Below, I discuss some of the best credit cards for newcomers to Canada and international students, including the ones I used to get started.
New immigrants to Canada have a lot to take in when they first arrive. From personal finances to housing and employment, the first year in Canada goes by really fast.
It does not take long before you realize you need to start building your credit history in Canada. Lenders want to see that you have a good credit score, and one way to establish and build this is to get a credit card and use it responsibly.
But which credit card is best for building your Canadian credit history and enjoying the benefits of having a good credit score?
Featured Offers
Tangerine Money Back Credit Card
On Tangerine’s website
Welcome Bonus
$100
Annual Fee
$0
Regular APR
19.95%
Credit Score
600
Neo Financial Mastercard
On Neo Financial
Welcome Bonus
$25
Annual Fee
$0
Regular APR
19.99%
Credit Score
600
KOHO Prepaid Card
On KOHO’s website
Welcome Bonus
$20
Annual Fee
$0
Regular APR
0% (n/a)
Credit Score
n/a
Best Credit Cards for New Immigrants in Canada
| Credit Card | Annual Fee | Rewards/Perks | Best For |
| Tangerine Money-Back Credit Card | $0 | Up to 2% unlimited cash back, low-rate balance transfer, purchase protection & extended warranty | Unlimited cash back rewards and no annual fees |
| Neo Financial Mastercard | $0 | Up to 5% cash back at partners | No income requirement and high cash back rates at thousands of stores |
| KOHO Easy Mastercard | $0 | Up to 5% cash back at partners; 1% cash back on groceries & bills | No income requirement, can apply with student or temporary visa, free budgeting app |
| Scotia Momentum No-Fee Visa | $0 | 0.50%-1% cash back, low-rate balance transfer offer | No fee cash back card from a big bank |
| Tangerine World Mastercard | $0 | Up to 2% unlimited cash back, mobile device insurance, complimentary Mastercard Travel Pass, rental car insurance, etc. | Premium perks without an annual fee (requires min. $60K annual income) |
| BMO CashBack Mastercard | $0 | 0.50-3% cash back with spending limits; rental car discounts | Students |
| Scotiabank Scene+ Visa | $0 | 1-2 Scene+ points per $1 spent | Students |
| BMO AIR MILES Mastercard | $0 | Earn AIR MILES rewards when you shop | AIR MILES rewards without an annual fee |
| PC Financial Mastercard | $0 | Get 10-25 PC Optimum Points per $1 spent | Free grocery rewards at Loblaw stores |
| Neo Secured Mastercard | $0 | Up to 5% cash back at partners | Secured credit card with no annual fee |
| Home Trust Preferred Visa | $0 | Get 1% cash back and no FX fees | Waiving FX fees with no annual fee |
| Scotiabank Gold American Express Card | $120 | Get up to 6 Scene+ points per $1 spent; No FX fees, comprehensive travel insurance benefits, discounted Priority Pass membership, etc. | Premium card for travel rewards, no FX fees, and perks |
| Scotiabank Passport Visa Infinite | $150 | Up to 3 Scene+ points per $1 spent, comprehensive travel insurance benefits, no FX fees, 6 free VIP airport lounge visits/year, etc. | Premium card for travel rewards/insurance and no FX fees |
| American Express Cobalt | $155.88 | Earn up to 5 points per $1 spent, comprehensive travel benefits, AMEX perks | Travel |
| BMO AIR MILES World Elite Mastercard | $120 | Earn 1 Mile per $10 spent; comprehensive travel insurance; complimentary Mastercard Airport Experiences membership (2 annual passes) | Travel |
| Scotia Momentum Visa Infinite Card | $120 | Get up to 4% cash back, comprehensive insurance coverage, and more | Premium credit card for high cash back rates |
Many big banks and credit unions in Canada have newcomer programs directed at new immigrants and international students.
Examples include the Scotiabank StartRight Program, RBC Newcomer Advantage, CIBC Welcome to Canada Banking Package, BMO NewStart Program, HSBC Newcomer Program, and TD’s New To Canada Banking Package.
Through these “Welcome to Canada” packages, you can waive the bank account fees on new chequing accounts for up to 12 months. You can learn more about the best bank accounts for newcomers here.
In addition, these new immigrant bank programs make it easier for you to qualify for a credit card even if you have no credit history.
