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Published June 28, 2021
Updated July 15, 2021

How to Choose the Best Credit Cards in Canada

First, check your credit. Identify which type of credit card you need by figuring out your goals. Narrow your choices by asking the right questions. Then apply for the card that offers you the highest overall value.

Choosing one of the best credit cards in Canada can feel like an impossible mission. There are dozens of cards to choose from, and each one has its pros and cons. But when you dig a little deeper, there’s often a card or two that’s ideal for you. To narrow down your choices, you need to consider your situation, what rewards you like and your spending habits.

Check your credit score and income

Before you apply for a credit card, you need to know your credit score. Checking this number helps you decide which credit cards to apply for. If your credit score is between 660 and 900, it’s considered good to excellent, and you will likely be eligible for more credit cards. If it’s lower, you still have options for cards that will help you build your credit.

You can check your credit score through the credit bureaus, Equifax or TransUnion. It might be free, or you might need to pay a fee. Some financial institutions also allow you to check your credit score for free.

Some credit cards require a minimum personal or household income for you to be eligible. Any income requirements will be clearly outlined during the application process. If your income doesn’t meet a card’s requirements, it’s better to apply for a different card instead.

Figure out your goals

Generally speaking, there are three types of credit cards:

  • Rewards cards
  • Low-interest cards
  • Cards for no/bad credit

All credit cards are designed with a specific purpose, so you should choose one that matches your needs.

If you want to earn rewards

A rewards credit card is the best choice for someone who has a good credit score and doesn’t typically carry a balance. You can earn points on every purchase you make, which can be redeemed for cash, free flights or other benefits.

If you want to reduce your debt

Anyone currently carrying a balance on another credit card should consider a new low-interest credit card, especially one with a balance transfer option. By moving your balance to a card with a lower interest rate, you could save money in the long run.

If you want to build your credit

Student or entry-level credit cards offer an excellent way for people to start building their credit scores. If you’ve run into credit issues in the past, a secured credit card can help you rebuild your credit score.

Ask the right questions

Once you’ve figured out your goals, you need to ask yourself a few more questions to help narrow down your choices.

For rewards cards

  • Do I want cash back or travel rewards? Travel rewards can be more lucrative, but cash back is more versatile because you can spend it on anything.
  • What type of travel rewards do I want? Choose from hotel, airline and general travel rewards.
  • Where do I do most of my spending? Many rewards cards offer an increased earnings rate on select categories like gas, groceries, or pharmacies.
  • What are the fees? If there’s an annual fee, make sure you’ll earn enough rewards to offset it.

For low-interest cards

  • Is there a promotional rate for balance transfers? Some cards offer a lower interest rate when you transfer a balance from another credit card, which can help you pay off your balance faster.
  • What are the fees? The credit card may charge you an annual fee, as well as a fee for the balance transfer.
  • What is the standard interest rate? You’ll want to know the regular interest rate you’ll pay when the promotional period ends.

For cards for no/bad credit

  • Will this card help me build my credit? Make sure any card you get will help you improve your credit score by reporting your payments to the credit bureaus.
  • Does it require a security deposit or fees? Most secured credit cards will require a deposit, and some may have annual fees.

Decide on the extras

Even after considering these questions, you’ll likely still have quite a few choices. At this point, look at the fine details to help you settle on the right card. Consider factors like:

  • Sign-up bonus: Look for a card that offers a welcome bonus, like extra rewards or a higher cash-back rate for a limited time.
  • Interest rate: Do you plan to pay off your balance each month, or is it more likely that you will carry some debt? Consider how your balance will add up when studying interest rates.
  • Additional benefits: Many premium credit cards come with extra perks, such as travel insurance, lounge access, price protection, extended warranties and more.

Finding a perfect match is rare, but you’ll likely be able to find a card that ticks many of your boxes.

Choosing the right credit card can help you achieve your financial goals by earning rewards, reducing debt and increasing your credit score. Take the time to apply for one that’s right for you, and reap the benefits.

About the Author

Barry Choi
Barry Choi

Barry Choi is a personal finance and travel expert. His website is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.


How to Apply for a Credit Card

Before applying, decide what type of credit card you want. Then, consider your credit score, income, and the implications of your application.

What Are the Different Types of Credit Cards?

Different types of credit cards come with different requirements, perks, benefits, and fees. Common types include no-fee, rewards, and low-interest cards.

Credit Card Instant Approval vs. Guaranteed Approval

Instant approval and guaranteed approval make it easy to get a credit card. Learn if you have been approved or rejected within minutes of applying.

How Long Should I Wait Between Credit Card Applications?

How often you should apply for a new credit card depends on how many you want, but waiting about six months between applications is a good guideline.