Card: American Express Gold Rewards Card

11-Best AIR MILES Credit Card: American Express AIR MILES Platinum Credit Card

12-Best Grocery Credit Card: Scotia Momentum Visa Infinite

13-Best Gas Credit Card: Scotiabank Gold American Express® Card

14-Best Premium Credit card: American Express Platinum Card

15-Best Business Credit Card: American Express Business Edge




1- Best Cash Back Credit Card: Scotia Momentum Visa Infinite Card

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The Scotia Momentum Visa Infinite card was the winner of the MoneySense best cashback card with a fee in 2019 - and for good reasons! Card holders earn cash back on all purchases at varying rates. There are also other perks of card ownership including access to exclusive Scotiabank events and offers, plus ample insurance coverage.

  • Tiered Cash Back Rates. Earn 4% cash back for every dollar spent on groceries and recurring bill payments. Earn 2% cash back for every dollar spent on gas and daily transit. Finally, earn 1% cash back for every dollar spent elsewhere.

 

Overview:

  • Welcome Offer: During the first three months of card ownership, earn a whopping 10% cash back on all purchases. This rate is only applicable for the first $2,000 of purchases.
  • Annual Fee: $120
  • Annual Interest on Purchases: 20.99%
  • Annual Interest on Cash Advances: 22.99%
  • Additional Benefits:
  • Additional Perks. Obtain exclusive offers from Scotiabank including concierge service, competitive hotel rates and upgrades, and access to dining and wine country programs.
  • Insurance Coverage. Ample coverage comes with this credit card, such as new mobile device, trip cancellation, trip interruption, purchase protection insurance and much more.

Eligibility:

  • Income Eligibility: $60,000 individual or $100,000 household
  • Credit Score Required: Average to Excellent (670-900)



2- Best Low Interest Credit Card: HSBC +Rewards™ Mastercard

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 With the HSBC +Rewards® Mastercard®, you can enjoy a low 11.9% interest rate on everything, from purchases to balance transfer and cash advances.

With just an annual fee of $25, this card gives you a multitude of benefits that you can start reaping right away. You can earn 2 points for each $1 spent on eligible entertainment or dining.

This card is perfect for any Canadian resident who wants a low-interest rate and coverage. With it, you can gain access to comprehensive travel insurance, price protection, zero liability protection, enhanced security, tap & pay, and worldwide acceptance

 

Overview:

  • Welcome Offer:
  • Annual Fee: $25
  • Annual Interest on Purchases: 11.9%
  • Annual Interest on Cash Advances: 11.9%
  • Additional Benefits:
  • Insurance Coverage: Shop confidently knowing that your eligible purchases are well-protected when you use your HSBC +Rewards Mastercard.

    Price Protection Service: If you find a lower price within 60 days of your purchase the difference will be refunded – up to $500, subject to a calendar-year maximum of $1,000 per account. Certain conditions and exclusions apply.

Eligibility:

  • Credit Score Required: Average to Excellent (670-900)



3- Best Balance Transfer Credit Card: Scotiabank Value® Visa* Card

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Coming with an annual fee of $29 and a very good interest rate of 12.99% for both purchases and cash advances, the Scotiabank Value® Visa* Card is one of the best credit cards you can find on the market if you're keen on paying a low interest.

This card from Scotiabank comes with an amazing introductory offer of 0.99% for balance transfers. Basically, during the first 6 months, you can consolidate your debt and save hundreds of dollars on interest

The Scotia Value Visa is aimed at individuals looking for a good balance transfer credit that offers decent privileges and a lower interest rate beyond the introductory promo period. Although it comes with a minimal fee, customers who cannot pay their balance in full can take advantage of the low post-promotional rate of 12.99%. Plus, if you regularly rent cars from Avis, then you might get the best value out of this card.

 

Overview:

  • Welcome Offer: 0.99% introductory interest rate on balance transfers for the first 6 months
  • Annual Fee: $29
  • Annual Interest on Purchases: 12.99%
  • Annual Interest on Cash Advances: 12.99%
  • Additional Benefits:

Eligibility:

  • Income Eligibility: $12,000 individual
  • Credit Score Required: Average to Excellent (670-900)

 





4- Best No Annual Fee Credit Card: Tangerine Money-Back Credit Card

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Tangerine's Money Back Credit Card is an excellent credit card for those who would like to maximize the cashback they earn by choosing their spend categories to earn more cashback.

It is viewed as one of the best credit card in Canada, Tangerine provides no annual fee, a lucrative 2% cash back in up to 3 merchant categories, and 0.5% on all other purchases with no caps, tiers or limits. It provides choice, value and convenience to beginner credit card users and even works great as a secondary credit card.

