1. Check your credit score

Start by checking your credit score. Why? Because your number determines your eligibility to apply for credit cards. If you don’t meet the minimum credit score requirement, strike a prospective card from your list.

Generally speaking, credit scores in Canada vary from 300 to 900 and are calculated based on a range of factors. The higher your number, the more appealing your credit application. Here’s a quick overview of the credit scoring in Canada and how it could impact your credit card application:

  • Excellent (741-900): The world is your oyster! Expect quick approval for your application, the lowest interest rates, high credit limits, and access to the best credit cards in Canada.
  • Good (690-740): You’re still in the good books. You won’t have much trouble getting approved, and credit cards with low-interest rates, rewards, and excellent benefits are within reach.
  • Fair/Average (660-689): You’ve got choices, but some premium credit cards offering rewards or other perks are likely off-limits until you improve your score. Look at the best credit cards for a fair/average credit score.
  • Below Average (575-659): Your options are limited. You likely won’t be approved for credit cards with premium perks or lucrative rewards.
  • Poor (0-574): If you fall into this category, most credit cards will be off-limits. Get back on track by applying for a secured or unsecured credit card for bad credit and paying your bill regularly and on-time.

Once you know your number, it will either shrink or widen the pool of credit cards that are available to you. If your score is poor or below average, consider it a wake-up call: apply for one of the best credit cards for bad credit in Canada and prioritize re-building your credit history.

2. Decide about debt

If you’re dealing with debt, a balance transfer credit card may be the best credit card for you. Because the introductory interest rate on balance transfers is so low, it buys you more time to pay down the principal and save a bundle on interest charges. A balance transfer credit card may be your best bet if:

  • You’re carrying a balance on one or more credit cards;
  • The interest rate on your current credit card is 18% or higher
  • You’re not able to pay off your outstanding balance immediately
  • You want to aggressively tackle your debt within the near future

There are plenty of excellent balance transfer credit cards in the Canadian market, but ideally, find one that offers both a low introductory interest rate (0% to 12.99%) and a long promotional period (9 months or more). It’s even better if the card has no annual fee and a low-interest rate after the promo expires just in case you’re still carrying a balance.

3. Examine your payment practices

Take a peek at your payment practices to help find a credit card that suits your budget. For instance, if you regularly pay your balance in full every month, a high-interest rate may be acceptable. But one of the best low-interest rate credit cards might be your best bet if:

  • You tend to carry a balance
  • You need flexibility on payments
  • You plan on making a large purchase and want to spread your payments over several months
  • You are motivated to pay off debt and minimize interest charges

If the above applies, seek a low-interest credit card offering a rock-bottom rate (below 18% APR) on new purchases, rather than the typical APR of 18% or higher. There are many options for a low-interest credit card: some cards offer ultra-low interest rates for a limited time (e.g. 6 months) but with no annual fee. Others might have an annual fee but boast a regular low-interest rate. There are even credit cards with variable interest rates tied to Canada’s prime rate. So how do you choose a low-interest credit card?

Comparison of the total cost of current credit card vs. low-interest rate card over 12 months

Outstanding Balance Interest Rate (% and $ monthly) Annual Fee Average Monthly Payment 1-Year Interest Paid Total Cost to Pay Off Balance (Including Annual Fee)
Current Card $5000 18% $0 $458.40 $500.80 $5500.80
Low-Interest Card $5000 8.99% $39 $437.23 $246.81 $5285.81

This table depicts how much a low-interest credit card can save you overall on interest. Although the “current card” doesn’t have an annual fee, the low-interest card saves you almost half the interest paid over the year, despite its annual fee (which is quite low considering.)

Use our credit card interest calculator below to better understand how a low-interest card can help you save. Put in the current balance you owe, the interest you’re paying on the balance and how you’d like to calculate your interest (by monthly payment or period of time). When you’ve finished, click “calculate” and see how much time or how much interest you’ll be paying (in cash).

