Step 1: determine your credit needs/wants
What is the best credit card for you? First, you need to figure out what kind of credit consumer you are. There are different types of credit users and each has a different spending pattern.
Revolvers
A revolver is a term in the credit card industry for a credit user who carries a balance month after month, paying it off over time. They’re revolvers because the balance “revolves” from one month into the next.
If this describes your credit usage, you’re going to want to apply for cards with low interest rates: you’ll be paying interest on the balance you carry, and those charges can accumulate into larger debt if they’re on a card with excessive interest rates.
Read: Best low interest credit cards
You might also want a card with low interest rates on balance transfers. Many revolvers take advantage of introductory interest rate offers on balance transfers, paying off as much of the balance as they can under the 0% rate until the promotional period ends. These balance transfer promotional periods might last from 3 months to 3 years.
Read: Best balance transfer credit card offers
Aside from purchase interest rates and balance transfer rates, here are some other important credit card features that revolvers should be particularly aware of:
- Interest-free period – the period in which you can avoid paying interest if you pay the full balance by a specified due date each month
- Late payment fees – the fee you pay if you miss a payment or pay later than your specified monthly due date
- Annual fee – the fee you pay to use the credit card each year
- Foreign transaction fees – the fee you pay for a transaction in a foreign country
Transactors
A transactor is the credit industry term for someone who is the opposite of a revolver. If you are a transactor, you pay off your balance in full and on time every month. You avoid paying interest because you don’t carry a balance.
Transactors are the ideal candidates for rewards and cash back cards of all kinds because they can reap all the benefits of charging purchases to their cards without losing money due to interest costs.
That said, just because transactors pay their balance every month, doesn’t mean they avoid fees altogether. Rewards cards usually come with high annual fees, so transactors must make sure that they can make up for the cost of the annual fee with the benefits they receive. Other fees and card features for transactors to be aware of include:
- Sign-up bonus – special rewards that a card issuer gives new cardholders. Note that receiving a sign-up bonus is sometimes contingent on charging a certain amount to the card within a specified period of time. See our picks for the Best sign-up bonus offers available right now.
- Reward point value – the real dollar value of a single reward point
- Flat cash back/reward rates – the per $1 rate at which you can earn cash back or rewards from all spending on the card
- Accelerated cash back/reward rate – the high rate at which you can earn cash or rewards from spending money in certain categories, e.g., groceries, gas, dining out, etc.
- Reward restrictions – any restriction on redeeming rewards such as blackout dates for booking travel or expiration dates for rewards points
- Foreign transaction fees – particularly relevant if you do a lot of travel or online shopping in foreign currencies
- Elite status – a second tier of benefits offered by some card issuers reserved for their longest-running credit card customers and those with the perfect credit and the highest income
Credit builders
A credit builder is a term for someone who is attempting to build or rebuild their credit. If you’re new to owning a credit card, have recently immigrated to Canada, have a poor credit score or you’ve experienced a bankruptcy, you are a credit builder.
Credit history (the record of your use of debt) is extremely important and affects everyone who wants to apply for a credit card, loan, or mortgage. If you have no credit, you are essentially a financial non-starter in Canada. But fortunately, the basics of credit are easy to learn and building credit is always possible, even if you’re starting over.
Those new to Canadian credit—like students and immigrants—can apply for credit cards specifically designated for their needs and circumstances. And anyone with no or low credit can apply for a secured credit card.
Read: Best credit cards for bad credit
A secured credit card is slightly different from a ‘regular’ card, in that it requires a deposit which then becomes the card’s credit limit. A secured cardholder’s progress in paying back their card charges is reported frequently to the credit bureaus, which in turn improves the cardholder’s credit score. Other important card features for credit builders are:
- Minimum/maximum deposit – the lowest and highest amounts that can be deposited for the card, which in turn determines the card’s credit limit
- Interest-bearing investment – some banks put your deposit in an interest-bearing investment vehicle as you build credit
- Annual fee
- Purchase interest rate
- Eventual option to upgrade to an unsecured card
Step 2: determine your credit card eligibility
There’s no point in applying for a credit card that you won’t be eligible for. Instead of filling out a credit card application prematurely, get a sense of what level of credit cards you’re likely to be approved for by reviewing where you stand with the following criteria.
Credit score
Credit scores generally range from 300 to 900 points, with the latter being considered an ‘excellent’ credit score. In order to get approval for any credit card in Canada, you need a score of 650 on average. However, some credit card companies may approve a lower score or require a higher score.
Read: How does your credit score compare to the average Canadian’s?
High-value credit cards with the highest rewards and cash back levels are appealing to all of us, but they’re usually only available to those with high credit scores—about 725 or above. Knowing your credit score can give you a sense of whether you’re likely to be approved for a high-value rewards card, something more basic, or a secured card.