The most notable feature is the cash back rewards. Who wouldn't want to earn money while they spend! In order to determine an estimate of how much you'll earn using this card, take your total credit card spending per month and multiply it by 1%. Typically, these card users average out to 1% cash back on purchases between the special 2% categories and 0.5% on all other purchases. If you spend $1,000 a month, you'll earn $10 ($1,000 x 0.01)!

Tangerine's Money Back Credit Card has lower than average fees as well. In addition, they are an excellent bank to work with since they're owned by Scotiabank. Tangerine's clients benefit indirectly from Scotiabank's services without paying the big bank fees. That being said, Tangerine's services are affordable because they don't offer in person services the way traditional banks do. If that's something you value, this card might not be right for you.

 

Overview:

  • Welcome Offer:
  • Annual Fee: $0
  • Annual Interest on Purchases: 19.95%
  • Annual Interest on Cash Advances: 19.95%
  • Additional Benefits:

Eligibility:

  • Income Eligibility: $12,000
  • Credit Score Required: Average to Excellent (670-900)



5- Best Credit Card for rebuilding credit: No Fee Home Trust Secured Visa Card

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The Home Trust secured credit card is a great credit card that enables those who do not have a good credit score to rebuild and reestablish it.

Almost everyone is approved (No credit, poor credit, bankruptcy and consumer proposal).

To be approved for this secured credit card, the applicants need to provide a security deposit of $500 minimum and be of the age of majority in the province of residence.

This credit card does not offer any rewards but provides purchase protection to insure eligible items against theft or damage for 90 days from the date of purchase.

Each month Home Trust reports to Equifax and Transunion. This will ensure that your payment and credit history related to your Home Trust Secured credit card is updated with the major Canadians credit bureaus accordingly. You will need to make your payments on time each month to rebuild your credit.

Home Trust will give you back your deposit when you close your account.

 

Overview:

  • Welcome Offer:
  • Annual Fee: $0
  • Annual Interest on Purchases: 19.99%
  • Annual Interest on Cash Advances: 19.99%
  • Additional Benefits:

90 days Purchase protection: Insures eligible items against theft or damage for 90 days from the date of purchase

Eligibility:

  • Credit Score Required: Poor or No Credit (0-669)



6-Best Travel Credit Card: American Express Cobalt Card

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One reason the American Express CobaltTM Card is so popular is because of the quick rewards that come with it. Points can be earned on everyday purchases which is what makes the earnings accumulate so rapidly. On food and drinks, such as grocery, restaurant, food delivery, bar and cafe purchases, cardholders earn five points per dollar spent.

On transit and travel, cardholders earn two points per dollar spent. These rewards are not limited to vacation only, cardholders will earn points when they spend on public transit, taxis and Ubers too. All other purchases earn one point per dollar spent. As you can see, no matter what your lifestyle is, you’ll quickly rack up points!

Points can be redeemed to cover the cost of flights and accommodation with 1,000 points being equivalent to $10. Flights don’t have any blackout dates and you can choose any airline you’d like. In addition, the points can be used to cover fees and taxes. If you don’t have an upcoming trip, you can also spend your points on events through Ticketmaster at a rate of 2,000 points to $20. As you probably noticed, the rate of return is the same when you spend on travel and events which is fantastic! For less bang for your buck, you can also use your points for gift cards or merchandise purchases.

 

Overview:

  • Welcome Offer: Up to 30,000 points in a year*
  • Annual Fee: $120
  • Annual Interest on Purchases: 19.99%
  • Annual Interest on Cash Advances: 21.99%
  • Additional Benefits:
  • Cardholders benefit from travel insurance as well. The insurance covers things like travel accidents, car rental insurance, medical emergencies, flight interruption or delay among others. Last but not least, cardholders gain access to American Express Invites which are limited offer, exclusive events.

Eligibility:

  • Credit Score Required: Average to Excellent (670-900)

 

 



7- Best Travel Insurance Credit Card: Scotiabank Passport™ Visa Infinite* Card

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The Scotiabank Passport™ Visa Infinite*Card offers 2 points for every $1 spent on grocery store, dining, entertainment, and transit purchases, and 1 point per $1 on everything else. That’s hardly best-in-class, so why does the Scotiabank Passport™ Visa Infinite* Card tie for best Scotiabank travel credit card?

Two reasons: a very lucrative bonus point offer and no foreign transaction fees.

Let’s start with the bonus points. You earn 20,000 welcome points when you spend $1,000 in the first 3 months. That’s worth up to $200, is easy to obtain, and is a solid reason to try this card for a year.

