Credit cards are rising in popularity with both users and retailers. As a result, personal credit card deals are getting more competitive as more of them enter the market. Traditionally, credit cards were associated with the “Big Five” banks of Canada, but today many independent and virtual-only banks are hoping to acquire new customers with their own offerings. With all these new credit card deals to choose from, it’s very easy to become overwhelmed when deciding which one to choose. Like all financial products, the most surefire way to lock in the best credit card deal for you is to become informed. This article will serve as your ultimate guide to credit cards to help you find the best rates, highest rewards, and greatest perks.
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| CREDIT CARDS | AVG. REWARD RATE | CREDIT RANGE | SIGNUP BONUS | ANNUAL FEE | PURCHASE INTEREST | CASH ADVANCE INTEREST |
| AMEX Express Cobalt | 3.76% | 560-659 | Yes | $120 | 19.99% | 20.99% |
| SCOTIABANK Momentum Visa Infinite | 2.08% | 660-724 | Yes | $120 | 20.99% | 22.99% |
| BRIM World Elite Mastercard | 2.25% | 760-900 | – | $120 | 19.99% | 21.50% |
| AMEX Simply Cash Preferred Card | 2% | 660-724 | Yes | $99 | 19.99% | 21.99% |
| AMEX Gold Rewards Card | 3.44% | 660-724 | Yes | $150 | – | – |
| TD Aeroplan Visa Infinite Card | 2.97% | 660-724 | Yes | $120 | 19.99% | 22.99% |
| BMO Air Miles World Elite Mastercard | 2.12% | 560-659 | Yes | $120 | 19.99% | 22.99% |
| AMEX Air Miles Platinum | 3.44% | 660-724 | Yes | $120 | 20.99% | 21.99% |
| TANGERINE Money-Back Credit Card | 2% | 660-724 | – | – | 19.95% | 19.95% |
| TANGERINE World Class Credit Card | 2% | 660-724 | – | – | 19.95% | 19.95% |
| MBNA Rewards Platinum Plus Mastercard | 1.35% | 660-724 | Yes | – | 19.99% | 24.99% |
| CIBC Aventura Visa Card | 1.48% | 660-724 | Yes | – | 19.99% | 22.99% |
A credit card is a metal/plastic slip that’s handed out by financial institutions that gives cardholders in person, online, or over the phone access to a pool of borrowed funds (also known as a credit limit). Individuals with credit cards can pay for goods or services on the assumption that the credit and associated fees will be paid back in full at a later date. Credit card issuers will systematically set a hard limit on the amount of credit available per individual, depending on their credit rating and financial situation. As of today, credit cards are the most widely used payment method in North America for everyday consumption. Some examples of common cards include: MasterCard, Visa, and American Express – although many financial service providers are promoting a new wave of lesser known credit cards; which often come with better deals.
Credit cards, at their core, are just financial tools that provide short term loans and ask for monthly repayments. As your credit usage is repaid through other means (like a chequing account) your monthly credit limit is refreshed by that amount. The primary advantage credit cards have over simply paying for things in cash is convenience. Through using one, you technically don’t suffer the cost of a product immediately – you reserve the right to pay for it in the future. As a result, this spares you from always needing cash or debit in your wallet. Other advantages of credit cards include incentivized rewards for specific uses, cardholder benefits, and the potential to grow your credit score (see below for more detail on the positives of utilizing credit). However, among all these good reasons to sign up for a credit card and the ability to build your credit history lies a great deal of responsibility. Credit cards are most efficient when you use your credit diligently. A beginner tip is to not overload your wallet with cards (1 or 2 cards should be fine to start), since you can easily lose track of monthly payments – which come with a substantial penalty when forgotten about. Your credit cards should be aligned with your self-controlled spending habits, and therefore not be abused. If you can manage to at least pay off your cards minimum balance every month you stand to benefit greatly in the long run.
Credit cards have different penalties depending on your financial institution’s unique credit card policy, but there are a few universal fees. Most credit cards are associated with an annual fee. This yearly lump sum payment (or monthly instalments) can be seen as paying for the right to be a cardholder. A reprinting fee is charged when specific financial documents are copied, usually a physical banking statement or transaction receipts. This type of fee is generally avoidable if you prioritize digital banking and move away from paper. Another common credit card fee is an over-the-limit fee, which is exactly as it sounds – your credit card provider will penalize you for consuming credit past the limit. There are a couple ways to navigate this: you could ask your bank to set a hard cap on your credit limit, so charges cannot accumulate past that number. Or you could simply monitor your account balance periodically to ensure that it is within a reasonable distance from the maximum. Dishonoured fees on credit cards occur when a payment method is unaccepted, or “bounced back” from the recipient. Typically, this results when the sender has insufficient funding to meet the asking amount – so before you write a cheque make sure you have enough to cover it. Lastly, there is the inactive account fee which only takes effect past a certain time frame (specific to your credit card provider) of not using the card. This fee can be avoided by either cancelling the credit card entirely (note that if this is done incorrectly it can harm your credit score), or by simply owning fewer credit cards.
