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Published October 28, 2021
Updated October 28, 2021

Canada’s 10 Best Credit Cards of 2021

From travel points to cash back, the best credit cards in Canada quickly deliver the rewards most valuable to you.

ALSO CONSIDER: Best travel credit cards || Best cash-back credit cards || Best general rewards credit cards || Best no-fee credit cards || Best student credit cards

A credit card can provide financial flexibility as well as a chance to maximize the value of every dollar you spend. Among our picks for the best credit cards in Canada, you’ll find huge sign-up bonuses, generous cash-back earn rates, indispensable travel benefits, and many more perks that can enhance your life and save you money.

NerdWallet’s picks for the best credit cards in Canada

American Express Aeroplan Reserve Card

Our pick for a premium Aeroplan credit card with unlimited rewards

Annual Fee
$599
Interest Rates
19.99% / 21.99%
19.99% on purchases, 21.99% on cash advances.
Rewards Rate
1.25x - 3x points
3x on Air Canada purchases, 2x on dining and food delivery, and 1.25x on everything else.
Intro Offer
90,000 Aeroplan points + a bonus Buddy Pass
See product details for specifics about this intro offer.
  • Our take

    Why we like it

    Comprehensive travel insurance, Air Canada benefits, impressive earn rates and unlimited rewards make the American Express Aeroplan Reserve Card a strong choice for frequent travellers.

    Pros

    • Strong earn rates with unlimited rewards.
    • Air Canada airport benefits, like Maple Leaf Lounge access, a free checked bag, Priority Airport Check-In, Priority Boarding for you and up to eight travel companions.

    Cons

    • A high $599 annual fee.
    • The highest earn rate only applies to Air Canada travel purchases, so this card might not be a good fit if you prefer another airline.
  • Product Details
    • Intro offer details: Spend $3,000 in the first three months and receive 30,000 Welcome Bonus Aeroplan points and a bonus Buddy Pass. Earn 5,000 points by spending $1,000 each month during the first year (a total of 60,000 Aeroplan points). New cardmembers only.
    • 3x Aeroplan points on Air Canada and Air Canada Vacation purchases.
    • 2x Aeroplan points on dining and food delivery in Canada.
    • 2x Aeroplan points on eligible train purchases with Rocky Mountaineer.
    • 1.25x Aeroplan points on everything else.
    • Earn twice the points when you present your Aeroplan number at over 150 participating Aeroplan partner brands and at 170 online retailers and pay with your card.
    • Redeem Aeroplan points online at AirCanada.com or via the app for flights, vacation packages, hotels, experiences, gift cards and more.
    • $599 annual fee.
    • Impressive Air Canada perks, including a free checked bag, Priority Airport Check-In, Priority Boarding, and Priority Baggage Handling for you and up to eight guests travelling on the same reservation. Plus, enjoy access to select Air Canada Maple Leaf Lounges and Air Canada Cafés in North America, with a same day ticket on a departing Air Canada or Star Alliance flight.
    • Receive one Annual Worldwide Companion Pass by spending $25,000 in the first year. This Pass entitles you to buy an accompanying Air Canada economy class ticket for a companion at a fixed base fare from $99 to a maximum of $599 CAD (plus taxes, fees, charges, and surcharges).
    • It’s easier to achieve Aeroplan Elite Status. Earn 1,000 Status Qualifying Miles (SQMs) and 1 Status Qualifying Segment for every $5,000 spent on your card. As a bonus, up to 200,000 unused SQMs roll over to help qualify for Aeroplan status the following year. If you already hold Aeroplan Elite Status and requalify the following year, you can roll over up to 50 unused eUpgrade Credits to the next status year.
    • Eleven types of insurance provided, including 15-day Out of Province/Country Emergency Medical Insurance — up to $5 million in coverage.
    • Preferred rates: 19.99% for purchases, 21.99% for cash advances.
    • To be eligible, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

American Express Cobalt Card

Our pick for bonus rewards on daily spending

Annual Fee
$155.88
$12.99 monthly fee.
Interest Rates
20.99% / 21.99%
20.99% on purchases, 21.99% on cash advances.
Rewards Rate
1x-5x points
5x on eats & drinks, 3x on streaming subscriptions, 2x on travel & transit, and 1x on everything else.
Intro Offer
50,000 points
Spend $3,000 in the first three months and receive a welcome bonus of 20,000 points. Spend $500 to earn 2,500 points each billing cycle for a year (30,000 points in a year). New cardmembers only.
  • Our take

    Why we like it

    The American Express Cobalt Card boasts high rewards rates on everyday spending, a generous welcome bonus, comprehensive travel insurance coverage, flexible point redemption and plenty of specialty perks to keep things interesting all year long.

