A credit card allows you to borrow money from a lender to make purchases, which you then must repay over time.
Here are 4 of the best credit card options for Canadians:
American Express Cobalt® Card
current offer
Up to 15,000 Membership Rewards points in the first year, based on earning 1,250 points per month with a $750 spend. Conditions apply.
key highlights
The American Express Cobalt® Card offers a flexible rewards program with high earn rates and extensive insurance coverage.You can redeem your points for various rewards, including travel expenses, gift cards, merchandise, Ticketmaster purchases, and statement credits. You can also transfer your points to loyalty programs like Aeroplan and Marriott Bonvoy. Or you can apply them directly for everyday purchases such as groceries and gas (1,000 points = $10 for all eligible purchases).
The card offers these benefits:
- Access to bonus rewards and special events through the Cobalt Perks program
- Hotel perks, such as room upgrades, at over 600 hotels and resorts in over 30 countries
- Access to presale tickets for concerts, theatre products, and other special events
- Exclusive offers on dining, shopping, entertainment, and wellness events and activities through American Express Experiences
As a cardholder, you automatically qualify for ten types of insurance, including:
- Emergency medical insurance
- Flight delay insurance
- Hotel burglary insurance
- Travel accident insurance
- Mobile device insurance
The card charges a monthly fee of $12.99, with an interest rate of 20.99%
Eligibility requirements include being a Canadian resident and the age of majority in your province or territory.
Rewards
Here’s how much you can earn on your spending:- 5 points for every $1 you spend on restaurants and food delivery
- 3 points for every $1 you spend on streaming subscriptions
- 2 points for every $1 you spend on travel and transit
- 1 point for every $1 you spend on all other purchases
Additional Cardholder Fee: $0
American Express does not maintain the accuracy of the information on this page. Please visit Americanexpress.com/ca for the most current information.
All images and trademarks are property of their respective rights holders.
®The American Express logo and other trademarks are the property of American Express or its subsidiaries.
Scotia Momentum® Visa Infinite* Card
current offer
Earn 10% cash back on all purchases up to $2,000 in total for the first 3 months. First year annual fee waived for primary and additional cards. Conditions apply.
key highlights
The Scotia Momentum® Visa Infinite* credit card offers generous cash back, especially on grocery purchases and bill payments.The following Visa Infinite* benefits accompany the card:
- Concierge Service – access to a personal assistant 24/7 to help you with errands like booking restaurant reservations or planning your trip
- Hotel Collection – receive the best available rates during your overnight stays, automatic room upgrades when you arrive, and free Wi-fi.
- Dining and Wine Country program – attend exclusive dining events at first-rate restaurants and enjoy multi-course meals, wine pairings, interactive experiences with chefs, and more.
You qualify for a 25% discount on car rentals through participating Avis and Budget locations when you pay using your card.
An extensive suite of insurance products is included with the card, including:
- Mobile device insurance with coverage for up to $1,000
- Trip cancellation and trip interruption insurance with coverage for up to $2,000 per person (maximum of $10,000 per trip)
- Travel emergency medical insurance with coverage provided for up to 15 consecutive days
The annual fee is $120, and the interest rate is 20.99%
Eligibility requirements include a minimum annual personal income of $60,000 or $100,000 for a household.
Rewards
As a cardholder, here’s what you can earn on your spending:- 4% cash back for every $1 you spend on groceries, recurring bill payments, and subscriptions
- 2% cash back for every $1 you spend on gas and daily transit
- 1% cash back for every $1 you spend on all other purchases
Additional Cardholder Fee: $50
Scotiabank does not maintain the accuracy of the information on this page. Please visit Scotiabank.com for the most current information.
All images and trademarks are property of their respective rights holders.
®The Scotiabank logo and other trademarks are the property of Scotiabank or its subsidiaries.