Given that the credit history you have accumulated in your home country rarely counts in Canada, it makes sense to look for a bank that’s willing to offer you a credit card without too much hassle.
After opening a bank account at any of these banks, ask them about getting a credit card and go for the maximum credit limit they are willing to give you.
In addition to regular (unsecured) credit cards approved under a bank’s newcomer program, you can also apply for a secured credit card at Canadian banks and financial institutions.
Secured credit cards are easy to qualify for with limited or no credit file or rating. These cards require you to provide a security deposit as collateral in the event you are unable to pay off your credit card. The security deposit becomes your credit limit.
More details about “regular” and “secured” credit cards are provided below.
The best credit cards for newcomers include both no-fee and annual-fee cards. Some of them require little to no annual income, and others (e.g. Mastercard World Elite cards) require at least $80,000 in personal income per year.
Best No-Fee Credit Cards for Newcomers
- Tangerine Money-Back Credit Card
- Neo Financial Mastercard
- KOHO Prepaid Mastercard
- Scotia Momentum No-Fee Visa
- Tangerine World Mastercard
- BMO CashBack Mastercard
- Scotiabank Scene+ Visa
- BMO AIR MILES Mastercard
- PC Financial Mastercard
- Neo Secured Mastercard
- Home Trust Preferred Visa Card
Best Premium Credit Cards for Newcomers
- Scotiabank Gold American Express Card
- Scotiabank Passport Visa Infinite Card
- American Express Cobalt Card
- BMO Air Miles World Elite Mastercard
- Scotia Momentum Visa Infinite Card
Best No-Fee Credit Cards for Newcomers
These credit cards do not have an annual fee. While we have indicated the minimum income requirements, this may be waived for newcomers and students.
Tangerine Money-Back Credit Card
Looking for a card that pays 2% cash back on your most frequent purchases? The Tangerine Money-Back Credit Card offers 2% cash back on your purchases in 2-3 spending categories and 0.50% on everything else.
Eligible cash back categories for the 2% money-back include groceries, restaurants, gas, recurring bill payments, entertainment, drugstore, home improvement, public transport, and furniture.
The standard offer includes two 2% categories, but if you open a free Tangerine savings account and deposit your cash back there, you get a third 2% cash back category.
The 2% and 0.50% cash back rewards are unlimited, and they are paid out every month.
This card also offers extended warranty and purchase protection benefits, and more importantly, there is no annual fee.
For a limited time, new cardholders get an extra 10% cash back on up to $1,000 spent in the first 2 months (with a $100 value).
- Annual fee: $0
- Interest rate: 19.95%
- Rewards: cash back
- Minimum income eligibility: $12,000
- Other perks: 1.95% balance transfer interest rate for 6 months (3% balance transfer fee applies)
- Learn more: Tangerine Money-Back Card review
Tangerine Money-Back Credit Card
Rewards: Earn up to 2% unlimited cash back in up to 3 spending categories and 0.50% on all other purchases.
Welcome offer: Get an extra 10% cash back on up to $1,000 in spending in the first 2 months ($100 value); 1.95% balance transfer rate for 6 months.
Interest rates: 19.95% for purchases, balance transfers, and cash advances.
Annual fee: $0
If you have a personal annual income of $60,000 or more, you can opt for the no-fee premium Tangerine credit card: Tangerine World Mastercard.
It offers all the same benefits of the Tangerine Money-Back card, plus free mobile device insurance, rental car insurance, and complimentary membership in Mastercard Airport Experiences provided by LoungeKey.
Neo Financial Mastercard
The Neo Mastercard allows you to earn unlimited cash back on all purchases with no annual fees. You earn an average of 5% cash back at Neo partners and will never go below 0.5%.
On top of that, Neo gives you up to 15% cash back on many of your first purchases with certain merchants.
Neo recently introduced Rewards Bundles, where you can get even more cash back on everyday purchases, food and drinks, travel purchases, and more.
Neo has no minimum income requirement, making it an easy credit card to qualify for. New applicants get a $25 bonus after approval.
- Annual fee: $0
- Interest rates: 19.99% to 24.99% purchases and 21.99% to 26.99% cash advances
- Rewards: Cash back
- Minimum income eligibility: None
- Other perks: Rewards Bundles, more cash back at Neo partners
- Learn more: Neo Financial Mastercard Review
Neo Credit card
Rewards: Average of 5% cash back at 12,000+ partners and a guaranteed minimum of 0.50% cash back across all purchases
Welcome offer: Get up to 15% cash back on your first-time purchases, plus a $25 welcome cash bonus.