But wait, there’s more. Every year you charge $40,000 to your Scotiabank Passport™ Visa Infinite* Card, you’ll get 10,000 bonus points. If you can hit the $40,000 minimum each year, the 10,000 bonus points will nearly cancel out the $139 annual fee.

If that wasn’t enough, the Scotiabank Passport® Visa*doesn’t charge any foreign transaction fees. It comes with a suite of travel insurance benefits, Visa Infinite benefits, and includes six free airport lounge passes.

 

Overview:

  • Welcome Offer: Earn up to 30,000 bonus Scotia Rewards points in your first year
  • Annual Fee: $139
  • Annual Interest on Purchases: 19.99%
  • Annual Interest on Cash Advances: 22.99%
  • Additional Benefits:
  • No Foreign Transaction Fees. While the exchange rate of your foreign purchases will still apply, you’ll save money on foreign transaction fees which would typically be 2.5%.
  • Airport Lounge Access. A complimentary Priority Pass membership is provided with this credit card along with six free lounge visits per year.

Eligibility:

  • Income Eligibility: $60,000 individual or $100,000 household
  • Credit Score Required: Average to Excellent (670-900)



8-Best No Foreign Exchange Fees: HSBC World Elite® Mastercard®

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The HSBC World Elite® Mastercard® is a modern rewards card that is quite useful for any clients who are using their credit cards for any type of purchase. With this card, you can get 6 points for every $1 you spend on eligible travel purchases, 3 points per $1 spent on all other eligible purchases.

This card also comes with no foreign transaction fees, 31-day emergency travel medical insurance coverage, a 10% discount on hotel bookings, unlimited Wifi through Boingo, extended warranty, purchase assurance, and $100 travel enhancement credit.

The HSBC World Elite® Mastercard® costs $149 a year and comes with a standard interest on purchases of 19.9% and interest on balance transfers and cash advances of 22.9%. The current Welcome Bonus is 20,000 Points ($100 in travel rewards).

You can use all points accumulated on this card to purchase airplane tickets to the airline partners of HSBC, which are British Airways, Singapore Miles and Asia Miles. As for medical travel insurance, this card is one of the absolute best, coming with $1 million in medical insurance, $500,000 in common carrier travel insurance, $750 for lost or delayed baggage, $5,000 trip cancellation in total, and another $65,000 in auto rental collision insurance.

 

Overview:

  • Welcome Offer: Welcome Bonus of 20,000 Points ($100 in travel rewards)
  • Annual Fee: $149
  • Annual Interest on Purchases: 19.9%
  • Annual Interest on Cash Advances: 22.9%
  • Additional Benefits: Mastercard Airport Experiences Provided by LoungeKey and Get unlimited Wi-Fi through Boingo at over 1 million hotspots worldwide

Eligibility:

  • Income Eligibility: $80,000 individual or $150,000 household
  • Credit Score Required: Average to Excellent (670-900)



9-Best Rewards Credit Card: American Express Cobalt™ Card

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One reason the American Express CobaltTMCard is so popular is because of the quick rewards that come with it. Points can be earned on everyday purchases which is what makes the earnings accumulate so rapidly. On food and drinks, such as grocery, restaurant, food delivery, bar and cafe purchases, cardholders earn five points per dollar spent.

On transit and travel, cardholders earn two points per dollar spent. These rewards are not limited to vacation only, cardholders will earn points when they spend on public transit, taxis and Ubers too. All other purchases earn one point per dollar spent. As you can see, no matter what your lifestyle is, you’ll quickly rack up points!

Points can be redeemed to cover the cost of flights and accommodation with 1,000 points being equivalent to $10. Flights don’t have any blackout dates and you can choose any airline you’d like. In addition, the points can be used to cover fees and taxes. If you don’t have an upcoming trip, you can also spend your points on events through Ticketmaster at a rate of 2,000 points to $20. As you probably noticed, the rate of return is the same when you spend on travel and events which is fantastic! For less bang for your buck, you can also use your points for gift cards or merchandise purchases.

 

Overview:

  • Welcome Offer: Up to 30,000 points in a year*
  • Annual Fee: $120
  • Annual Interest on Purchases: 19.99%
  • Annual Interest on Cash Advances: 22.99%
  • Additional Benefits:
  • Cardholders benefit from travel insurance as well. The insurance covers things like travel accidents, car rental insurance, medical emergencies, flight interruption or delay among others. Last but not least, cardholders gain access to American Express Invites which are limited offer, exclusive events.