Canadians are entitled to one free credit score a year from the major credit bureaus: TransUnion and Equifax. Find out how to get that credit score here.
Income
If you’re shooting for rewards or cash back, you’ll need to meet a card issuer’s income requirements. Some cards require a minimum income level for the individual applicant only, while other card issuers might also allow the use of a combined household income in the card application.
Eligibility Tip: If you’re close but don’t quite meet the minimum income or credit score requirements, sometimes having another financial product, like a bank account, a loan or another credit card with the same issuing bank, will increase the chances of your credit card application being approved.
Read: What credit card should you have at your income level?
Age and residential status
The minimum standard of age eligibility for a credit card in Canada is either 18 or 19 years of age, depending on the province you live in. Applicants also must be residents of Canada.
Read: What’s the best age to get a credit card?
Step 3: compare your credit card pptions
Once you’ve figured out the kind of credit user you are and where your eligibility stands, it’s time to find the credit card that’s right for you. Don’t jump on applying for the first card you come across. Compare the different options in the card category that interests you, and pick the card that you’re not only likely to qualify for, but which will also include at least some of the features you want:
Low interest
If you’re a revolver who wants to carry a balance from month to month without generating high levels of additional interest charges, then a low interest card is what you want. The MBNA True Line® Gold Mastercard® credit card has a very low purchase interest rate of 8.99%, which makes it our top recommendation for low interest cards. It means you can use this card to shop and not feel the strain of extremely high interest on those purchases, and since the balance transfer rate is 8.99% you might as well consider this card for a balance transfer option as well!
Outside of MBNA, the BMO Preferred Rate Mastercard®* is also a good option for those who might carry a balance from month to month, offering a purchase interest rate of 13.99% and waiving the $29 annual fee for the first year*.
- Terms and conditions apply
✪, Terms and Conditions apply.
This offer is not available for residents of Quebec.
Sponsored advertising. MBNA is a division of The Toronto-Dominion Bank (TD) and TD is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete information on this MBNA credit card, please click on the “Apply Now” button
The Toronto-Dominion Bank is the issuer of this credit card. MBNA is a division of The Toronto-Dominion Bank. ®MBNA and other-trademarks are the property of The Toronto-Dominion Bank.
Balance transfers
Balance transfer cards can give you very welcomed breathing room to pay off your debt at minimal interest, and the CIBC Select Visa* Card currently offers one of the best balance transfer deals in Canada. New cardholders will enjoy a 0% credit card interest rate for your first 10 months, a low 1% balance transfer fee†, and a first-year annual fee rebate†. New cardholders can use this promotion to make a balance transfer up to as much as 50% of their assigned credit limit with CIBC. Note that the balance transfer offer is only available at the time of your online application, so be sure to tick the checkbox to select the balance transfer option when filling out your application. After 10 months, the interest rate goes up to the regular Balance Transfer Annual Interest Rate of 13.99%†.
Keep in mind that in some circumstances you can actually save more money by applying for a card that doesn’t charge a balance transfer fee at all, even if the interest rate it gives you on your transferred balance is above 0% and/or the promotional period is a bit shorter than other offers. You ultimately might save you more money than a card that offers a 0% interest promo.
¹ Conditions Apply. Visit here for the Scotiabank Value® Visa Card to learn more.*
† Conditions apply
Quebec Residents – Learn More about this CIBC product here
Résidents du Québec : Pour en savoir plus sur ce produit CIBC, suivez ce lien
Travel rewards
If you love to travel, a travel rewards card can help you get to where you want to go for less money—or even for free. But different travel rewards cards offer different perks, even if they might seem similar on first glance.
Read: Best travel credit cards
Compare the BMO Ascend™ World Elite®* Mastercard®* with the BMO AIR MILES®† World Elite®* Mastercard®*.
They come with a similar annual fee at $150 for the BMO Ascend™ World Elite®* Mastercard®* and $120 for the BMO AIR MILES®† World Elite®* Mastercard®*, but offer different sign-up bonuses. The BMO Ascend™ World Elite®* Mastercard®* offers up to 60,000 BMO Rewards points* and a first-year annual fee waiver*; the BMO AIR MILES®† World Elite®* Mastercard®* also offers a first year annual fee waiver, but instead of BMO Rewards points it gives 2,000 Air Miles as its sign-up bonus*.
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- Terms and conditions apply
Lifestyle rewards
Travel isn’t your thing? No problem, there are plenty of rewards credit cards offering discounts on groceries, entertainment, dining, and gas. (If lifestyle rewards appeal to you, be sure to see our picks for Best grocery credit cards and Best gas credit cards in Canada.)
