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Our top picks for credit cards
LowestRates.ca has narrowed the top picks for every main credit card category, making it easy for you to compare the best Canadian credit cards all in one place.
Here are all the top credit cards in Canada.
|Category||Card||Required Credit Score|
|Rewards||American Express Cobalt™ Card||Fair|
|Low Interest||HSBC +Rewards™ Mastercard®||Good|
|Balance Transfer||MBNA True Line® Gold Mastercard®||Good|
|Student||BMO CashBack® Mastercard®* for Students||Good|
|No-Fee||Tangerine Money-Back Credit Card||Fair|
|Secured||Home Trust Secured Visa||NA|
|Guaranteed||Home Trust Secured Visa||NA|
|Business||American Express® Business Gold Rewards Card®||Good|
|U.S. Dollar||BMO U.S. Dollar Mastercard*||Excellent|
|Travel Rewards||TD® Aeroplan® Visa Infinite* Card||Good|
|Cash Rewards||BMO CashBack World Elite* Mastercard*||Excellent|
|Points Rewards||Scotiabank®* Gold American Express® Card||Good|
|Specialty Rewards||The Marriott Bonvoy™ American Express® Card||Good|
Types of credit cards in Canada
When it comes to picking a new credit card, there are a wide range of credit card categories to choose from. The category you pick depends on your credit score and credit card needs. Here are the main types of credit cards in Canada.
A rewards credit card helps you earn rewards through day-to-day transactions. This reward can be either rewards points, cash back or travel miles, depending on your credit card rewards program. The rewards you earn can be redeemed for travel, cash back and more, depending on your card’s rewards program. Most rewards credit cards also come with a variety of benefits such as purchase protection, travel insurance, car rental insurance etc. If you have good to excellent credit, getting a rewards card to maximize the value of your buck is a smart idea.
If you tend to carry a credit card balance from month to month and a larger percentage of your credit card payments go towards interest charges, having a low interest rate credit card can help you pay your balance down faster. This will also improve your overall credit rating. Low interest credit cards usually have an APR of less than 10%, becoming a better choice than the average credit card, which usually has an APR of 19.99% or higher.
A balance transfer credit card allows you to transfer your existing credit balance onto it and take advantage of a lower interest rate. It is also important to note that some balance transfer credit cards have great promotional offers, such as a 0% introductory APR.
If you’re a student, part-time or full-time, you can qualify for a student credit card. Student credit cards usually have no annual fees as well as great students perks and benefits.
A no annual fee credit card allows you to enjoy the convenience of using a credit card without having to worry about paying an annual fee.
A secured credit card requires you to place a secure deposit as part of your application. This deposit protects the lender from any missed credit card payments. Usually, with a secured credit card the deposit amount will be your credit limit. If you have bad credit, a secured credit card can help you slowly re-build your credit score.
Anyone who meets the set criteria of a guaranteed credit card can qualify for a guaranteed credit card. This is a great option for those who have a weak credit rating and want to get a credit card to rebuild their credit score.
A business credit card can help you access credit to conveniently pay for your business needs such as, employee meals, inventory and travel purchases etc. A business credit card can also make your expense tracking simpler, as all your transactions will be accessible through your credit statement.
If you tend to frequently make US dollar credit card purchases while travelling or online, a U.S. dollar credit card will help you avoid the typical foreign exchange transaction fee that comes such credit card purchases. This fee can be around 3% of the transaction price.
If you’re an avid traveller, a travel rewards credit can help you earn great travel rewards with every transaction. This can be anything from free flights and travel upgrades to travel discounts. Most travel credit cards also have travel related benefits such as lounge access and trip cancellation insurance.
A cash back credit card allows you to earn a percentage of cash back on all eligible credit card purchases. This can be in the form of instant cash back on your statement or accumulative cash back that is accessible according to your card’s terms.
A specialty rewards credit card can help you earn rewards from your favourite brand, so you can have a card that is tailored to the getting you the rewards you actually want.
Here’s everything you need to know about credit cards in Canada.
How do credit cards work?
When you open a credit card account, your credit card provider extends you a line of credit which is accessible through your new card. Every time you buy something with your card, you spend money borrowed from your credit card provider.
As a cardholder, you are obligated to repay those funds within a set amount of time and to abide by the terms and conditions set out in your card’s contract. Your contract will describe the interest rates, late fees, surcharges, cash-advance limits, and other conditions that you're held to by when using your card.
Once a month, your credit card company will send you a bill outlining all the purchases you made with your credit card, the minimum amount you owe, and the due date for your payment. You can opt to pay a portion of the bill or the full amount — it’s up to you.
If you don't pay your bill in full by the due date, any balance that you carry over into the next billing period will be subject to interest charges. The activity on your account will also be reported to the credit bureaus in Canada, which can boost your credit score over time if you use your card responsibly.
Why do I need a credit card in Canada?
A credit card allows you to conveniently make cashless payments online or instore. As more commerce moves online or goes high tech, credit cards are becoming a necessity rather than a convenience.
Whether it’s booking an airline ticket, paying for parking, or shopping on your favourite website, credit cards are often the only way to complete a transaction. Credit cards are also a secure means of payment, as each of your transactions is recorded and secured by the card’s payment network.
Most importantly, using a credit card helps you build your credit history. Credit unions like Equifax and TransUnion use your credit card behaviour to assign you a credit score from 300-900. Your credit score matters when you are looking to apply for loans such as a mortgage. A low credit score indicates poor credit behaviour to the lender and may disqualify you from getting a loan.