Eligibility:

  • Income Eligibility: $60,000 individual or $100,000 household
  • Credit Score Required: Average to Excellent (670-900)



10-Best Aeroplan Credit Card: American Express® Gold Rewards Card

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If you spend big on travel, gas, pharmacy, groceries and other everyday expenses, this might be the card for you! With this card, you earn two points per dollar spent on eligible purchases, essentially all everyday expenditures plus travel. All other purchases earn one point per dollar spent. In addition, cardholders earn 25,000 points when they sign up and spend $1,500 or more in the first three months.

Earned points can be put towards your next trip, used to pay down your card balance or transferred to eligible travel rewards programs, such as Aeroplan and Avios. Transferability of points is one of the best things about this card! Other benefits of this card include specific hotel credits, travel insurance, purchase protection and access to American Express exclusive events. Cardholders also benefit from no blackout dates or seat restrictions when booking flights.

Please note that the American Express® Gold Rewards Card is a charge card.

 

Overview:

  • Welcome Offer: Earn a Welcome Bonus of 25,000 Membership Rewards points
  • Annual Fee: $150
  • Additional Benefits:

Eligibility:

  • Income Eligibility: $60,000 individual or $100,000 household
  • Credit Score Required: Average to Excellent (670-900)



11- Best AIR MILES Credit Card: American Express AIR MILES Platinum Credit Card

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Owners of the American Express Air Miles Platinum credit card earn one Air Mile for every $5 spent on eligible expenses. These expenses include food, drinks, groceries, gas, ride share and transit purchases in Canada, to name a few. Card holders also earn 1 Mile for every $10 spent on non-eligible purchases.

When it comes to points redemption, card holders can use them to purchase flights, merchandise, electronics, hotels, car rentals, among many other things. In addition, card holders will get 25% bonus Miles, based on how many you’re spending, on their first single flight or vacation package purchased through Air Miles once per calendar year. This once a year offer caps at 750 Air Miles, but still will contribute to one of your annual trips!

The American Express Air Miles Platinum credit card is an excellent choice, particularly if you’re already invested in Air Miles’ loyalty program. You’ll also reap the benefits of low commitment balance transfers and other American Express benefits. Keep in mind that if you’re not keen on the annual fee of this credit card, American Express offers a basic Air Miles credit card with no annual fees.

 

Overview:

  • Welcome Offer: Earn a Welcome Bonus of 3,000 AIR MILES®* Bonus Miles
  • Annual Fee: $120
  • Annual Interest on Purchases: 20.99%
  • Annual Interest on Cash Advances: 21.99%
  • Additional Benefits: Front Of The Line® Advance Access, Front Of The Line® Reserved Tickets

Eligibility:

  • Credit Score Required: Average to Excellent (670-900)



12- Best Grocery Credit Card: Scotia Momentum Visa Infinite

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The Scotia Momentum Visa Infinite card was the winner of the MoneySense best cashback card with a fee in 2019 - and for good reasons! Card holders earn cash back on all purchases at varying rates. There are also other perks of card ownership including access to exclusive Scotiabank events and offers, plus ample insurance coverage.

  • Tiered Cash Back Rates. Earn 4% cash back for every dollar spent on groceries and recurring bill payments. Earn 2% cash back for every dollar spent on gas and daily transit. Finally, earn 1% cash back for every dollar spent elsewhere.

 

Overview:

  • Welcome Offer: During the first three months of card ownership, earn a whopping 10% cash back on all purchases. This rate is only applicable for the first $2,000 of purchases.
  • Annual Fee: $120
  • Annual Interest on Purchases: 20.99%
  • Annual Interest on Cash Advances: 22.99%
  • Additional Benefits:
  • Additional Perks. Obtain exclusive offers from Scotiabank including concierge service, competitive hotel rates and upgrades, and access to dining and wine country programs.
  • Insurance Coverage. Ample coverage comes with this credit card, such as new mobile device, trip cancellation, trip interruption, purchase protection insurance and much more.

Eligibility:

  • Income Eligibility: $60,000 individual or $100,000 household
  • Credit Score Required: Average to Excellent (670-900)



13-Best Gas Credit Card: Scotiabank Gold American Express® Card

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With a generous rewards rate of 5 points per dollar on gas, groceries, restaurants and entertainment, the Scotiabank Gold American Express Card will help make your travel plans a reality. Plus, with a flexible points program, you can book you flights on your own schedule. Excellent credit card with 7 types of travel coverage and great reward earn rates.

 

Overview:

  • Welcome Offer: The Scotiabank Gold American Express offers a way for new cardholders to quickly stockpile points. It lets you Earn 25,000 bonus Scotia Rewards points with your first $1,000 in everyday purchases in first 3 months.
  • Annual Fee: $129
  • Annual Interest on Purchases: 19.99%
  • Annual Interest on Cash Advances: 22.99%
  • Additional Benefits:

This Amex credit card provides has one of the most comprehensive travel protection benefits with insurance against flight delays and lost baggage even insurance against burglaries.