*Visa and Visa Infinite are trademarks of Visa International Service Association
TD® Aeroplan® Visa Infinite* Card
current offer
Earn up to 40,000 Aeroplan points and first year Annual Fee waived for approved accounts by March 4, 2024. Conditions apply.
key highlights
TD’s Aeroplan® Visa Infinite* Card is a solid credit card for avid travellers.You can redeem your points on flights, hotel rooms, car rentals, merchandise, gift certificates, and more. Plus, you can share them with up to eight family members through the Aeroplan Family Sharing program.
As a cardholder, you’ll have access to numerous travel benefits, including:
- $2 million in medical coverage for the first 21 days of your trip
- Trip cancellation coverage worth $1,500 per insured person, up to a maximum of $5,000
- Auto rental coverage for up to 48 consecutive days
- One free checked bag on Air Canada flights
- Discounts on car rentals through Avis and Budget
In addition, you’ll have access to a wide array of exclusive benefits courtesy of Visa’s Infinite program. These include complimentary concierge service and perks related to dining, entertainment, accommodation, and golf.
The card charges an annual fee of $139 and an interest rate of 20.99%
Eligibility requirements include an annual personal income of $60,000 or $100,000 annual household income.
Rewards
The card allows you to earn 1.5 Aeroplan points for every $1 you spend on eligible gas, grocery, and Air Canada® purchases and 1 Aeroplan point for all other purchases you make. You can also double your points if you shop using your card at one of over 150 Aeroplan partner brands or 170+ online retailers through the Aeroplan eStore.Additional Cardholder Fee: $75
TD does not maintain the accuracy of the information on this page. Please visit TD.com for the most current information. All images and trademarks are property of their respective rights holders. ®The TD logo and other trademarks are the property of The Toronto-Dominion Bank or its subsidiaries. *Visa Infinite is a trademark of Visa International Service Association. ®Aeroplan is a registered trademark of Aeroplan Inc. TM NEXUS Official mark and/or trademark of Her Majesty the Queen in Right of Canada
BMO CashBack® Mastercard®*
current offer
5% cash back in first 3 months on spend up to $2,500 and 0.99% on balance transfers for 9 months with 2% transfer fee. Conditions apply.
key highlights
BMO’s CashBack® Mastercard®* offers lucrative cash back rewards for those who spend heavily at grocery stores.Your cash back points don't expire, provided you maintain your account in good standing. You can redeem your cash back any time you wish and set up automatic cash outs whenever you hit a certain threshold (which can be as little as $25).
You can also choose where you want your cash back to go: deposit the money into your chequing account, savings account, InvestorLine account, or use it as a statement credit.
Here are some of the additional benefits the card offers:
- Extended warranty and purchase protection
- Bonus cash back rewards when you add an authorized user to your account
- Car rental discounts of up to 25% at select National Car Rental and Alamo Rent A Car locations
- Savings of 15% on tickets to Cirque du Soleil shows in Canada and 20% on tickets to resident shows in Las Vegas
There’s no annual fee, and the interest rate is 20.99%.
Eligibility requirements include a minimum annual personal income of $15,000.
Rewards
As a cardholder, you earn cash back on your spending as follows:- 3% on grocery purchases
- 1% on recurring bill paying payments
- 0.5% on all other purchases
Additional Cardholder Fee: $0
BMO does not maintain the accuracy of the information on this page. Please visit BMO.com for the most current information.
All images and trademarks are property of their respective rights holders.
®The BMO logo and other trademarks are the property of The Bank of Montreal or its subsidiaries.
What is a Credit Card?
An credit card is a debt instrument issued by various financial institutions, particularly banks and credit unions.
There’s a variety of credit cards to choose from in Canada, but keep in mind all credit cards work in much the same way.
When you use a credit card to pay for a purchase, you draw the money from a credit facility provided by your card issuer.
Since this amounts to a loan, you must repay the money owed at a future date, along with any interest charges and applicable fees.
An credit card is a revolving credit product.
When you contribute a payment toward your outstanding balance, those funds are available for you to spend again.
Each credit card comes with a pre-set credit limit, which is the maximum balance you can carry at any one time before needing to make a payment.
You must make regular payments against your credit card balance like you would with another bill.