Interest rates: 19.99% – 29.99% on purchases; 22.99% – 31.99% for cash advances.
Annual fee: $0
KOHO Prepaid Mastercard
The KOHO Mastercard is a reloadable prepaid card that’s easy to qualify for. You can apply and be approved without a credit history and while on a temporary or student visa.
The free card offers 1% cash back on grocery purchases and bill payments, and up to 5% cash back when you shop at KOHO partners.
You can use the KOHO card to build credit history when you subscribe to its credit-building product, which costs $7 to $10 monthly.
Since you are spending funds you loaded, there are no interest, NSF, or cash advance fees. It also offers a $20 welcome bonus when you sign up using the CASHBACK promo code.
- Annual fee: $0 for KOHO Easy
- Interest rates: 0% (not applicable)
- Rewards: Cashback, access to a budgeting app, automated savings plans
- Minimum income eligibility: None
- Other perks: Lower FX fees, higher cash back at KOHO partners
- Learn more: KOHO vs Secured Card
KOHO Prepaid Mastercard
Rewards: Earn 1% cash back on groceries and transportation, up to 5% unlimited cash back at partner stores in Canada. Get 3% interest on your entire balance. Users also get access to a free budgeting app.
Welcome offer: $20 sign up bonus after first purchase (use CASHBACK promo code during sign-up)
Interest rate fee: N/A
Annual fee: $0 (no monthly fees)
Scotia Momentum No-Fee Visa Card
This no-frills, no-annual-fee credit card offers a low 0% introductory interest rate on balance transfers for 6 months and up to 1% cash back on grocery, gas, drugstore purchases, and recurring bill payments. For all other eligible purchases, a 0.50% cash back rate applies.
You can save up to 25% off base rates when renting a car at participating AVIS and Budget locations and pay with your Scotia Momentum No-Fee Visa Card.
Cons: It lacks basic insurance coverage such as purchase protection and extended warranty.
- Annual fee: $0
- Interest rates: 19.99% purchases and 22.99% cash advances
- Rewards: cash back
- Minimum income eligibility: $12,000
- Other perks: none
- Learn More: Scotia Momentum No-Fee Visa review
Scotiabank Momentum No-Fee Visa Card
Rewards: Earn 1% cashback on gas, groceries & drugstore purchases; 0.50% cashback on everything else.
Welcome offer: Earn 5% cashback in the first 3 months on up to $2,000 spent ($100 value); introductory 0% interest on balance transfers for the first 6 months.
Interest rates: 19.99% on purchases; 22.99% on cash advances.
Annual fee: $0
Tangerine World Mastercard
The Tangerine World Mastercard is the premium version of the Tangerine Money-Back Credit Card. If you have a personal yearly income of $60,000 or a household income of $100,000 or more, you can apply.
It offers all the benefits of the Money-Back card, like 2% cash back in up to 3 categories, plus travel perks such as:
- Free mobile device insurance
- Rental car collision and loss damage insurance
- Boingo Wi-Fi for Mastercard
- On-demand and subscription services
- Mastercard Travel Pass by DragonPass
With all these extra perks, it still has a $0 annual fee.
- Annual fee: $0
- Interest rates: 19.95%
- Rewards: Cash back
- Minimum income eligibility: $60,000 individual or $100,000 household
- Other perks: insurance benefits, Mastercard Travel Pass, on-demand and subscription services, and more
- Learn more: Tangerine World Mastercard Review
Tangerine World Mastercard
Rewards: Earn up to 2% unlimited cash back in up to 3 spending categories and 0.50% on all other purchases; VIP perks.
Welcome offer: Get an extra 10% cash back on up to $1,000 in spending in the first 2 months ($100 value).
Interest rates: 19.95% for purchases, balance transfers, and cash advances.
Annual fee: $0
BMO Cash Back Mastercard
The BMO CashBack Mastercard is a great card option for students and new immigrants.
This card pays 3% cash back on grocery purchases, 1% cash back on recurring bill payments, and 0.5% cash back on all other purchases. There is a $500 maximum monthly spending limit for the 3% and 1% cash back rewards categories.