The term consumer credit is distributed through different financial service providers, and can be broken down into two main subcategories called instalment credit and revolving credit. The more classical of the two, instalment credit, is issued for a specific motive within a fixed time period – usually the purchase of an expensive home asset such as a car or furniture. In order to incentivize an individual, instalment credits mainly feature lower rates than revolving credits, since the asset can be held as collateral in case of credit defaults. Modern times however place a higher emphasis on revolving credit, which can be used for virtually any good or service via credit cards. The convenient flexibility of revolving credit is very hard to ignore, even if interest rates are slightly higher than instalment credits due to a lack of collateral.
Credit scores are an official calculation and numerical representation of your total credit file. Calculated federally by credit bureaus, your credit score is a complex result that comes from your ability to consistently meet payments on time, history of loans, and total debt accumulated. Credit scores can fall anywhere from 300 to 900, with 900 being a perfect (yet hardly realistic) score. As a general statement, the higher the credit score the better – since it shows your ability to pay off credit. A credit score of 720 and above represents healthy management of personal finances, and almost complete assurance to repay credit providers. A credit score of 600 to 719 ranges from being “good” or “fair,” although landing in this range (most people do) isn’t a major hindrance when making credit card applications. Any number below this however is considered suboptimal, and you’d likely need to pay back a considerable amount of debt to raise it.
Before you start searching for the one, know that there is no “perfect” credit card on the market. Some credit cards will perform better in certain areas than others. You should begin by considering your financial situation, interests, and spending priorities and then follow up by determining which rewards can benefit you the most. If you find yourself only able to make minimal payments each month on your outstanding balance, opt for a barebones low-interest card that will save you money by excluding the latest bells and whistles. Alternatively, if you can afford to pay back your balance in full each month, look into cards that offer rewards. Just for example, two of the most common types of rewards cards are travel point collectors and cash-back cards. The reward cards you ultimately decide on should side with your individual needs and interests. Once you’ve settled on a credit card category, look into further details such as the card’s interest rate, fees, bonus features, and point system.
Each credit card offered on the market is unique, as they all specialize in different financial needs. There is no right or wrong choice of credit card option as long as it meets the requirements of your lifestyle. On a basic level, a zero-fee credit card is the ideal way to start building credit from the ground up. Although it is stripped of most credit card rewards and bonus features, this card is about as struggle-free as it gets; since you save money by having no mandatory charges.
As soon as your financial situation improves you can sign onto a rewards credit card which delivers a trade-off between higher (yet manageable) fees and a point accumulation program. Reward cards can come with perks like flyer miles, cash-back service, or gas and grocery points. If you’re able to use your reward card frequently and still pay off the monthly balance, the value of the rewards will make up for the annual fee to use the card.
Another option is to open a student credit card, which is eligible for both domestic and international post-secondary students. If you’re young and still unemployed, this is without a doubt the best credit card to get – since most come with no annual fees, and will help with your future financial obligations.
If you’re planning to make purchases on behalf of an entrepreneurial venture, a business credit card allows you to automatically keep your business and personal expenses apart. The advantages of this type of credit card are most often visualized during tax season, because it simplifies the bookkeeping for the business. In addition, business credit cards frequently come with an exceptionally high limit in order to cover unforeseen expenses that can occur when operating the business.
If you’re worried about your ability to tackle monthly account charges but still want to work on your credit history, a low interest card can occasionally be a good option (it still assumes you’ll run into increased income eventually). It allows the cardholder to shift credit card debt month over month at a much lower interest rate.
In the worst case scenario (you have a bad credit rating) you can still be approved for a guaranteed credit card. Investing in one can give you a shot at improving your credit score, but the amount of credit issued is extremely limited when compared to others credit cards.
Fortunately, applying to get approved for a credit card in Canada is a relatively simple task. Generalizing the application process, signing up for a new credit card can be done in three steps. Step one is to develop a foundation of specific credit card needs that fit your means of living (the key here once again is to understand your financial situation). Step two involves discovering if you are eligible for said card. Eligibility can be calculated through your credit history and score. If you are new to Canada and are lacking in both of these areas, it will become more difficult to be approved for a credit card. Lastly, the third step is just to compare and select. Once you’ve done a comprehensive assessment on the different types of cards, you can make a decision with a financial institution.
If you’re not taking full advantage of competitive fees and bonus credit card rewards, you’re really missing out. We are in the middle of an age where credit is slowly becoming the new norm, as cash and debit accounts get rotated out of the equation. To be frank, there’s hardly any financial benefit to be achieved from using a debit account to make purchases. With this new line-up of elite credit cards, you’ll be rewarded on most transactions – but not equally. That’s why it’s so important to choose a credit card that best suits your spending habits, unless your strategy is to sign up for as many as possible. By sharing with you our guide, we’re hoping to ease your search for a new card while listing the top-ranking credit cards in Canada for the major categories. It’s time to save more while you spend more.