Eligibility:

  • Income Eligibility: Min $12,000 Yr
  • Credit Score Required: Average to Excellent (670-900)



14-Best Premium Credit card: American Express Platinum Card

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This card is the most exclusive credit card in the market however it comes with a $699 annual fee which is one the highest for a Canadian credit cards. The Platinum Card® is great for those who are looking for a luxury credit card with outstanding benefits, rewards, insurances, and platinum experiences. The annual fee is high however a frequent traveler will enjoy every single benefit on this card.

Platinum Card's rewards earn rate:

  • Earn 3 points for every $1 in Card purchases on eligible dining in Canada
  • Earn 2 points for every $1 in Card purchases on eligible travel
  • Earn 1 point for every $1 in all other Card purchases

25,000-point welcome bonus: New card holders are eligible to receive a welcome bonus of 25,000 membership reward points. In order to qualify for the welcome bonus, cardholders must spend $2,000 within three months after the card activation.

No credit limit: There is no preset credit limit with this credit card

Premium airport lounge access: Complimentary access to over 1,200 airport lounges across 130 countries.

 

Overview:

  • Welcome Offer: Earn 25,000 Welcome bonus points
  • Annual Fee: $699
  • Annual Interest on Purchases: 30%
  • Additional Benefits:

Eligibility:

  • Income Eligibility: $60,000 individual or $100,000 household
  • Credit Score Required: Average to Excellent (670-900)



15- Best Business Credit Card: American Express Business Edge™

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As the name of this credit card implies, this card is designed for the unique, modern needs of business owners. Card holders earn three times the points for purchases made on essential business expenditures, such as office supplies, electronics, food, drinks, transportation, and gas. For all other purchases, regular points are earned. As you can see, this card ensures that business owners easily earn points wherever they spend.

When you get this credit card, AMEX will greet you with 30,000 bonus points when you spend $5,000 or more on the credit card within the first three months of card membership. Card holders also earn 1,000 points for every month $3,000 is spent on the card. This means you could potentially earn 42,000 extra points in your first year of card ownership!

All of these perks are fantastic and the cost is a reasonable $99 per year. Additional cards come with no annual fee which means that your coworkers can obtain a card free of charge while contributing to your points balance and paying for necessary business expenses. Card holders also benefit from being able to pay off their balance at any time, insurance, Front of the Line access and custom business tools. After you’ve earned a healthy points balance, you can redeem them for travel, dining, entertainment, retail and merchandise purchases, among many others.

 

Overview:

  • Welcome Offer: Earn up to 42,000 Membership Rewards® points in your first year of Cardmembership
  • Annual Fee: $99
  • Annual Interest on Purchases: 19.99%
  • Annual Interest on Cash Advances: 21.99%
  • Additional Benefits:

Eligibility:

  • Credit Score Required: Average to Excellent (670-900)




Credit Card FAQ'S

 

What is a Credit Card?

When a business such as a bank lends you money it is called credit. A credit card essentially allows you to spend the bank’s money and pay them back later, all through the use of a small plastic card.

Credit cards are convenient, secure, and help build your credit rating if you use them responsibly. Paying for goods with a credit card also gives you the backing of the credit card company’s fraud handling measures. If your card is used fraudulently without your knowledge, the credit card company will almost certainly pay you back.

However, it’s important to remember that credit cards have annual fees and/or interest to pay. If you don’t pay off the entire balance each month, then you will pay interest on the balance. If you use a credit card at an ATM you will likely be charged a cash advance fee.

Your credit card will also have a credit limit – the maximum amount you are allowed to borrow on the credit card at one time. Once you’ve paid off some or all of the credit used, you’ve essentially reset it and the amount paid becomes available again minus interest and charges (as opposed to bank loans where the credit is non-revolving.)


How Do Credit Cards Work?

Your bank will typically give you a monthly billing cycle. This doesn’t necessarily run from the first of each month to the last but is based on your account open date.

At the end of each billing cycle, your bank will send you a credit card statement that shows how much you owe them. You can choose to pay the entire amount – this means you won’t have to pay any interest – or you can choose to pay the minimum amount or some amount in the middle. There is an interest-free grace period where you are not charged interest on your balance.

If you pay less than the full amount, interest is charged. which is a percentage of the amount you owe them. Credit card interest is usually calculated daily and charged monthly. Typically, a bank will charge 19.99% interest per month.

Credit card providers typically charge other fees including:

  • An annual fee
  • A fee when you make a payment in a foreign country or in a foreign currency
  • A fee for paying your bill late
  • A fee for using your card to advance cash, such as taking money out at an ATM.