This card also offers a 0.99% promotional balance transfer interest rate for nine months (a 2% transfer fee applies).
- Annual fee: $0
- Interest rate: 20.99% purchases and 22.99% cash advances
- Rewards: cash back
- Minimum income eligibility: $12,000
- Other perks: save up to 25% on car rentals at National Car and Alamo Rent A Car
- Learn more: BMO Cash Back Mastercard review
BMO CashBack Mastercard
Rewards: Up to 3% cash back on groceries, 1% cash back on recurring bill payments, and 0.50% back on everything else (3% and 1% cash back rates have monthly spending limits).
Welcome offer: 0.99% introductory balance transfer rate for 9 months (1% fee applies).
Interest rates: 20.99% on purchases and 22.99% on cash advances.
Annual fee: $0
Scotiabank Scene+ Visa
This card allows you to earn Scene+ rewards points you can redeem for free movies or food and drink at multiple restaurants, including Harvey’s and Swiss Chalet, and other rewards.
You earn 1 Scene+ point for every $1 spent on everyday purchases and 2 Scene+ points per $1 spent at Cineplex and select grocery stores (such as Sobeys, Safeway, and Foodland).
New cardholders receive 5,000 bonus points (worth four movies) after spending $750 in the first 3 months.
- Annual fee: $0
- Interest rate: 19.99% purchases and 22.99% cash advances
- Rewards: SCENE points
- Minimum income eligibility: $12,000
- Learn more: SCENE Visa Card review
Scene+ Visa Card
Rewards: Earn 2x Scene+ points /$1 at participating grocery stores and Cineplex; 1x points/$1 for everything else.
Welcome offer: Get up to 5,000 points ($50 value).
Interest rates: 19.99% on purchases; 22.99% on cash advances.
Annual fee: $0
BMO AIR MILES Mastercard
The BMO AIR MILES Mastercard is a great choice for newcomers to Canada who travel often. This credit card earns you Air Miles on every purchase, which can be redeemed for merchandise, trips, or AIR MILES cash vouchers.
You earn 3x Air Miles for every $25 spent at participating Air Miles partners, 2x Air Miles for every $25 spent on groceries, and earn Air Miles twice at participating partners.
This credit card includes extended warranty and purchase protection insurance coverage. You can save up to 25% at National Car Rental and Alamo Rent a Car locations, and get 15% off admission to Cirque Du Soleil shows touring in Canada.
- Annual fee: $0
- Interest rates: 20.99% purchases, 22.99% cash advances
- Rewards: AIR MILES rewards
- Minimum income eligibility: $15,000 personal
- Other perks: 0.99% introductory balance transfer rate for up to 9 months
- Learn more: BMO AIR MILES Mastercard Review
PC Financial Mastercard
If you regularly shop at the Real Canadian Superstore, Shoppers Drug mart, Joe Fresh, Zehrs, and other Loblaw-owned supermarkets, the PC Financial Mastercard can help to amplify your PC Optimum points.
You have three President’s Choice Financial cards to choose from, including the PC Financial Mastercard (entry-level), PC Financial World Mastercard, and PC Financial World Elite Mastercard.
You can read about all three here.
For the PC Financial Mastercard, you earn 10-25 points per $1 spent, and you can redeem your points for free groceries and other household items.
- Annual fee: $0
- Interest rate: 19.97%
- Rewards: PC Optimum points
- Minimum income eligibility: N/A
- Learn more: How to maximize your PC Optimum points
Neo Secured Card
The Neo Secured Card has all the perks of the Neo Mastercard, but you choose your credit limit based on how much security funds you deposit.
This card is great if you don’t have a credit history or your credit score isn’t the best. Almost everyone will get approved. All you have to do is put aside $50 or more as your security funds, which you will get back if you close your account.
- Annual fee: $0
- Interest rates: 19.99% to 24.99% purchases and 21.99% to 26.99% cash advances
- Rewards: Cash back
- Minimum income eligibility: None
- Other perks: Rewards Bundles, more cash back at Neo partners
- Learn more: Neo Financial Secured Mastercard Review
Neo Secured Credit
Rewards: Earn an average of 5% real cash back on purchases.
Welcome offer: Up to 15% cashback on your first-time purchases, plus a $25 welcome bonus.