    Pros

    • Earn 150,000 points in the first year by spending up to $30,000 on eats, drinks and groceries. Combined with the 50,000 point intro offer, you could earn 200,000 points in your first year, which you could redeem for travel and more.
    • Easily transfer the points you earn to popular airline and hotel loyalty programs, such as Aeroplan and Marriott Bonvoy.

    Cons

    • Airport lounge access isn’t provided, which may disappoint some frequent travellers.
    • No travel medical coverage for cardmembers over the age of 65.
  • Product details
    • 5x Membership Rewards points on eats & drinks (coffee shops, restaurants, grocery stores, and more), up to $30,000 annual spend.
    • 3x Membership Rewards points on streaming subscriptions.
    • 2x Membership Rewards points on travel & transit
    • 1x Membership Rewards points on everything else.
    • Earn 1 additional Membership Rewards point for every $1 you charge to your Cobalt Card on eligible hotel or car rental bookings made with American Express Travel.
    • Redeem Membership Rewards points towards card purchases, statement credits, gift cards, merchandise, travel on American Express Travel Online, flights through the Fixed Points Travel Program, or transfer points to eligible loyalty and frequent flyer programs.
    • You must redeem a minimum of 1,000 points per redemption. 1,000 points = $10 for any eligible purchase. Points do not expire.
    • $12.99 monthly fee.
    • Earn up to $100 USD hotel credit and enjoy perks at hotels and resorts in more than 30 countries — including one-category room upgrade at check-in — with The Hotel Collection.
    • American Express Experiences offers dining, entertainment, retail and wellness offers and events, plus Front Of The Line presale and reserved tickets.
    • Amex Offers and the Cobalt Perks program provides perks, bonus rewards and more.
    • Access to Plan It, the American Express Installment Program.
    • 10 types of insurance provided, including 15-day travel medical benefits — up to $5,000,000 million in coverage per insured person under age 65.
    • Preferred rates: 20.99% for purchases, 21.99% for cash advances.
    • To be eligible, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Brim World Elite Mastercard

Our pick for bonus rewards and a digital-first experience

Annual Fee
$0 intro for the first year, then $199
Offer available for new cardholders.
Interest Rates
Rates vary by card member
Rewards Rate
1x-30x points
2x on everyday purchases, up to $25,000 annual spend, then 1x. Up to 30x on retail partners in the eShop.
Intro Offer
$500
Earn up to $500 in first-time reward bonuses at participating retailers.
  • Our take

    Why we like it

    Brim is a tech-savvy option that offers an impressive mobile app with budget tracking, an eShop with hundreds of retailers, partnerships with five mobile wallets, free global WiFi, and no foreign transaction fees — even when shopping online.

    Pros

    • Rewards are easy to understand —  each point is worth $0.01 — and you can earn up to 30x at select retail partners, which includes small local businesses and big brands.
    • Comprehensive insurance package offers 16 types of insurance, ranging from trip cancellation and interruption to mobile device and event ticket protector insurance.

    Cons

    • The bonus rewards rate drops down to the 1x flat rate after you spend $25,000.
    • Brim is a virtual bank with no physical bank branches, so you must be comfortable with a digital-first experience.
  • Product details
    • 2x points per dollar on everyday purchases, up to $25,000 annual spend. Then, 1x.
    • Up to 30x points per dollar on retail partners in the eShop.
    • Points have a straightforward value of $0.01 and can be redeemed on transactions or as cash back. $1 minimum redemption required. Points do not expire.
    • $199 annual fee.
    • Brim’s Family Card option lets you add additional card members, set and adjust their spending limits, block types of transactions and track spending — perfect for teaching teens smart budgeting.
    • World Elite Mastercard benefits, including membership to Mastercard Airport Experiences provided by LoungeKey and access to over 1 million Boingo Global Wi-Fi hotspots around the world.
    • Enhanced security features allow you to lock your card and block online or foreign transactions instantly.
    • Access to the Brim Installment plan.
    • 16 types of insurance provided, including 15-day travel medical benefits — up to $5 million in coverage. 3-day coverage is available for ages 65 and older.
    • Preferred rates vary by card member.
    • No foreign exchange fees.
    • To be eligible, $80,000 (individual) or $150,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

