Credit cards are some of the easiest and most convenient financial tools you can have. But since there are so many out there, it may seem daunting to know which option is right for you. Luckily, by doing some research and considering different kinds of credit cards, you can easily find a card that works for your spending habits and needs. Read on to learn more about having a credit card and how to find the best credit cards in Canada:
How credit cards work
Credit cards are plastic or metal cards that you can use at your convenience for any purchase where they’re accepted. This can save you the trouble of paying for something upfront with cash or waiting until your next paycheck.
At the end of the billing cycle (once per month), you’ll receive a bill for everything you purchased. Before the given due date, you must either pay:
- The statement balance in full
- The minimum amount
- Some amount in between the minimum and statement balance
If any balance remains after you pay your bill, it will roll over into your next billing cycle and begin accumulating daily interest at the most recent APR (annual percentage rate).
What to consider when choosing the best credit card for you
When you’re shopping around for the best credit cards in Canada, you’ll have a lot of great options at your fingertips. To help you narrow down your choices, here are some important aspects that you’ll want to consider:
1. Credit score requirements
Your credit score, or a number ranging from 300 to 900, will be a considerable factor in determining which cards you’ll be able to qualify for. The higher your rating, the more creditworthy you’ll appear and the more products you’ll be able to choose from.
If you don’t know your credit score, you can always check it at any time. Simply visit one of Canada’s two main credit bureaus online, Equifax and TransUnion, and request to check your score.
Many major credit card carriers offer rewards to cardholders. These may be points earned for everyday purchases, or they could also be part of an introductory bonus promotion. Either way, the more you earn, the more cash back, gift cards, and other perks you’ll be able to redeem.
It’s important to know that not all reward point programs are the same. Depending on your spending habits and how much you plan on using your credit card, you could do better with some types of credit cards than others. For example, if you want to earn cash for your spending, you can consider getting a cash back credit card that gives you rewards for everyday purchases. . , then you may want to get a credit card that caters to travel rewards because it can help you to earn free airline tickets and nights in hotels.
3. Annual fees
Even though many credit cards don’t cost anything to use, some of the more exclusive ones do charge an annual fee. These fees may be offset by the rewards points you’ll learn, but you should do some math upfront to be sure. Also, keep in mind that some providers will waive the annual fee in your first year.
4. Interest rates
The interest rate that the card issuer plans on charging is an important detail to note. Even if you plan on paying your card off in full every time and not accumulating any debt, knowing this rate is still a good idea. That way, if you’re ever put in a position where you have to charge an emergency expense to the card that you can’t pay upfront, you’ll be aware of the cost.
5. Your ability to manage credit
Understand that every payment you make to the credit card company will be reported in your credit history, whether it’s good or bad. So, no matter which type of credit card you choose, make a commitment to yourself that you’ll use it responsibly and as a tool for raising your credit score.
The bottom line
Even though credit cards can be very useful tools for making everyday purchases, not all of them are the same. To find the option that fits your needs, check your eligibility and look for cards with low fees, reasonable APRs, and a good rewards program. Once you get your credit card, remember to use it responsibly.
Name: Carolina d’Arbelles-Valle
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