Interest rates: 19.99% – 29.99% for purchases; 22.99% – 31.99% for cash advances.
Annual fee: $0
Credit limit: Starts at $50.
Credit score required: Poor or bad credit score.
Home Trust Preferred Visa Card
This no-annual-fee credit card is great if you spend money in many different categories, as you earn 1% cash back on all eligible purchases with no spend cap.
Another great feature of this Home Trust credit card is that you can use it anywhere in the world with no foreign transaction fees.
It has a low minimum income requirement of only $15,000, so almost anyone can apply.
- Annual fee: $0
- Interest rates: 19.99% purchase and cash advances
- Rewards: Cash back
- Minimum income eligibility: $15,000 personal
- Other perks: No FX fees, purchase security insurance
- Learn more: Home Trust Preferred Visa Card Review
Best Annual Fee Credit Cards for New Immigrants in Canada
While these credit cards have an annual fee, they offer additional perks and depending on your needs, it may make sense to pay an annual fee to enjoy more benefits.
Watch out for credit card promotions where you get a sign up bonus and may also have the annual fee waived for one year.
Scotiabank Gold American Express Card
Want to earn rewards where it counts? The Scotiabank Gold American Express card offers an industry-leading 6 points per $1 spent at participating grocery stores (Sobeys, Safeway, and several others); 5 points per $1 spent at restaurants, fast food, food delivery, food subscriptions, entertainment, and other eligible grocery stores.
In addition, you earn 3 points per $1 spent on gas, daily transit, and select streaming services; and 1 point per $ spent on everything else.
This card waives the 2.5% foreign transaction fee, offers a discounted Priority Pass membership and you get free comprehensive travel insurance (8 types).
New applicants enjoy 20,000 bonus points ($200 value) when they spend $1,000 in the first 3 months, and an additional 20,000 points ($200 value) when they spend $7,500 or more in the first year.
- Annual fee: $120
- Interest rate: 20.99% purchases and 22.99% cash advances
- Minimum income eligibility: $12,000
- Rewards: $400 value sign-up bonus, and VIP benefits
- Other perks: AMEX Invites
- Learn more: Scotiabank Gold AMEX review
Scotiabank Gold American Express
Rewards: Earn 5x Scene+ points/$1 on restaurants, food delivery, and grocery (up to 6x at some stores); 3x points/$1 in gas & travel; 1x points/$1 everything else.
Welcome offer: Get up to 40,000 points ($400 value).
Interest rates: 20.99% on purchases; 22.99% on cash advances.
Annual fee: $120
American Express Cobalt
The AMEX Cobalt card is one of the best travel credit cards in Canada.
Earn up to 5 points per $1 spent on grocery, restaurants, and food delivery. You also get 3 points for every $1 spent on streaming subscriptions, 2 points for every $1 spent on gas and travel, and 1 point per $1 spent on all other purchases.
This card offers comprehensive travel insurance benefits, rental car insurance, purchase protection, and extended warranty coverage.
- Annual fee: $155.88
- Interest rate: 20.99% on purchases and 21.99% on cash advances
- Rewards: points and comprehensive travel benefits
- Minimum income eligibility: N/A
- Learn more: AMEX Cobalt vs. Scotiabank Gold AMEX
American Express Cobalt Card
Rewards: Earn 5x pts per $1 spent on food & drinks; 3x pts on streaming subscriptions; 2x pts on travel; 1x pts everywhere else.
Welcome offer: Get up to 15,000 bonus points in the first year.
Interest rates: 20.99% on purchases and 21.99% on cash advances.
Annual fee: $155.88
Scotiabank Passport Visa Infinite Card
This top travel rewards card is one of the best within its category in Canada.
You start off with a sign-up bonus worth $250 (25,000 points) when you spend $1,000 in the first 3 months, and an extra $100 (10,000 points) when you spend $40,000 in the first year.
Cardholders enjoy no-FX fees, 3 points per $1 spent at select grocery stores; 2 points per $1 spent on other grocery purchases, dining, entertainment, and daily transportation, and 1 point per $1 for everything else.
The Scotiabank Passport Visa card comes with comprehensive travel insurance (12 types), purchase security, car rental insurance, purchase protection, and extended warranty coverage.