BMO CashBack World Elite Mastercard

Our pick for bonus rewards on groceries, transit, gas and recurring bills

Annual Fee
$0 intro for the first year, then $120
Offer available for new cardholders.
Interest Rates
19.99% / 22.99%
19.99% on purchases, 22.99% on cash advances (21.99% for Quebec residents).
Rewards Rate
1% - 10%
10% intro offer, then 5% on groceries, 4% on transit, 3% on gas, 2% on recurring bills, 1% cash back on all other purchases with no limit on how much cash back you can earn.
Intro Offer
$380
Receive 10% cash back in the first three months, up to $2,600 in purchases (equal to $260 cash back). Plus, waive the $120 annual fee in the first year. Only valid for applications received by December 6, 2022.
  • Our take

    Why we like it

    You won’t need a strategy to make the most out of this bonus-category card. The BMO CashBack World Elite Mastercard spends like a flat-rate card thanks to stellar rates on four popular daily spending categories.

    Pros

    • Score generous cash-back rates for popular spending categories: 5% on groceries, 4% on transit, 3% on gas, 2% on recurring bills, and 1% on everything else.
    • Feel protected with 13 types of insurance and fantastic travel benefits.

    Cons

    • Spending categories come with easily-hit spending caps, but the 1% base rate still earns you value once you hit your monthly bonus rate limits.
    • The $120 annual fee is pretty steep. While we think you’ll more than make up for it through cash back savings, the no-fee BMO CashBack Mastercard is a great alternative.
  • Product details
    • 5% on groceries, 4% on transit, 3% on gas and electric vehicle charging, and 2% on recurring bills, up to $500 each on every statement cycle.
    • 1% on everything else.
    • Redeem your cash back as a statement credit, or directly deposit it into a BMO Chequing, Savings or InvestorLine Account.
    • $120 annual fee.
    • Mastercard World Elite Benefits, including Mastercard Travel Rewards, Mastercard Airport Experiences provided by LoungeKey and Boingo Public Wi-Fi.
    • Cash back when you travel outside of Canada with the Mastercard Travel Rewards program.
    • 13 types of insurance provided, including eight-day out-of-province/out-of-country emergency medical benefits — up to $2 million coverage.
    • Preferred rates: 20.99% for purchases, 22.99% for cash advances.
    • To be eligible, $80,000 (individual) or $150,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

MBNA Rewards World Elite Mastercard

Our pick for bonus rewards on restaurants, groceries and household utility bills

Annual Fee
$120
Interest Rates
19.99% / 24.99%
19.99% on purchases, 24.99% on cash advances.
Rewards Rate
1x-5x
5x on restaurant, grocery, digital media, memberships, and household utility purchases, and 1x on everything else.
Intro Offer
30,000 points
Spend $2,000 in the first 90 days and earn 20,000 points (approximately $165 in cash back value). Enroll for paperless e-statements within the first 90 days for 10,000 bonus points (approximately $80 in cash back value).
  • Our take

    Why we like it

    This card offers a competitive sign-up bonus and accelerated earn rates on useful categories like restaurant and grocery purchases and household utility bills.

    Pros

    • An impressive array of perks and insurance benefits for travellers, such as concierge services and rental car discounts.
    • Flexible redemption options, including cash back, brand-name merchandise, gift cards, charitable donations and travel.

    Cons

    • Intro offer does not include a waived annual fee.
    • The 5x bonus rewards rate on restaurants, groceries, digital media, memberships and utility drops down to a 1x flat rate after you spend $50,000.
  • Product details
    • 5x MBNA Rewards Points per dollar on restaurant, grocery, digital media, memberships, and household utility purchases up to $50,000 annual spend, then 1x.
    • 1x MBNA Rewards Points per dollar for every $1 on everything else.
    • Redeem MBNA Rewards Points per dollar for cash back, brand-name merchandise, gift cards from participating retailers, charitable donations, and travel.
    • The redemption value for travel is 100 points per $1, while cash and charity donations are 120 points per $1. MBNA rewards points never expire.
    • $120 annual fee.
    • Receive Birthday Bonus Points equal to 10% of the total number of points earned in the 12 months before the month of the primary cardholder’s birthday, up to a max of 15,000 points.
    • Use your MBNA card to save 10% off Avis and Budget rental car base rates in Canada and the U.S., and 5% of base rates internationally.
    • Access to the MBNA installment payment plan.
    • Eleven types of insurance provided, including 21-day travel medical benefits — up to $2 million in coverage for those under 65 years of age, and comprehensive rental vehicle coverage.
    • Preferred rates: 19.99% for purchases, 24.99% for cash advances.
    • To be eligible, $80,000 (individual) or $150,000 (household) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Scotiabank Gold American Express Card