The American Express Cobalt® Card offers 5 Amex Membership Rewards points for every $1 spent at eligible restaurants, bars, cafes, and food delivery services in Canada. Its welcome offer is also potentially very lucrative: In your first year as a new Cobalt Cardmember, you can earn 1,250 Membership Rewards® points for each monthly billing period in which you spend $750 in net purchases on your Card. This could add up to 15,000 points in a year. That’s up to $150 towards a weekend getaway or concert tickets. Terms and conditions apply. Amex Membership Rewards points can be redeemed for statement credits, meals, movie tickets, streaming services, retail, events, and travel.
Cash back
Cash is king, and for that reason many Canadians prefer pure cash back cards as opposed to rewards cards. Unlike rewards cards, the redemption process for money back rewards is typically quite simple, with the earned cash back usually redeemed as a statement credit toward paying down a card’s balance.
Read: Best cash back credit cards in Canada
One of the most accessible and flexible cashback cards in Canada is the Tangerine Money-Back Credit Card, which has no annual fee and a minimum income requirement of only $12,000. What’s unique about the Tangerine Money-Back Credit Card is that it allows cardholders to choose up to 3 spending categories where they can earn 2% cash back. Available categories include prominent household budget line items like groceries, gas, restaurants, etc.; all other eligible purchases outside the cardholder’s selected 2% categories will earn 0.5% cash back. Special 10% extra cash back rate on the first $1,000 spent with the card on everyday purchases (max. $100 cash back) in the first two months if you're approved, apply by July 5, 2023.*
If you’re in a higher income bracket you might instead go for the *Scotia Momentum® Visa Infinite Card. For new cardholders, neither the primary cardholder nor additional cardholders will have to pay the card’s annual fee for the first year¹. You’ll earn 4% cash back on groceries and recurring bills/subscriptions; 2% on gas and daily transit; and 1% back on all other eligible purchases.
- Terms and Conditions apply
¹ Conditions Apply. Visit here for the Scotia Momentum® Visa Infinite Card to learn more.*
Credit building
While bad credit will limit the type of credit cards available to you, it won’t shut you out of having a credit card completely. Even if you’re building or rebuilding credit from scratch, there are still some good Canadian cards out there.
The Home Trust Secured Visa, has no annual fee but the minimum deposit is higher at $500 and the interest rate is higher as well.
The Home Trust Secured Visa is a basic credit card with no rewards program.
Step 4: apply online
After you set your sights on a card that suits your credit score, income, financial needs, and lifestyle, it’s time to finally apply for it. These days, the quickest and easiest way to fill out a credit card application is to apply online. Sure, you can still apply by mail or by phone, but a snail mail application might take weeks for you to find out if the card issuer approved or rejected you, and you could forget to send in important forms or supporting documents. Applying by phone might subject you to long hold times, and you can’t apply outside office hours.
Different card applications require different information, but the below guidelines should give you a general idea of what’s in store for you. Try to get the following details in order before you apply online:
- Basic personal information (name, current address and phone number)
- One previous address
- Current rent or mortgage payment
- Current occupation and employer’s address
- Your annual income
- Your household income and spouse’s income (if applicable)
- Social insurance number
- Mother’s maiden name (provides an extra layer of security when dealing with the credit card company in the future)
Step 5: wait to be approved for your credit card
If you fill out a credit card application online during business hours, it’s possible to be approved in minutes. Sometimes the credit issuer will need additional information from you, but they will usually notify you via email if a representative will be calling over the next few days. As for when you’re getting the card following credit approval, they might tell you that it takes 2 to 3 business days, but be prepared to wait for 7 to 10.
When it comes to getting instant approval, having a good to excellent credit score is a great way to bypass any kind of waiting period. Making sure you meet the minimum income requirements will also improve your odds for approval.
What if you’re declined?
There are a variety of reasons why your credit card application might be declined. Here are some to keep in mind:
- You don’t meet the card’s minimum income requirements
- You’re not a resident of Canada
- The information on your application doesn’t match your credit report
- Your credit score is too low to qualify for that particular card (that’s the most common reason)
Being declined for a card is not the end of the world. Try to find a card with lower income and/or credit score requirements. If your credit is poor, or you have no credit history, you should consider applying for a secured card, as they’re approved for almost anyone who can make the security deposit. After you build up your credit score with the secured card you’ll have a better chance at being approved for a more lucrative unsecured card the next time you apply.
Will applying for a credit card affect your credit score?
In short, yes, applying for a credit card will affect your credit score. Each new application is considered a “hard pull” or a “hard inquiry,” which means that you have given a lender authorization to check your credit reports. And while your credit score will only go down by a few points with each new application, this can add up if you apply for too many credit cards.