- Annual fee: $150
- Interest rate: 20.99% purchase and 22.99% cash advances
- Rewards: $350 value sign-up bonus
- Minimum income eligibility: $60,000
- Other perks: Free Priority Pass membership with 6 free airport lounge visits (worth $379) per year
- Learn more: Scotiabank Passport Visa infinite review
Scotiabank Passport Visa Infinite Card
Rewards: Earn 2x Scene+ points/$1 on groceries, dining, entertainment, and daily transit; 1x points/$1 everything else; 6 free airport lounge passes/year; no FX fees.
Welcome offer: Get up to 40,000 points ($400 value).
Interest rates: 20.99% on purchases; 22.99% on cash advances.
Annual fee: $150 (waived in the first year)
BMO Air Miles World Elite Mastercard
The BMO Air Miles World Elite Mastercard is considered to be one of the best Air Miles credit cards in Canada.
It offers a welcome bonus of 2,000 miles, and you earn 1 mile per $10 spent. Additionally, you get a complimentary membership in Mastercard Airport Experiences provided by Loungekey (plus 2 free passes annually), comprehensive insurance coverage, and car rental discounts.
- Annual fee: $120; waived in the first year
- Interest rate: 20.99% purchases and 22.99% cash advances
- Rewards: points and VIP perks
- Minimum income eligibility: $80,000
- Other perks: Mastercard World Elite benefits
- Learn more: BMO Air Miles World Elite Mastercard review
Scotia Momentum Visa Infinite Card
Ranked as one of the best cash back credit cards in Canada, the Scotia Momentum Visa Infinite is worth checking out.
You get 4% cash back on groceries, recurring bill payments and subscription purchases like Netflix, 2% on gas and daily transportation, and 1% cash back on all other purchases.
In addition, cardholders enjoy a comprehensive insurance package (11 types), including mobile device insurance.
There is also a 10% welcome cash back bonus on all purchases in the first 3 months, with a $2,000 spending cap at this rate (valued at $200).
- Annual fee: $120; waived in the first year
- Interest rate: 20.99% purchases and 22.99% cash advances
- Rewards: cash back and comprehensive insurance
- Minimum income eligibility: $60,000
- Other perks: Visa Infinite benefits
- Learn more: Scotia Momentum Visa Infinite review
Scotiabank Momentum Visa Infinite Card
Rewards: Earn 4% cashback on groceries & recurring bills; 2% cashback on gas & daily transit; 1% cashback on everything else.
Welcome offer: Earn 10% cashback in the first 3 months on up to $2,000 spent ($200 value).
Interest rates: 20.99% on purchases; 22.99% on cash advances.
Annual fee: $120
Types of Credit Cards in Canada
Credit cards can be broadly categorized as having an annual fee or no fees.
A credit card with an annual fee means you pay a one-time fee each year to keep your credit card account open. Some cards break the annual fee into monthly payments, such as some American Express credit cards. Annual fees can range from $29 to $699 or higher on a premium credit card.
A credit card without an annual fee means you don’t pay a fee to keep your account open.
Apart from annual fees, all credit cards have service charges based on how you use them. Popular fees to watch out for include:
Interest charges: This fee usually ranges from 12.99% to 24.99% and applies when you don’t pay off your balance in full each month. There is a 21-day grace period in which interest is not charged on your balance, and if you pay off your card on time, you can avoid interest charges altogether.
Cash advance fee: When you use your credit card to withdraw cash at an ATM, you will be charged a cash advance fee. Interest is also charged starting immediately on the amount withdrawn. In general, you should avoid using your credit card for cash-like transactions.
Foreign currency transaction fee: Unless your card specifically waives foreign exchange transaction fees, you will pay a 2.5% fee (or higher) when you use your Canadian credit card to make payments in a foreign currency (either in Canada or abroad).
Balance transfer fee: A credit card may allow you to transfer your existing credit balances from another credit card. This process is known as a balance transfer. A balance transfer fee is often charged when you do this and can range from 1% to 5% of the amount being transferred.
Over-the-limit fee: When you exceed your credit card limit, the credit card company may charge a fee.
Processing fee: Businesses in Canada can now charge you a processing fee when you make payments using a credit card. They can do this to offset the interchange fees they would otherwise need to pay to Visa, Mastercard, or American Express, depending on your card type.