4. Scrutinize your spending

Choosing the best Canadian credit card can be confusing, but studying your spending habits can help nail down what card will benefit you the most. Do you make frequent purchases at one particular retailer (like Costco, Loblaws, or Canadian Tire)? Is your credit card statement filled with flight, hotel, and other travel-related expenses? Or are the bucks going towards groceries and gas? There are credit cards that reward specific spending categories, so if you understand where your money is going, you could save (or even earn!) a bundle by putting the right card in your pocket.

Realistically, you probably won’t find one credit card that ranks #1 in every spending category, but you can cover all your bases by having more than one credit card in your wallet.

5. Consider the card’s value

If you’re struggling to choose between credit cards, take a step back and assess the card’s overall value. Here are some questions to ask:

What is the welcome bonus worth? Sign-up incentives – like bonus points, additional cash back, or a first-year annual fee waiver – certainly sweeten the pot. But it must be an incentive that you can actually use for it to have value. For instance, a credit card offering bonus Aeroplan Miles is worthless if you’re not an Aeroplan member.

Is the annual fee justifiable? Rewards credit cards frequently charge an annual fee, typically ranging from $120 to as high as $699 (!). However, look for value: What’s the point-earning potential? Does the card include travel, new mobile device, or car rental insurance? Is there an annual fee rebate in the first year? These extras may cancel out the cost of an annual fee.

Are the perks worth it? Some premium cards come with high annual fees, but are the extra perks really worth the price? These little luxuries may include complimentary airline lounge access, enhanced hotel experiences, priority treatment on certain airlines, or access to exclusive entertainment events. These can add great value if you use them frequently, but if these perks don’t matter to you, you might want to consider getting a card with a lower annual fee.

So just make sure you do the math. Add up the actual cost of what a card is offering. For instance, what would travel medical insurance cost per year? What’s the running rate for mobile phone repairs? How much is an airline lounge membership? What’s a first-year annual fee waiver worth? Then, compare the value of the top credit cards you’re considering. The numbers don’t lie and can help you decide whether (and which) credit card is worth it.

6. What are the types of credit cards?

Look before you leap! Get to know popular credit card categories in Canada:

Low-interest credit cards

A low-interest credit card offers a very low standard interest rate on new purchases (typically between 8.49% and 12.99%). The rate is not promotional and doesn’t expire. If you tend to carry a balance or need to spread out your payments over several months, a low-interest credit card is a smart way to minimize the amount of interest you’ll pay.

More: Best low-interest credit cards in Canada

No-fee cards

It’s sometimes worth paying an annual fee for a credit card if the combined value of the card’s rewards and features outweigh the annual fee level. But no-annual-fee cards are an excellent option for those looking to keep expenses down any way they can. Though there are many attractive free rewards or cashback credit cards out there, they have lower earning power and less attractive features than their premium counterparts, however, the minimum credit score and income requirements are often correspondingly lower as well.

More: Best no-fee credit cards in Canada

Balance transfer credit cards

Balance transfer credit cards let you transfer (usually for a small fee) some or all of your high-interest debt to a new card and enjoy a temporarily low interest rate on the transferred amount – typically between 0% to 12.99% for a span of 6 to 12 months. How it works: simply move your existing balance from a higher interest credit card to the new credit card with a lower interest rate.

Although a balance transfer can potentially save you a massive amount in interest payments, it’s not always a financially shrewd step in every circumstance, and you should weigh a number of important considerations before determining if a balance transfer is the right move for you.

More: Best balance transfer credit cards

More: How to know if you should do a balance transfer

Lifestyle rewards credit cards

A rewards credit card allows you to earn incentives for eligible purchases charged onto the card. Some cards are tied to one loyalty program (e.g. AIR MILES, Aeroplan, Optimum Points, Scotia Rewards, etc.), while others offer cash back, flight rewards, merchandise discounts, statement credits, free hotel stays, or other benefits. Some are even designed to remunerate specific spending categories – like groceries, gas, dining out, or travel. The pay-off is plenty!

More: Best rewards credit cards in Canada

Travel credit cards

Popular among frequent fliers, travel credit cards offer points or miles that can be redeemed for travel-related rewards like free flights, upgrades and hotel stays. They often feature perks that would especially appeal to globetrotters, such as premium travel insurance packages, airport lounge access and discounts on rental cars. The amount of the rewards generated by the card (the ‘earn rate’) can be a flat rate based on your overall spending or can vary depending on specific spending categories.