Our pick for a bonus rewards card with a 0% intro period + no foreign exchange fees

Annual Fee
$0 intro for the first year, then $120
Offer available for new cardholders.
Interest Rates
19.99% / 22.99%
19.99% on purchases. 22.99% on cash advances.
Rewards Rate
1x-5x points
5x on food, groceries and entertainment, 3x on gas, daily transit and streaming services, and 1x on everything else.
Intro Offer
50,000 points
Spend $1,000 in the first three months to earn 30,000 points. Spend at least $7,500 in the first year to earn 20,000 points. Annual fee waived for the first year. New cardmembers only.
  • Our take

    Why we like it

    Not only does the Scotiabank Gold American Express card reward you with impressive rates in six popular spending categories, but it also comes with a 0% intro period for balance transfers and no foreign exchange fees.

    Pros

    • No foreign exchange fee on any foreign currency purchases while travelling abroad or shopping online — you just have to pay the exchange rate.
    • The 0% introductory interest rate on balance transfers lasts for a full six months.

    Cons

    • The bonus rewards rates drop down to the 1x flat rate after a $50,000 annual spend. This sounds like a lot, but much of your daily spending is probably included in the six bonus categories, so you might hit the limit faster than you’d think.
    • Your points will expire if you don’t use them within 12 months of the purchase date.
  • Product details
    • 5x Scotia Rewards points per dollar on eat in & eat on, including grocery stores, restaurants, fast food, drinking establishments, food delivery and food subscriptions.
    • 5x Scotia Rewards points per dollar on entertainment.
    • 3x Scotia Rewards points per dollar on gas, daily transit, and streaming services.
    • 1x Scotia Rewards points per dollar on everything else + after $50,000 annual spend in accelerated earn rate categories.
    • Redeem Scotia Rewards points for merchandise, statement credits, prepaid and gift cards, and more, including travel through the Scotia Rewards Travel Service, which offers a Best Price Guarantee on airfare.
    • You must redeem a minimum of 5,000 points per travel-related rewards redemption. Points must be redeemed within 12 months of the purchase date.
    • Covert Scotia Rewards points to SCENE points.
    • $120 annual fee, which you can waive every single year by using the Scotiabank Preferred Package or Ultimate Package.
    • Discounted Priority Pass membership, which grants you access to over 1200 VIP lounges around the world.
    • Score deals on shopping, dining, travel and more with Amex Offers, and experience special events and discounts with American Express Invites.
    • Front Of The Line presale and reserved tickets.
    • 12 types of insurance provided, including 25-day travel medical benefits — up to $1 million in coverage. 3-day coverage is available for ages 65 and older.
    • Preferred rates: 19.99% for purchases, 22.99% for cash advances.
    • No foreign exchange fees.
    • To be eligible, $12,000 (individual) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

SimplyCash Preferred Card from American Express

Our pick for flat-rate cash back with a high ongoing rewards rate

Annual Fee
$99
Interest Rates
19.99% / 21.99%
19.99% on purchases, 21.99% on cash advances.
Rewards Rate
2% - 10%
10% cash back for the first four months, then earn unlimited 2% cash rewards on purchases.
Intro Offer
$500
Receive 10% cash back during the first four months, up to $4,000 in purchases (equal to $400 cash back). Plus, a $100 statement credit after spending $4,000 in the first four months. New cardmembers only.
  • Our take

    Why we like it

    A high flat rewards rate of 2% makes it easy to earn cash back on every purchase — no need to keep track of bonus categories, spending limits or tiered and rotating structures.

    Pros

    • An unlimited 2% cash-back earn rate is among the highest we evaluated.
    • You can earn up to $500 in the first four months.