Interested in getting away for the winter? Not sure if your credit cards travel insurance packages offer enough coverage? Check out our article on Snowbird Travel Insurance
A balance transfer credit card is opened for the purpose of paying off an existing credit card’s monthly balance. Typically, the balance transfer credit card will feature a lower interest rate, so its payments will be easier to afford than your “main” credit card. To prevent cardholders from making balance transfers an inexpensive tool to access lower rates, financial institutions will include a considerable balance transfer fee. This will usually come in the form of a percentage of the transferred amount, although conditions can vary by credit card provider.
In general, prepaid credit cards are a limited spending resource that does not get factored into credit score calculations. Unfortunately, it cannot be used to build credit either, as there are no interest charges or similar usage fees. It is more useful to think of a prepaid credit card as a debit account based on its functionality.
A cash advance, at its core, is just a very expensive (yet temptingly easy) method of borrowing money through the credit system. No matter how great the cash advance interest rate on a credit card may seem relative to other credit cards, you will most likely face a steep rate of roughly 20% on the loan. Ideally, getting a cash advance should be treated as a financial last resort, and is by definition completely optional. If you are desperately in need of short term funding, consider cheaper borrowing alternatives such as a personal line of credit.
As a general rule of thumb – you should only take out as many credit cards as you can realistically handle. The ideal number varies from person to person, but you should aim to have at least two credit cards in the wallet that fit your spending habits. It is a good idea to have one all-purpose credit card that is widely acceptable (such as Visa) and pair it with at least one type of rewards card. Your rewards credit cards should be tailored to your lifestyle for optimal benefit – if you need help saving money, a cash-back card should help the most. On the other hand, if traveling is instead your largest priority, narrow your applications to travel reward credit cards. Note that a two card recommendation is a minimalistic goal – if you find yourself in a healthy financial situation, you could potentially stand to benefit from having additional credit cards.
In the vast majority of cases, your credit card will still function overseas – but at an additional cost. It is universally understood that any credit card transaction made in a foreign country is subject to a currency exchange rate plus a currency conversion charge. While currency exchange rates can fluctuate frequently, the conversion rate will remain fixed and is entirely based on your credit card plan. You also have the option of taking out a cash advance in a foreign country, but the fee will be slightly higher than the already unfavourable domestic rate –a foreign cash advance should only be used if absolutely necessary.
Assuming you haven’t negotiated with your financial institution the terms of instant credit card approval, the entire process could take an estimated 2 to 3 weeks. If you’ve already been approved for one, there is a high likelihood of getting the card in 10 business days or less through the mail. Since the application delivery is instant, the fastest way to be approved is through an online portal – not an in-person visit or phone call.
There are several ways to improve your credit score, although the exact impact each action will have is hard to accurately predict. The majority of lenders will agree that the most essential action to increasing your credit score is timely bill payments. Reliability to lenders is very important, as past repayments can be more or less indicative of future repayments. Another important action is to maintain low monthly balances on your credit cards. Ideally, you want to have a low credit utilization ratio – which is defined as the amount of credit you actually use divided by your total credit availability. This leads into the concept of opening multiple credit cards to improve credit score, since the act of having many account balances will theoretically lower your credit utilization ratio. As a result, it can also prove beneficial to the cardholder to keep inactive credit cards rather than cancel them – since removing them entirely can hurt the credit score by increasing credit utilization.
At the end of the day, a payment is a payment – the two types of cards will give the same amount of value to a product or service. However, credit cards are increasing in popularity since they can provide benefits and bonus perks that debit cards typically can’t. If you consider yourself a relatively conscious spender, using a credit card is more advantageous than a debit card in the long run. By paying off monthly credit balances, your credit card’s interest rate charges are effectively 0% (the same as debit) yet you’re now eligible to earn rewards for spending. These rewards can range anywhere from cash back opportunities, free flights, and more affordable grocery bills – and they are not usually available with debit cards. Another advantage to credit cards is their built-in purchase protection. Since you are basically leveraging your financial institution’s money, it makes sense for them to want to insure it. If you ever find yourself in a situation where you were the victim of a faulty/inconsistent charge, your financial institution is more likely to dispute the charge with the vendor.
Remember that while increasing your credit limit theoretically gives you more access to funds, it still needs to be repaid at a later date. As a result, it’s best to only increase your credit limit if it is to match an increase in income. While contacting your financial institution for a higher credit limit is completely reasonable, you’re going to have to prove your financial worthiness. Generally speaking, a good financial credit standing is built upon the past 6 months of account status. Making timely credit bill payments and having low credit utilization rates on each individual credit card can vastly improve your chances of a limit increase. Aside from making a direct request to your financial institution, you could instead choose to take out a new credit card – one with a higher base limit. Depending on your credit score and financial health, this can be the simplest option, although it does increase the amount of credit you need to manage. If you’re looking for currency exchange in Fort McMurray, you can reach out to us and we will give you the best rates!
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