How to Choose the Best Credit Card For You
Article highlights:
Match the card type to your income, credit score and the ways you'll use it.
Check your credit score first to improve your chances of approval.
After choosing a card type, compare features like fees, interest rates, reward rates and perks.
Choosing the best credit card can be a challenging mission. There are numerous cards out there, each with its own pros and cons.
NerdWallet Canada's 2026 Consumer Credit Card Report found that rewards, annual fees and sign-up bonuses were the most important factors for Canadians when choosing a new credit card.
But choosing the right card will always be a unique, personal decision. Using your income, spending habits and financial goals as a guide can help you narrow down your choices.
Nerdy Tip: You’re more likely to get approved for a credit card if your credit score is above 660. If you’re unsure of your current score and worry it might be too low, check your credit score to avoid applying for multiple cards you won’t get approved for. Each application triggers a hard credit check, which can temporarily lower your credit score.
What card can you afford?
Perks might be the most fun credit card component to consider, but you should focus on the nitty gritty when deciding whether a card’s right for you. That means examining the costs and whether the card fits your lifestyle.
Annual fee
A credit card’s annual fee might be a deal-breaker if you're on a tight budget. Annual fees can cost several hundred dollars. If you get charged once a year, it could put significant pressure on your household budget.
It’s also worth deciding whether a card’s annual fee is worth paying. If the benefits don’t outweigh the cost, you’re leaving money on the table.
Unpaid balances and interest charges
Do you expect to carry a credit card balance from one month to the next? If so, you’re going to pay interest.
How much interest you pay will depend on many factors, including how much you expect to spend using the card, its interest rate and whether you have enough money in your monthly budget to cover the occasional big spend (new laptop, a vacation, Christmas shopping, etc.)
If carrying a balance seems likely, consider credit cards with lower interest rates. You may not get much in the way of perks, but the money you save in interest might be worth more to you.
Income requirements
In many cases, credit cards require a minimum personal or household income for you to be eligible.
Several Mastercard credit cards, for example, require a personal income of at least $80,000 or a household income of $150,000. For some premium credit cards, you might need a personal income of $150,000.
It doesn’t matter whether you can afford the annual fee and potential interest charges. Banks and credit card companies will shut down your application if the income’s not there. When you know you won’t qualify for a card, move on to the next.
Choosing the right type of credit card
For experienced card users: Rewards credit cards
A rewards credit card may be the right choice if you have a good credit score and don’t typically carry a credit card balance from month to month.
Rewards credit cards allow you to earn cash back or some form of points on everyday purchases. They generally offer elevated earn rates on certain purchases or shopping categories, which can help you earn rewards more quickly.
These rewards can then be redeemed for cash, free flights or other benefits. Compare the best rewards card in Canada to help you decide.
Pros and cons of rewards credit cards:
Pros:
Many come with added travel perks, discounts and access to exclusive experiences.
Some perks can be worth more than the card's annual fee.
You get rewarded for shopping you’d probably be doing anyway.
Cons:
Annual fees and interest charges can erode rewards values.
Chasing rewards or welcome offers can lead to overspending.
Rewards aren’t designed to fit every lifestyle.
Getting your first card? Consider a low-interest option
Carrying a credit card balance from month to month isn’t unusual, but it still costs you money.
If you generally carry a balance, you may want to consider a low-interest credit card. You won’t get many bells or whistles, but you’ll pay less in interest.
If you want to switch to a low-interest card, look for one with a balance transfer option. This allows you to move a balance from a high-interest card to one that charges you less. Some balance transfer cards offer even lower interest rates for the first several months.
A low-rate card may also be a fit if you’re new to credit cards. You don’t really know how well you’ll handle credit card use, so it might be better to choose a simple, entry-level card that carries less risk.
Pros/cons of low-interest option:
Pros:
A way to pay less in interest if you know you’ll be carrying a balance.
May help improve cash flow and get you out of debt.
Cons:
Few perks or benefits.
Balance transfer cards are really only useful if you stop using the card while you pay off your balance.
If you need to build your credit: Secured cards
If you’ve damaged your credit or are new to Canada, you might not have access to the credit cards you want. In these cases, you may have to choose a secured credit card
Instead of relying on your credit score for approval, secured credit cards require a deposit as collateral — typically equal to the card’s credit limit.
For example, if you provide a $1,000 security deposit, you’ll have access to $1,000 in credit.
A secured card’s low borrowing limit can help prevent overspending, but it’s still up to you to make your payments on time every month. Otherwise, your credit score won’t improve and graduating to a card with more features will take longer.
Pros/cons of secured cards:
Pros:
No credit check required.
The low borrowing limit should prevent overspending.
Cons:
You won’t get your security deposit back until you close the card.
Very few perks.
Compare credit card features
Once you’ve decided on the type of card that will meet your needs, ask yourself the following questions to evaluate the features of each product.
What’s the annual fee?
Depending on the type of card and the features it offers, the annual fee can range from zero to several hundred dollars. The value of a card’s benefits should outweigh its annual cost.
What is the standard interest rate?
Credit card interest rates typically hover around 20% in Canada, but can be considerably higher or lower depending on your credit and the type of card you get.
With most cards, if you fail to make your payments regularly, you’ll be charged a higher penalty interest rate. Be sure to compare these penalty rates, too.
Do I want cash-back or travel rewards?
Travel rewards can be very lucrative, but if you don’t travel often, cash-back rewards may be more appropriate.
Also ask yourself what type of travel rewards you want. If you only fly with a certain airline or stay at a specific hotel chain, choose a card that specializes in those rewards. If you want flexible travel rewards, pick a card with a more generalized redemption program.
Where do I spend my money?
Many rewards cards offer an increased earnings rate on select categories like gas, groceries or pharmacies. Others might provide discounts at certain retailers.
Find a card that matches your spending habits so you can get the most out of its reward program.
Does the card offer extra perks?
Many cards come with added features, such as travel insurance, airport lounge access, purchase protection, extended warranties and more. If a particular perk is important to you, focus on cards that offer that feature.
Is there a sign-up bonus?
Some cards offer juicy welcome bonuses, like extra rewards points or a higher cash-back rate for a limited time. These bonuses can be very tempting.
But many of them come with high spending requirements. If you have to spend more than you normally do to capture these extra points, you might wind up paying more in interest than your bonus is worth.
Is there a promotional balance transfer rate?
Some cards offer a lower interest rate when you transfer a balance from another card. If you’re struggling with your current card’s interest charges, moving your balance to a new card (and limiting that card’s use) can help you pay it off faster.
The Best Credit Cards in Canada
Compare the best cards side-by-side to find one that meets your needs with special perks and benefits.
The Best Credit Cards in Canada
Compare the best cards side-by-side to find one that meets your needs with special perks and benefits.
Find the best credit card
Choosing the right credit card can help you achieve your financial goals by earning rewards, reducing debt and growing your credit score. Take the time to compare cards so you apply for one that’s right for you.
When you start using your new credit card, keep an eye on the common credit card mistakes beginners make so that you can continue to reap the benefits. Don’t overspend. And if you can’t pay off the balance in full, try to make more than the minimum payment.
Compare credit cards within the same category to find the best option for you.
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