    Cons

    • Other cards on this list offer a higher cash-back rate on specific spending categories and might be a better fit if you’re comfortable keeping track of tiered rewards structures.
  • Product details
    • Earn 2% cash back on purchases with no spending limits.
    • Redeem cash back as a statement credit in September.
    • $99 annual fee.
    • Enjoy exclusive ticket access, virtual events, live performances and more with American Express® Experiences.
    • Refer a friend and earn a maximum annual referral bonus of $1,500 cash back.
    • Access to The American Express® Installment Program.
    • Nine types of insurance provided, including 15-day out-of-province/out-of-country emergency medical benefits — up to $5 million in coverage.
    • Preferred rates: 19.99% for purchases, 21.99% for cash advances.
    • To be eligible, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Simplii Financial Cash Back Visa Card

Our pick for a no-fee bonus category card with a low introductory APR on purchases

Annual Fee
$0
Interest Rates
19.99% / 22.99%
19.99% on purchases, 22.99% on cash advances.
Rewards Rate
0.5% - 10%
10% intro offer. 4% at restaurants, bars and coffee shops, 1.5% on gas, groceries, drugstores and pre-authorized payments, and 0.5% on everything else.
Intro Offer
$500 + 9.99% annual interest on purchases
Earn 10% bonus cash back at restaurants and bars in your first four months (up to $500). Get 9.99% introductory annual interest on purchases for the first six months (must apply by April 30, 2022).
  • Our take

    Why we like it

    The $0-annual-fee Simplii Financial Cash Back Visa Card earns bonus cash-back on the purchases you make almost every day.

    Pros

    • New cardmembers can earn a 9.99% introductory annual interest on purchases for the first six months.
    • Newcomers to Canada can build credit with Simplii’s New to Canada Banking Program.

    Cons

    • The 0.5% base rate isn’t exactly impressive, but it only applies after you hit the annual spending limits of bonus categories.
    • It only includes purchase security and extended protection insurance.
  • Product details
    • 4% on restaurant, bar and coffee shops, up to $5,000 per year.
    • 1.5% on gas, groceries, drugstores and pre-authorized payments, up to $15,000 per year.
    • 0.5% on everything else.
    • Redeem cash back as a statement credit in December.
    • No annual fee.
    • Cash back when you send money abroad with a Simplii Financial Global Money Transfer. No transaction fees and no interest charges.
    • Newcomers to Canada can build credit with Simplii’s New to Canada Banking Program.
    • Purchase security and extended protection insurance provided.
    • Preferred rates: 19.99% for purchases, 22.99% for cash advances.
    • To be eligible, a $15,000 (individual) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident (excluding Quebec) that is the age of majority in the province or territory where you live.

Tangerine Money-Back Credit Card

Our pick for bonus categories tailored to your spending

Annual Fee
$0
Interest Rates
19.95%
19.95% on purchases and cash advances.
Rewards Rate
0.5% - 2%
2% unlimited cash back on up to three categories. 0.50% unlimited cash back on everything else.
Intro Offer
$150
Earn 15% back on up to $1,000 in purchases ($150) during the first two months if you apply by November 30, 2021.
  • Our take

    Why we like it

    You can earn unlimited cash back at a 2% rate in up to three categories of your choice — all while earning 0.50% back on everything else.

    Pros

    • You can tailor the 2% rewards to your spending by choosing up to three categories from Tangerine’s list of 10, which includes basics like gas and groceries as well as unusual picks like furniture and home improvement.
    • Transfer balances within your first 30 days and pay only 1.95% interest on the transferred balance for the first six months (19.95% after that).

    Cons

    • 2% cash back is a competitive rate, but many cards offer double the rewards on specific categories.
    • Tangerine is a virtual bank with no physical bank branches.
  • Product details
    • 2% on two categories of your choice: grocery, furniture, restaurants, hotel-motel, gas, recurring bill payments, drug store, home improvement, entertainment, or public transportation and parking.
    • Get a third cash-back category by choosing to have your rewards deposited into a Tangerine Savings Account.
    • 0.50% on everything else.
    • Redeem cash back monthly as a statement credit or deposited into a Tangerine Savings Account.
    • No annual fee.
    • Transfer balances within your first 30 days and pay only 1.95% interest on the transferred balance for the first six months (19.95% after that).
    • Get free cards for any authorized users on your account.
    • It only includes purchase assurance and extended protection insurance. For more insurance, consider the Tangerine World Mastercard which requires a minimum personal income of $60,000. If you meet this requirement, you will automatically be considered for the World card if you apply for the Money-Back card.
    • Preferred rates: 19.95% for purchases and cash advances.
    • To be eligible, a $12,000 (individual) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

TD Aeroplan Visa Infinite Privilege Card

Our pick for a premium Aeroplan credit card with comprehensive travel insurance

Annual Fee
$599
Interest Rates
19.99% / 22.99%
19.99% on purchases, 22.99% on cash advances.
Rewards Rate
1.25x - 2x points
2x on Air Canada purchases, 1.5x on gas, groceries, travel and dining, and 1.25x on everything else.
Intro Offer
65,000 Aeroplan points + a bonus Buddy Pass
See product details for specifics about this intro offer.
  • Our take

    Why we like it

    The TD Aeroplan Visa Infinite Privilege Card comes with strong travel insurance and perks, plus healthy earn rates on everyday purchases.