A charge card is a special type of credit card that requires you to repay the entire balance in full each month. American Express is well known for its charge cards.



Issuers vs. Networks

You get a credit card either from a bank or other financial institution – the issuer. They are the ones who physically issue you the card, extend you a credit limit, set the terms and conditions of use, and deal with customer inquiries.

However, each bank doesn’t run their own credit card network – they all use one or more credit card networks. Some of the major credit card networks in use in Canada are MasterCard, Visa, and American Express. These companies handle the immense infrastructure required to support a worldwide credit card system.

 




Types of Credit Card

 

Unsecured Credit Cards

These credit cards are acquired through banks and financial groups. Because they are “unsecured,” you don’t have to put a security deposit or collateral And the application is easy if you have a favorable credit rating.

Unsecured credit cards vary in annual fees, interest rates, and rewards. Let’s look at the different types of unsecured credit cards:

 

Low-Interest Credit Cards

Also known as Low APR credit cards, these credit cards are great if you carry a balance each month. Their zero interest and low installment payment terms are also very useful when you need to make a large purchase.

Low-interest credit cards can have a single fixed rate annual percentage rate (APR) or a low APR that increases after a specific period. Because these credit cards have different terms, it’s best to read the terms and conditions of the introductory rate to avoid surprises such as accumulated interest.

 

No Fee Credit Cards

Getting a credit card with no annual fee will help you maximize earnings while minimizing costs. Just like any other unsecured credit card, a no-fee credit card helps you earn rewards such as hotel stays, merchandise, miles, and cashbacks.

Here’s the caveat: annual fees on credit cards can also mean higher rewards. However, if you’d rather save money than earn rewards, then you may want to check out credit cards with no annual fees.

 

Rewards Credit Cards

This type of credit card gives more rewards on credit purchases. There are three general types of rewards: travel, cashback, and points. Cashback credit cards are popular because they give cash rewards for each purchase. You can redeem these rewards for cash to buy goods.

On the other hand, general rewards credit cards give you points that you can use for plane tickets, gift cards, and merchandise. Some rewards cards are partnered with certain companies and brands. If you want to accumulate rewards for certain brands, then you might want to get a rewards credit card. Some examples are hotel rewards cards, gas cards with points or rebates, and retail rewards cards. If you are a frequent traveler, then you might want to apply for airline mile / frequent flier credit cards.

Rewards credit cards are recommended for individuals who regularly pay off their balances. This way, you can maximize the rewards by minimizing finance charges.

 

Balance Transfer Credit Cards

Ideal for people with already existing credit card debt, balance transfer credit cards have a low-interest rate and a lower introductory rate on balance transfers for a period of time. Apply for a balance transfer credit card if you want to save money from your high-interest-rate balance.

When comparing credit cards, look at the duration of the payment term and the interest rate. Ask yourself: How long can I pay my debt without interest? The longer the zero-interest payment period and the lower the rate, the better.

You may also want to compare the balance transfer fee of these credit cards. Most balance transfer cards have a “teaser” interest rate of 0% that can last for several months to a year. Always make sure to review the terms and conditions of each card before you apply.

 

Secured Credit Cards

A secured credit card is a good option for people who want to build their credit score or repair damaged credit. Unlike unsecured cards, this type of credit card requires a security deposit. The credit limit of each card depends on the amount of your deposit.

Secured credit cards have different annual fees and interest rates. If you want to rebuild your credit, go for secured cards from financial institutions that also offer unsecured credit cards. A consistent track record of on-time payments may earn you an upgrade to an unsecured card.

 

Business Credit Cards

Business credit cards help entrepreneurs separate their business and personal expenses while providing additional features and rewards ideal for business owners. For example, these cards give the flexibility on payments, rewards on typical office purchases, and airport lounge access. Some business credit cards also include free supplementary credit cards for employees. Other “business perks” include higher credit limits, expense management reports, and purchase protection policies.

 

U.S. Dollar Credit Cards

These credit cards are for Canadians who love to shop across the border - whether it’s buying online from US retailers or booking hotels out of the country. With a U.S. dollar credit card, you can spend money and pay bills in U.S. currency which eliminates discrepancies in exchange rates and conversion fees.

Tip: Consider applying for U.S. dollar credit cards if you regularly travel across the border, buy items from U.S. retailers and vendors, or have a U.S. dollar bank account.

 

Student Credit Cards

Getting a student credit card is your first step to building your credit history. The key is to look for a card with low-interest rates, no annual fees, and generous rewards. By faithfully paying off your balance each month, you can establish a good credit rating that will help you in your future application for a house or car loan.