That means most working adults should have at least one credit card — provided they can use it responsibly. But if you have trouble controlling your spending or tracking your bills, a credit card might be a bad idea.
How can I find the right credit card?
When it comes to credit cards, online comparison websites like LowestRates.ca can help you compare multiple credit cards to find the perfect one that fits all your needs. We have powerful comparison tools that let you search for cards by category or criteria. So, whether you're shopping by rewards, annual fees, interest rates, or credit score, you'll always find the right card. And unlike bank websites, comparison sites let you compare offers from all the major credit card providers in Canada rather than in just one company.
You'll be able to see how the best cards from top providers compare to the best cards from specialized providers like American Express. You'll also be able to view the best offerings in whichever credit card category you’re interested — you can compare your options side by side. Once you find the right card, just click the “Get Card” or “Apply Now” button, and we'll direct you to a secure application page for that credit card.
What type of credit card should I get?
Before you can find the perfect credit card, you need to know how you're going to use it and what kind of consumer you are. Do you pay off your card on time every month? How much do you spend? Do you make use of credit card rewards or is a low interest rate or another credit card feature more important to you? We offer a complete range of credit cards and allow you to easily compare them side by side.
How can I benefit by getting a credit card?
When you make your day-to-day purchases using a credit card, you also get the following benefits:
Why carry wads of cash when you can just swipe your credit card and go? Millions of vendors worldwide accept credit cards and using a card is often the only way you can make online transactions.
Cash flow management
Credit cards let you borrow money, which means you can use them to pay bills or make purchases even if you don’t have the cash immediately on hand. For many Canadians, particularly those just starting out, this is a huge benefit.
Credit card providers act as an intermediary between you and the merchant. That means credit card charges can be reversed or put on hold if someone tries to defraud you or give you faulty goods.
Features, perks, and rewards
Many credit cards offer perks and rewards just for using them. Depending on the card you choose, you might get fraud protection, travel points, cash back, or special access to concerts and sporting events.
It’s a fact — using your credit card responsibly can help you establish and improve your credit score over time. For Canadians looking to boost their credit, nothing works better than using a credit card and promptly paying your bill every month.
Credit cards offer a convenient way to track your monthly expenses and monitor your spending. Many cards also itemize your purchases by category so you can see exactly where your money goes each month and how your spending habits change over time.
Cheap to use (in the right hands)
Credit cards don’t cost a lot of money if you use them responsibly. As long as you pay your credit card bills on time and in full, you won’t be charged interest or late fees, making them very inexpensive to use.
Nobody wants to be stuck without a way to book a hotel room, buy something online, or pay for parking. Credit cards aren't just a convenience, they’re a necessity. All you have to do is find the right card.
How many credit cards should I have?
While there's no perfect number, most consumers should avoid having more than two or three credit cards at a time. The more credit cards you have, the harder it is to track your bills and make your payments. Many middle-to-upper-income credit card users use a premium credit card that offers lots of perks and rewards and a regular card that serves as a backup.
What do I need to know about my credit card’s terms and conditions?
First, you should understand that once you sign your credit card agreement, the terms are legally binding. And your credit card issuer can change these terms at any time, as long as they provide written notice. So, it’s a good idea to carefully read mail from your credit card company and check for changes or updates to your account.
What are the key credit card terms I need to know?
Here are the most common credit card terms that are helpful to know.
This is the maximum credit balance that can be outstanding on your card. And remember: your credit limit also includes interest and fees.
Annual percentage rate
The APR is the interest rate your card charges on balances, balance transfers, and cash advances carried over from one month to the next.
Fixed or variable APRs
The interest rate on your credit card can either be fixed (it stays the same) or variable (it increases, or decreases based on whatever index it follows).
This is the amount of time you have to pay for the charges on your credit card before interest begins accruing. Your grace period may be different for each card, but a typical grace period can be as long as 10, 15, or even 30 days.
The minimum amount of money you're required to pay towards your credit card bill each month. If you can't meet the minimum payment, you'll be charged a late fee and the delinquency might be reported to your credit bureau.
The amount of unused credit still available on your credit card. Wondering how your available credit is calculated? Just subtract your outstanding credit card balance from your total credit line.
For a full rundown of the credit card terms you might encounter, you can browse our glossary here.
What are the drawbacks of a credit card?
The main drawback of any credit card is that you can use it to spend money you may not have. And if you don't have good financial judgment, you can quickly rack up lots of high interest debt that you can't pay back. Studies show that credit card debt is a major factor in consumer bankruptcies in both Canada and the United States.
We recommend that credit card users never take on more debt than they can reasonably pay back within a few months.
What should I watch out for with a credit card?
You should always keep an eye on the interest rate (known as APR) terms on your card. Credit card APRs are subject to change and many cards offer low introductory rates that reset much higher after a few months.
It's also a good idea to be mindful of how your APR is calculated. Most credit cards take your average daily account balance for the month and charge interest on that figure; others subtract the previous month’s balance from the current month’s balance and charge interest on the remaining amount.
Some credit cards calculate APR using a “two-cycle” method: the average of the last two months’ worth of balances is used. The two-cycle method often results in higher interest charges, so you should think twice before taking a card that uses it.
Credit card users should also pay attention to ATM fees. Most cards charge anywhere from $2 to $5 on ATM withdrawals. Thankfully, you can easily avoid these fees — skip the ATM altogether and just take out cash from your debit card or at your local bank.
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