    Pros

    • Comprehensive travel insurance includes medical benefits for ages 65 and older.
    • Complimentary Priority Pass membership with six airport lounge visits included each year.

    Cons

    • A high annual fee and a $200,000 household annual income requirement.
    • Accelerated earn rates are limited to $100,000 annual spend.
  • Product details
    • Intro offer details: Earn a welcome bonus of 20,000 Aeroplan points after making your first purchase. Earn up to 45,000 Aeroplan points when you spend $1,000 within 90 days of Account opening. Earn a bonus Buddy Pass that can score you a second ticket when you book an economy ticket on a North American Air Canada flight. New card members only. Must apply by December 5, 2021.
    • 2.25 Aeroplan points per $1 spent on Starbucks purchases (offer ends February 14, 2022).
    • 2x Aeroplan points on Air Canada and Air Canada Vacation purchases.
    • 1.5x Aeroplan points on gas, groceries, travel and dining.
    • 1.25x Aeroplan points on everything else, or after $100,000 annual spend in the bonus categories listed above.
    • Earn twice the points when you present your Aeroplan number at over 150 participating Aeroplan partner brands and at 170 online retailers and pay with your card.
    • Redeem Aeroplan points online at AirCanada.com or via the app for flights, vacation packages, hotels, experiences, gift cards and more.
    • $599 annual fee.
    • Receive an Annual Worldwide Companion Pass — either for $99 or no additional cost after spending $25,000 on your card.
    • Priority Check-In, Priority Boarding, Priority Baggage Handling and Priority Airport Standby for you and up to eight travel companions on the same Air Canada flight.
    • Complimentary Priority Pass membership with six airport lounge visits included each year. Access to a Maple Leaf Lounge is also included.
    • Access to up to $5,000 in emergency cash advances.
    • 13 types of insurance provided, including 31-day travel medical benefits — up to $5 million in coverage for ages 65 and younger. Ages 65 and older are covered for the first four days of a trip.
    • Preferred rates: 19.99% for purchases, 22.99% for cash advances.
    • To be eligible, a $200,000 household annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.

Methodology

NerdWallet Canada selects the best credit cards based on overall consumer value and their suitability for specific kinds of consumers. Factors in our evaluation include annual and other fees, rewards rates, the earning structure (for example, flat-rate rewards versus bonus categories), redemption options, bonus offers for new cardholders, introductory and ongoing APRs, and other noteworthy features such as airline or hotel perks or the ability to transfer points. Charge cards are not included on this list.

Understanding credit cards in Canada

By Barry Choi

A credit card is part of daily life for many Canadians. Using your card to pay for purchases can be more convenient than using cash. Plus, with the best credit cards, you can manage your expenses and earn rewards at the same time.

Even though it’s easy to swipe a credit card, the ins and outs of how they work aren’t as obvious. The interest rate, rewards structure and how to take advantage of a card’s perks can be complicated and confusing — even among the best credit cards in Canada. Knowing how your credit cards work is essential since it can help you make smarter financial decisions. Here are the basics so you can choose, and use, your credit card with confidence.

How do credit cards work?

Think of credit cards as a short-term loan from your credit card provider. You make purchases with your card and pay for them later.

One thing that makes credit cards appealing is that there’s an interest-free period. As long as you pay for all charged purchases in full by your statement due date, you won’t have to pay interest in exchange for borrowing the issuer’s money for a few weeks.

A typical credit card transaction would look something like this:

  1. You charge a purchase to your card. When making purchases, choose credit as your form of payment. You’ll then tap, insert or swipe your card to initiate the payment. You may also be required to enter your pin number. If you’re making payments online, you’ll need to enter all your card information manually.
  2. Wait for your purchase to be authorized. The payment terminal will contact your credit card company to confirm the purchase amount.
  3. The merchant gets paid. Once approved, your credit card provider sends the merchant the funds. The merchant does pay a small fee to your credit card provider for this service.
  4. You get your bill and pay. Once your bill arrives, it’ll list your transactions, minimum payment requirement and due date. If you only make the minimum payment, you may see some interest charges on your next bill. To avoid this extra cost, pay your bill in full by that date so no interest is charged.