More: Best travel credit cards in Canada

More: Best credit cards with lounge access

More: Best travel rewards program in Canada

Cash back credit cards

A cash back credit card is a type of rewards credit card that offers cash incentives. How it works: whenever you make an eligible purchase on your credit card, you earn a percentage back on the total purchase price – usually between 0.5% to 4%. Redemption is straightforward: cash back rewards are usually credited to your credit card statement on an annual or monthly basis. But some may allow you to deposit your cash back into your bank account. The best cash back credit cards also have lucrative welcome bonuses, offering limited time “cash back top-ups” as high as 10% for new cardholders.

More: Best cash back credit cards

No foreign transaction fee credit cards

Most Canadian credit card companies charge a 2.5% to 3% foreign transaction fee to purchases made outside the country. But some credit cards waive or offset foreign transaction fees – otherwise known as a “no foreign transaction fee credit cards.” If you travel or make purchases abroad, a no foreign transaction fee credit card could save you money.

More: Best credit cards with no foreign transaction fees

Student credit cards

A wonderful way to establish a credit score, student credit cards are designed specifically for university/college students who have no credit history and no regular income. They tend to have a low credit limit, less (but still attractive) reward-earning potential, an easy application process and no annual fee.

More: Best student credit cards in Canada

Business credit cards

Business credit cards focus on the specific needs of cardholders who run a company. Rather than offering rewards for spending on things like groceries or ride-share programs, they typically feature perks and up the earn rate of categories business owners can really use, like travel expenses, group cell phone plans, office supplies and internet use. Many have nice extras like zero-liability employee cards, longer interest-free grace periods and generous insurance packages.

More: Best business credit cards in Canada

Credit cards for cad credit

There are secured or unsecured credit cards that can help establish, re-establish, or repair your credit histories and/or scores. It’s usually easy to get approved, as the credit score required is usually quite low (0 to 659). While lacking all the frills of a premium card, you’ll get the convenience and security of using a credit card.

Unlike regular credit cards (a.k.a unsecured cards), secured credit cards require that cardholders provide a cash deposit—of an equal or greater amount than their credit limit—to guarantee repayment of their balance. They are an ideal way for people with a poor credit score or no credit history to repair a record of heavy debt and credit mismanagement.

More: Best credit cards for bad credit

Is it OK to have multiple credit cards?

Absolutely! It’s a smart idea to have more than one credit card in your wallet. Firstly, some retailers only accept select credit card brands, so a backup (or two!) makes sure you’re not left in the lurch. For instance, Costco Canada only accepts Mastercard, so if you’re a frequent shopper there, stick one of the best Costco credit cards in your wallet.

Secondly, if you have multiple cards, you can use them strategically to maximize your rewards earnings. For instance, designate one card for travel purchases, another one for drug store and/or grocery purchases, one for cash back on miscellaneous purchases, and so forth. You can never have too many credit cards – as long as you use them responsibly and avoid unfettered spending sprees.

The final word

Finding the right credit card is a journey: it involves a hard look at your financial circumstances, spending habits, and priorities. If you’re still stuck, use the Money.ca credit card comparison engine to find the best credit card deals all in one place. You can search by card type and get results ranked by the credit cards that give the most value back to you based on your personalized spending habits, including cash back, rewards and travel cards.

Once you’ve made your credit card choice, the next step is easy: apply online and celebrate that you’ve found the best credit card for you. Sure, it was a bit of a hunt to find “The One” – but isn’t the chase just part of the fun?

More: Best credit cards in Canada

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Lisa Jackson is a freelance personal finance and travel journalist, editor, and blogger who contributes to various online and print media outlets in Canada and abroad, including The Globe & Mail, Toronto Star, Islands Magazine, Fodors, BRIDES, Huffington Post Canada, CAA Magazine, The Food Network, West Jet Magazine, NUVO Magazine, and many others. When she's not writing from her home office, she's busy globe-trotting to new destinations in search of her next story.

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