Picking a credit card can be overwhelming. Card perks, interest rates, fees and eligibility criteria vary widely. Begin your search by considering what type of credit card will match your lifestyle and spending habits.
Types of credit cards at a glance
|Card type||Details||Best for|
|No-fee credit cards||Anyone who doesn't want to pay a fee to carry a credit card.|
|Rewards credit cards||People interested in earning rewards points for things like merchandise, gift cards and more.|
|Travel credit cards||Those seeking travel perks and insurance.|
|Cash-back credit cards||Anyone who wants to earn cash-back rewards.|
|Low-interest credit cards||Those who typically carry a balance on their credit card.|
|Business credit cards||Business owners.|
|Balance transfer credit cards||Those paying down credit card debt.|
|Prepaid credit cards||Anyone with low or no credit.|
|Secured credit cards||Anyone with low or no credit trying to raise their credit score.|
|Student credit cards||Students.|
|Metal credit cards||Those willing to pay for luxurious card perks.|
7 types of credit cards
Broadly speaking, credit cards fall into seven major categories.
1. No-fee credit cards
If you’d prefer not to pay to be a cardholder, consider a no-fee credit card. As the name suggests, these credit cards do not charge an annual fee.
Is a no-fee credit card right for me?
A no-fee credit card is ideal for those who don’t want to pay an annual fee to have a credit card. A no-fee card may still offer rewards and insurance, but at a more modest level than a credit card you pay to carry. A card with an annual fee may be worthwhile if you earn more in rewards than you spend to have the card.
2. Rewards credit cards
Rewards cards are one of the most common types of credit cards. General rewards cards earn points that can be redeemed for free or discounted experiences, retail items and more. Sometimes these cards are linked to specific stores, so you can only redeem your rewards at that retailer. Popular Canadian rewards programs include American Express Membership Rewards points, PC Optimum points and Scene+ points.
Travel and cash-back cards both fall into the rewards credit card category.
Travel credit cards
Cash-back credit cards
Cash-back cards offer a percentage of your purchases as “cash,” which is usually applied as a statement credit.
Is a rewards credit card right for me?
A rewards credit card is ideal for anyone interested in earning rewards points, miles or cash back. To compare your options, consider how rewards are earned.
Some rewards cards offer higher earn rates for groceries, while others will prioritize travel-related spending. Choose a rewards card that offers higher rewards for categories that match your spending habits.
Also, consider your lifestyle and the type of reward that will benefit you most — if you rarely stay in hotels, a hotel rewards card may not be the best fit. And consider the annual fee. A higher annual fee may mean better perks, but it’s only worth paying if you use the perks extensively.
Best Credit Cards in Canada
Compare all different credit cards side-by-side and find out the best card that will meet your need with special perks and benefits
3. Low-interest credit cards
Many Canadian credit cards have an interest rate of 19.99% — but not all. Some low-interest credit cards offer rates closer to 10%. These cards are ideal for individuals who struggle to pay off their entire bill each month since the balance won’t grow as quickly as it would on a card with a higher interest rate.
Balance transfer credit card
Some low-interest credit cards have balance transfer promotions. These promotions offer discounted rates on balances transferred from another credit card, sometimes as low as 0%. But the rock-bottom rates of a balance transfer credit card don’t last forever — the card’s interest reverts to a higher rate once the promotional period is over.
Is a low-interest credit card right for me?
A low-interest credit card is ideal for anyone who regularly carries a balance on their credit card. Balance-transfer cards may be practical for someone struggling to pay down credit card debt.
If you’re considering a balance-transfer credit card, read the fine print. Familiarize yourself with the offer details, including the length of the promotional interest rate and any fees that may apply to balance transfers.
4. Business credit cards
Business credit cards offer features, benefits and insurance specifically designed for companies and entrepreneurs. Higher credit limits are common with business cards. Insurance coverage may include protection from employee card misuse. And rewards programs often offer accelerated earn rates for business spending.
Is a business credit card right for me?
A business credit card may benefit any merchant or entrepreneur who wants a credit card with business-oriented features. These credit cards often reward business spending and may even offer tools to help you track and organize business finances. The downside? Business credit cards can potentially affect your personal credit score, so weigh your options before applying and explore employee card misuse insurance if you plan to give supplementary cards to your staff.
5. Credit cards for low or no credit
People with a low credit score or no credit history may want to explore their secured and prepaid credit card options.
Secured credit cards require a refundable deposit that the lender will claim if you stop making payments. The amount you deposit becomes your credit limit. Secured cards tend to be easier to qualify for than traditional, unsecured cards. When used responsibly, a secured card may help you build or rehabilitate your credit.
A prepaid credit card works like a debit card: funds deposited onto the card become your spending limit. Prepaid cards don’t impact your credit and don’t charge interest, since you’re not actually borrowing any money. You can usually add more funds to a prepaid card through an app, online money transfer, e-Transfer or in-store.
Is a prepaid or secured credit card right for me?
A prepaid or secured credit card is best suited to someone with a low credit score or no credit history. These cards are designed to offer accessible credit options to those building or rehabilitating their credit score.
6. Student credit cards
Numerous banks and credit unions offer student credit cards. These cards typically offer low fees alongside perks like cash back on everyday spending and car rental discounts.
Despite the name, you don’t necessarily need to be in school to qualify for a student credit card. Student cards are generally designed for people of a specific financial profile — one that may be more common for students but could apply to anyone, regardless of age or occupation.
Is a student credit card right for me?
A student credit card may be practical for someone seeking an accessible credit option with a low or no annual fee. Student cards often have more lenient eligibility criteria, making them suitable for people with lower credit scores or no credit history, even if those people might not necessarily be students.
7. Metal credit cards
Metal credit cards are typically made of titanium or stainless steel. But their composition isn’t the only feature that sets them apart.
Metal credit cards often boast premium perks, like airport lounge access, strong earn rates for rewards, hotel upgrades, robust insurance coverage and more. The catch? High annual fees and restrictive eligibility criteria.
Is a metal credit card right for me?
If you’re willing to pay for above-average card perks — sure. A metal credit card may be worth considering for anyone who doesn’t mind paying a high annual fee in exchange for deluxe benefits and insurance. Ensure you’re familiar with the eligibility criteria before applying, as many metal credit cards have strict annual income and credit score requirements.
How do I choose the best credit card for me?
When comparing credit cards, consider these factors:
- Lifestyle. What type of credit card will benefit you the most?
- Eligibility. Review any eligibility criteria before you apply. Make sure your credit score and annual income match the card’s requirements.
- Fees. A card with an annual fee may only be worthwhile if the rewards and insurance offset the cost of the card.
As you consider your credit card options, remember that you can upgrade or apply for a new credit card at a later date if your circumstances change.
Frequently asked questions about types of credit cards
Generally, a good credit score is a score of 660 and above.
Your ideal number of credit cards will depend on your lifestyle, finances and spending habits. Having numerous credit cards may help you take advantage of multiple rewards programs but could put you at risk of overspending or accumulating credit card debt.