Ideally, you’d be able to pay your bill in full each month so these interest charges would not apply. If you’re worried about your ability to do so, seek out a low-interest card to reduce your financial risk.

» MORE: How to calculate credit card interest

Types of credit cards

A wide variety of credit cards are available in Canada, and each can be used as a tool to achieve various financial goals. People who always pay their bills on time may want a rewards credit card, whereas someone looking to rebuild their credit may prefer a secured credit card. Since your personal situation could change at any time, it’s a good idea to understand how the different types of credit cards work.

Rewards credit cards

Rewards credit cards can be broken down into the following categories:

  • Cash back. You’ll get cash back on every purchase you make. See our picks for the best cash back credit cards in Canada.
  • General rewards. The points you earn can be used for gift cards, merchandise, experiences and sometimes travel. See our picks for the best general rewards credit cards in Canada.
  • General travel. The points you earn can be used for any type of travel redemption. See our picks for the best travel credit cards in Canada.
  • Airline rewards. Co-branded airline rewards can be used on a specific airline and its partners.
  • Hotel rewards. Points earned through hotel credit cards can be used at any participating property.
  • Store rewards. Use the points you’ve earned for groceries, merchandise and more.

No-fee credit cards

No-fee credit cards come with no annual fee. They can be any type of credit card, but often feature rewards or a low interest rate. Some no-fee cards are geared towards students and have easier requirements.

» See our picks: the best no-fee credit cards in Canada

Balance transfer credit cards

Balance transfer credit cards typically come with a low introductory interest rate. Because of this, you can use them to move your balance from a credit card with a high rate to one with a lower rate, allowing you to pay down debt faster

Low-interest credit cards

Low-interest credit cards often have an interest rate of between 8% – 16%. This is significantly lower than standard interest rates, so low-interest credit cards can be helpful for people who may carry a balance.

Student credit cards

Student credit cards typically have more relaxed qualification requirements and often charge no annual fee. They’re a good choice for students who may be looking to build their credit or establish good spending habits.

» See our picks: the best student credit cards in Canada

Secured credit cards

If you’re unable to qualify for an unsecured credit card, you might be able to get a secured credit card. These cards require you to deposit security funds that act as your credit card limit. As you make your payments regularly, secured credit cards can build your credit score.

How to choose a credit card

With so many kinds of credit cards available, narrowing down your choices can be hard. Consider the following when deciding which credit card is right for you:

  • Your income. Higher tier credit cards require a higher personal or household income.
  • Annual fee. Decide if you want to pay an annual fee or not. Cards that have an annual fee typically come with better benefits.
  • Rewards earned. The type of rewards you want to earn will quickly help you narrow down your choices.
  • Additional perks. See if there are any additional benefits you want, such as no foreign transaction fees, travel insurance, extended warranty, etc.
  • Earn rate. Try to choose a card that comes with increased earn rates on the categories where you naturally spend more.
  • Welcome bonus. If you’re comparing similar cards, choose the one with a better sign-up offer.

How to apply for a credit card

When you apply for a credit card, there’s no guarantee you’ll be approved. The credit card provider needs to assess your financial profile to determine if you’re creditworthy. The application process will typically look something like this:

  1. Fill out an application. This can be done online or at your financial institution. The application will ask for some basic information, such as your name, date of birth, address, social insurance number, employer and income.
  2. Your information is checked. The credit card issuer will check your credit history and verify the information that you provided.
  3. A decision is made. If you apply online, approval or disapproval could be instant, but there’s also a chance the credit card issuer will ask you to contact them to provide additional information.
  4. Your card is mailed out. Your credit card will immediately be mailed out and will typically arrive within 14 business days.
  5. Activate your card. Once your card arrives, you’ll need to activate it by logging into your account or calling the number on your card. Once activated, you can use your card to make purchases.

» MORE: How to use your credit card like a pro

How do credit card rewards work?

With certain credit cards, you can earn rewards when you make a purchase. The type of rewards you earn and your earn rate differ by card, however.