Once your card’s billing cycle ends, which lasts 28 to 31 days, your card issuer will send you a statement that contains the following details:
- A list of transactions processed for the period
- Fees and interest charged to your account, if applicable
- Your available credit limit
- Payment due date
- Minimum payment due
You must pay at least the minimum payment noted by the due date to keep your account in good standing.
If you fail to do so, your card issuer will report your payment as late to the credit bureaus, resulting in a downgrade to your credit score.
If you pay your balance in full by the due date, you won’t get hit with any interest.
Conversely, any amount you carry forward into the next billing cycle will incur interest charges.
To acquire an credit card, you’ll need to apply with your card issuer.
As part of their due diligence, the card issuer will assess your credit report to determine the risk of extending credit to you.
Some issuers will also consider other aspects of your finances when evaluating your application, such as your income and debt-service ratios.
As mentioned, an unsecured credit card doesn’t require you to place a cash deposit or pledge a personal asset as collateral.
As a result, your card’s outstanding balance is secured only by your general creditworthiness or promise to pay back the amount owed.
Did You Know?
Companies outside the financial services industry also offer credit cards, such as Canadian Tire and Walmart.
Benefits of a Credit Card
Here are some key benefits credit cards offer:
1. Convenience and Flexibility
When you’re short on cash, you can always rely on your credit card to bail you out, especially during a financial emergency like an unexpected and overwhelming medical bill.
Credit cards are a universally accepted payment method, so you can use them almost anywhere.
Plus, you don’t need to carry large sums of cash.
2. Credit Building
Using a credit card responsibly can help you establish or repair your credit score.
Your credit score helps you borrow more significant amounts of money in the future for larger purchases that will require a car loan or mortgage.
3. Rewards Programs and Other Perks
A wide variety of credit cards exist and many are notable for their rewards programs, which allow you to redeem points you earn for cash back, merchandise, travel costs, and more.
Many brands offer perks like purchase protection, extended warranties, airport lounge access, and optional products such as balance protection.
Drawbacks of a Credit Card
Despite their benefits, however, it’s wise to be mindful of the drawbacks associated with credit cards:
1. Risk of Debt Problems
You can quickly accumulate a mountain of debt using an card to the point where you become financially overwhelmed and struggle to keep up with payments.
In the worst-case scenario, your only option to extinguish the debt may be to file for bankruptcy.
2. High Interest Rates
Card issuers routinely charge a high-interest rate on any balance you fail to pay off by the due date.
The average rate is around 20%, but it can also be as high as 30%.
Risk of Damage to Credit Score
If you fail to make timely payments against your balance, your credit score will decline.
The same outcome applies if you continuously maintain a high credit utilization ratio, meaning you use a large portion of your available credit.
Alternatives to Credit Cards
Having trouble getting approved for a credit card? Here are some alternative options to explore:
1. Consider starting with a secured card
A secured credit card functions like its unsecured counterpart but with one key difference: you need to provide a cash deposit before using it, as security for the lender.
The deposit determines your credit limit and gives your card provider the right to seize the funds should you default on your payment obligations.
2. Become an authorized user on another account
Most credit cards allow the cardholder to add additional users to their account.
If a trusted family member or friend adds you as an authorized user, you’ll receive access to a card that’s linked to their account.
As a result, you can actively use it to make purchases without meeting the lender’s eligibility criteria.
3. Apply for a retail card
Some retailers partner with banks and card networks to issue credit cards of their own.
Retail credit cards can net you discounts on purchases and earn you points through loyalty rewards programs that you can redeem for merchandise or cash back.
Retailers generally have relaxed eligibility requirements when it comes to credit scores, so you’ll face fewer hurdles when applying for one compared with regular cards.
4. Get a student card
Student credit cards cater to individuals pursuing their post-secondary education.
Like retail credit cards, they have less stringent eligibility requirements, so there’s a good chance you’ll get approved for one.
Don’t Forget!
Making timely payments on a credit card account where you’re an authorized user will neither improve nor harm your credit score.
Frequently Asked Questions
- What credit score is needed for a credit card?