However, remember that being in college does not automatically qualify you for a student credit card. You may need to show proof of income and good credit history to get approved. In this case, the best option is to get a secured credit card.

 



Comparing Credit Cards

 

There are literally hundreds of different credit cards on the market, all with different interest rates, terms, fees, and benefits. There’s no perfect card and choosing the best one for your needs comes down to your financial situation, credit history, needs, and requirements.

Your credit history will be a big factor in the type and number of credit cards banks will offer you. If you have good credit, then you’ll be offered cards with low-interest rates, high credit limits and additional perks such as the ability to collect air miles or discounts on hotels. If you have a poor credit rating, you will be considered more of a risk and, therefore, only get cards with higher interest rates and a lower credit limit.

Your age can factor into this too – if you are young, you won’t have built up much credit history. Consider a student credit card or a charge card to build up your credit rating. Only by using credit responsibly will your credit rating improve.

Your income will also play a big part in which credit cards are open to you – banks want to know that you’ll be able to repay the credit they are extending you. With a steady income flow coming into your bank account they can see that you have the means to repay your debts.

Apart from choosing the credit card with the lowest interest rate and fees for your situation, you might also want to consider the extra perks that come with some credit cards. Some offer cash-back when you spend in certain shops; others offer a points system that you can use to for example pay for travel with your credit card.



How to Apply for a Credit Card

 

Applying for a credit card is quite easy, whether you do it in person, at a bank, or online. The card issuer will need some documents from you to gauge whether you are a good fit for their credit card offers.

They will typically ask for pay stubs that show your income, bank statements, or an alternative proof of income. They will also ask for documents that prove your identity and residence, such as a government-issued ID and a utility bill in your name.

Every credit card will have different eligibility requirements. Some will require that you have a minimum annual income. Most require that you are 18 years old, while others 21.

After you have given the credit card issuer these details and documents, they will typically look over your application and approve/decline it. If approved, your credit card will be sent to your home address in 7 to 10 business days and you can begin spending once you activate it.



Which credit card is for me?

 

There are different types of credit cards in Canada. Finding the right one depends on your credit history, lifestyle, and income. Unsecured credit cards give rewards, secured cards help you build your credit history, and business credit cards have features that are helpful for entrepreneurs. We recommend comparing interest rates, payment terms, annual fees, and rewards to find the right credit card for you.



What are the different types of credit card rewards?

 

There are different rewards for different cards. The most common are cash back, travel points, store points, and free gas. Let’s have a look at each of them:

  • Cashback rewardsCash back rewards are rebates and typically range from 0.75% - 4.00% of your purchase. These rebates can be used as cash, and can be mailed to you as a cheque, transferred to your bank account, or applied to your statement.
  • Travel points – These credit card rewards usually come in the form of air miles and can be used to purchase airplane tickets and free flights. Travel points are also used to redeem perks such as hotel stays and car rentals. Best for travelers, some credit cards also offer more points for travel purchases.
  • Store points – Store credit cards are provided by select retailers such as Wal-Mart, Costco, Home Depot, Ikea, and HBC, to name a few. Points are earned from purchases, not necessarily from the same store, and can be used to redeem merchandise from their store.
  • Free gas – Gas rewards credit cards allow you to earn points for purchases (up to 2x for gas purchases) that can be used at specific gas stations. These cards also give additional discounts on select gas and tire
  • Other rewards – Some credit cards also include other rewards such as insurance products. They come at no added cost and bring value during unforeseen events.



How to choose the best credit cards rewards program

 

Before deciding to apply for your next credit card, consider your monthly spending and rewards preference.

  • Think about your spending habits. Where do most of your credit card purchases go? Some credit cards offer 2x – 3x points for specific purchases like groceries, restaurants, gas, and travel.
  • Consider the sign-bonus and terms. Some cards offer more bonus points, cash back and travel mileage as a sign-up bonus. Look into these terms and see how they fit in the long-term picture.
  • Decide how you want to claim your reward. If want additional spending money each month, then a cash back rewards program would be the ideal choice. On the other hand, if you frequent grocery stores or gas stations, then credit cards linked to your favorite stores may give you better rewards.



Determine Your Eligibility for Credit Cards

 

Credit card lenders perform a credit check every time you submit an application. Credit checks from lenders and other third parties negatively impacts your credit score. For this reason, you should only apply for credit cards that you genuinely have a chance at getting approved for.

Some lending institutions provide minimum requirements for their borrowers that can be assessed before you apply. By considering minimum requirements, you will ensure that you don’t apply for a credit card that you will automatically get denied for. Below are some additional criteria to consider.

 

Sources of Income

Rewards and cash back cards tend to have minimum income requirements. Most banks consider the income of the applicant only, while others will consider the combined income of a household.