Types of rewards you can earn

The types of rewards you can earn can generally be broken down into four categories:

  • Cash back. For every purchase you make, get a set percentage back in cash. The pay-out date for your cash back earned differs depending on the card. It can be monthly, annually or when you reach a minimum threshold.
  • Travel benefits. Credit card travel rewards programs let you earn points or miles when you make purchases. You can use your rewards to offset the cost of flights, hotels, car rentals, vacation packages and more.
  • General rewards. Most rewards programs offer the option to redeem the points you’ve earned for general merchandise, gift cards, experiences, entertainment, financial rewards, and more.
  • Store perks. Many merchants have a co-branded credit card. The points you earn can be used in-store or online at any participating stores. Groceries, and merchandise are typical redemption options for store rewards cards.

» What’s right for you?: Cash back or rewards?

Earn rates

When it comes to getting rewards, the earn rate is a critical factor. Every rewards card has a base earn rate, but some cards also have higher earn rates on certain types of purchases that can be highly lucrative. Knowing the difference between the two can help you maximize your rewards.

  • Base earn rate. This is what you’ll get for any purchase that doesn’t fall into an increased earn rate category, or after you’ve hit any applicable limits in those categories. For example, you might get 1% cash back or 1 point per dollar spent.
  • Accelerated earn rate. Getting extra points on bonus categories that line up with your regular spending is a great way to rack up rewards even faster. For example, some of the best cash-back credit cards in Canada may give you 4% back on groceries or 2% back on gas.

The rewards process

Earning rewards can look different depending on the card and issuer, but generally speaking, the process works like this:

  1. Make a purchase with your credit card. The purchase must be considered eligible by the issuer to earn rewards.
  2. Your rewards are calculated. Depending on the merchant category and your earn rate, your credit card provider calculates how many rewards you’ve earned. They’ll also factor in any promotions where you’ll earn additional rewards.
  3. Rewards are deposited into your account. Cash-back rewards may be immediately visible in your account, but you may not be able to cash them out until a certain date or when you hit a certain threshold. If you’re earning travel or store rewards, you’ll either see your points immediately or at the end of the month when your statement posts.
  4. Redeem your rewards. In most cases, redeeming your rewards requires you to log in to your account. Redeeming cash back may only take a few clicks, but if you’re looking to redeem travel rewards, you may need to go through a travel portal or book the travel first.

» FIND OUT: What’s the best way to use credit card points?

Tracking your rewards

In most cases, logging in to your account will allow you to see how many rewards you’ve earned. Most credit card providers show how many points you’ve earned for each transaction as well as a running total, so you’ll know exactly where you stand. Additionally, credit card statements often have a more detailed breakdown of any extra rewards that you may have earned.

Your rewards typically show up when the transaction posts. Bonus rewards earned from special promotions should show up on your monthly statement. It’s also worth mentioning that any special rewards you get, such as a companion voucher, may take longer to appear in your account.

As for your welcome bonus, you usually need to track that on your own. For example, let’s say you need to spend $3,000 in the first three months of card membership to get your intro offer. Although you’ll usually get your bonus immediately after passing the minimum spend requirement, it’s up to you to check if points land after you’ve spent enough.

» MORE: Do travel rewards expire?

  • FAQs

    • How many credit cards should I have?

      The number of credit cards that’s right for you will depend on your financial situation and goals. Many Canadians have multiple credit cards, often from two different credit card networks. For example, if you have an American Express as your primary card, you may want to get a Visa or Mastercard as your backup card. It can be especially useful to have cards that maximize different types of spending, such as a cash-back card with a high earn rate on groceries and a travel credit card that earns rewards on your favourite airline.

    • How does credit card interest work?

      Many Canadian credit cards have an interest rate around 20%. You would only pay this interest rate if you don’t pay off your entire balance by the time your bill is due. As long as you continue to carry a balance, you’ll continue to pay interest. If you’re constantly paying interest charges, it can be hard to make a dent on the principal amount.

    • What credit score do I need to get a credit card?

      A good credit score is typically required to get the best credit cards. However, there are plenty of options available for people with bad or fair scores, or limited credit history. If you are still building your credit score, consider a more suitable option, such as a secured credit card a prepaid card.

DIVE EVEN DEEPER

Canada’s 10 Best Cash Back Credit Cards of 2021

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Canada's 8 Best Rewards Credit Cards of 2021

The best rewards credit cards transform your everyday grocery, gas, restaurant and household spending into easy-to-use points and flexible loyalty program perks.

Canada’s 8 Best Travel Credit Cards of 2021

The best travel credit cards have strong earn rates and great travel rewards.

Canada’s 10 Best No-Fee Credit Cards of 2021

No-fee credit cards are a smart choice for anyone who doesn’t want to pay an annual fee to use their credit card.