 

Credit Score

Your credit score plays a major role in all your personal finances and borrowing, including credit cards. Knowing your credit score can give you an idea of what types of credit cards you will be eligible for. If your credit score isn’t the greatest, you probably won’t get approved for the highest valued credit cards out there. Also, you can work on giving your credit score a boost before you apply to put your best foot forward with credit card issuers.

 

Residential Status and Age

In Canada, you must be a Canadian resident and the age of majority in your province to obtain a credit card. Usually this age is either 18 or 19, check your province’s age of majority if you’re unsure which age is applicable to you.

 

 

Complete Your Application

Now you have your sights set on a credit card that will work for you, it’s time to apply, finally! The quickest and easiest way to apply for a credit card is online, but you can also mail or fax your application, apply over the phone or visit the financial institution in person to complete your application. Keep in mind that applying using any method other than online will be much more time consuming.

Each application requires different information from the borrower, however, below is some basic information you can expect to submit with your application.

  • Personal information, such as your name, address, email address and phone number
  • Rent or mortgage payment amounts
  • Occupation and current employer
  • Annual income
  • Spouse’s or total household income
  • Social insurance number

 

Wait for Approval

You submitted your application, now it’s time to wait for approval. Approval can take a couple minutes if done online, unless the credit card provider needs more information from you. If additional information is needed, it can hold up the process for several days. If you applied using another method other than the internet, the process can take several days or weeks.

 

What to Do When You’re Declined

If you weren’t approved for a credit card, figure out why so you don’t make the same mistake again. Below are some common reasons for credit card non-approval. If none of the below are the reason you got declined, reach out to the lender to find out why.

  • Do not meet the credit card’s minimum income requirements
  • Information on your credit card application does not match your credit report
  • You aren’t a Canadian resident or the age of majority
  • Your credit score is too low to qualify for the credit card

 

Being declined for a credit card, or anything for that matter, is never fun, but it also isn’t the end of the world. Perhaps you applied for a credit card that was slightly out of your reach for your current financial position, and that’s okay! The important thing is that you learn from your financial mistakes. When you apply for another credit card, consider the reason you got declined and work on your personal finances to get approved the next time around.




Tips to Avoid Credit Card Debt

 

Have an emergency fund

Most people use their credit cards when an emergency arises (e.g. for paying medical bills or after a car breaks down). Setting aside a fund for emergencies which is typically 3 months’ worth of your overall expenses will help you not rely on your credit card during unforeseen circumstances.

 

Buy only things you can afford

Treat your credit card as cash and only swipe it on stuff you can afford.

 

Pay your balance in full and on time every time

Once you miss a payment, not only will you have to make up for the missed payment, but you will also have to pay the late fee and interest rate. This not only puts a strain on your budget, but it also puts you at risk of using your credit card again to make ends meet.

 

Understand your credit card terms

It is recommended that you read through your credit card agreement. Make sure you understand the interest rates, fees, billing dates.

 

Keep away from unnecessary balance transfers

Balance transfers can increase your balance because providers charge a balance transfer fee. As much as possible, use balance transfers only if you have a good reason to so, such as to take advantage of a lower interest rate. If you really need to transfer your balance from one card to another, use our Credit card comparison tool to help find the best balance transfer credit card based on your needs.

 

Avoid cash advances

Cash advances are one of the most expensive forms of credit card debt. They have high interest rates on top of the cash advance fees. It is advised to Use them as a last resort. Most importantly, avoid cash advances by making sure to set a budget and to have an emergency fund.

 

Never let anyone borrow your credit card

As mentioned previously, treat your card like you would with cash and never lend it to anyone else. Even if that person promises to pay your credit card bill, you are the one responsible for any charges on your credit card. This means that if he or she refuses to pay on time, you will ultimately have to pay the balance (and interest).

 

Limit the number of credit cards you own

The more cards you have, the more you are at risk of debt. Most people keep up to 3 credit cards with them.

 

Know the signs of credit card debt

Learn to recognize early warning signs such as being unable to pay your balance in full. Once your see the signs, you can follow our tips on how to reduce your debt below.

 

 

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Author Bio

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Mohamed Konate

Mohamed Konate is a personal finance expert, blogger, and marketing consultant based out of Toronto. He is a former financial services professional who worked for many years at major Canadian financial institutions where he managed the marketing strategy around various financial products ranging from credit cards to lines of credit. Mohamed is passionate about personal finance and holds a Bachelor in Business Administration from the University of Quebec (Montreal) and a Master in International Business from the University of Sherbrooke (Quebec).He is also the author of the Canadian Credit Card Guidebook.

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