Credit cards can also be categorized based on their function and rewards type:
- Cash back credit cards
- Rewards credit cards
- Regular or unsecured credit cards
- Secured credit cards
- Student credit cards
- Business credit cards
- Low-interest credit cards
- Balance transfer credit cards
- US Dollar credit cards
- Store credit cards
- Charge cards
Cash back credit cards: A cash back credit card will return a percentage of your spending to you in the form of “real cash.” How you can redeem this cash back varies for different cards. You may be able to redeem cash back as a statement credit (to pay off all or a portion of your balance) or for merchandise, gift cards, travel rewards, and more. Cash back rates may differ depending on what you are paying for.
One of the best no-fee cash back credit cards is the Tangerine Money-Back Credit Card. For an annual fee card, you could consider the Scotiabank Momentum Visa Infinite Card.
Rewards credit cards: This is a broader definition for credit cards that offer points, cash back, or other rewards. You can redeem rewards earned in a variety of ways. Many travel credit cards fall into this category, including the American Express Cobalt Credit Card and Scotiabank Passport Visa Infinite Card.
Regular or unsecured credit cards: These are the most common types of credit cards. They do not require a security deposit, and you get a credit limit which is essentially access to a loan. Unsecured credit cards may or may not have annual fees.
Secured credit cards: These credit cards are designed for individuals with poor credit or no credit history. They are easier to qualify for and require a security deposit which is also the credit limit. For example, if you put down a $500 collateral for the Neo Secured Mastercard, your credit limit is equivalent to $500.
When you no longer need a secured credit card, you can close your account, and your security deposit will be returned to you if your account was in good standing (i.e. you don’t owe the credit card issuer money). Secured credit cards report your transactions to the credit bureaus like regular credit cards and can help improve your credit score). For more secured card options, click here.
Student credit cards: Student credit cards allow students to build their credit history and are easier to qualify for with limited credit. They usually have no annual fees. Here are some of the best student credit cards.
Business credit cards: These are credit cards designed for small and large businesses. They make it easier to track business purchases and keep business finances separate from personal ones.
Low-interest credit cards: Compared to the average credit card purchase interest rate of around 20%, low-interest credit card rates are much lower. That said, they rarely offer rewards and usually have annual fees.
Balance transfer credit card: You can use a balance transfer credit card to pay off one credit card while moving the balance owing on it to another credit card. This makes sense to do if a credit card is offering you a lower interest rate or if it is offering a promotional interest-free period, such as a 0% interest rate for 6-12 months. Watch out for balance transfer fees ranging from 1% to 5%.
US Dollar credit cards: This refers to credit cards denominated in US dollars. They can help avoid FX transaction fees if you regularly spend USD or travel to the United States.
Store credit cards: Refers to a credit card issued by a retailer or store, such as PC Financial credit cards for Loblaws stores. Store-branded credit cards may be easily approved when you apply; however, watch out for higher interest fees, and there may be limits to where you can redeem rewards.
Charge credit cards: A charge card has no pre-set spending limit and requires you to pay off your full balance each month. They may apply a hefty late payment fee and interest charges if you fail to do so. An example of a charge card is the American Express Aeroplan Card.
How To Apply For a Credit Card in Canada as a Newcomer
If applying at the bank where you are opening a bank account, you will already be required to provide documentation showing you are a legal resident of Canada.
Required documents:
- Your Passport
- Confirmation of Permanent Residence (CoPR) or Permanent Resident Card
- Social Insurance Number (SIN)
If you are a student, you will need to show:
- Your study permit (IMM 1442) and/or
- Proof of enrollment at a post-secondary educational institution
If applying for a credit card online, simply visit the website of the financial institution and fill out their online application. You may need to upload the necessary documents to finalize the process.
Makes things easier on yourself by opening a credit card account and free chequing and savings accounts at the same bank. When you know your way around better, you can easily open financial accounts at multiple banks and take advantage of the perks each one offers.
Why You Need a Credit Card as a Newcomer
My mum has always been against using credit cards. After hearing all kinds of horror stories about how credit card debt has ruined people’s lives, her advice when I first travelled abroad was to stay away from credit cards.
Alas, life in Canada is very different from in Nigeria, and unless you have the cash to pay outright for a car or home, you will have to apply for a credit card or loan at some point.
Lenders want to see that you have a history of paying back your debts on time, and they assess this using your credit report.
Credit card issuers and other lenders (e.g. banks) send regular reports to credit bureaus, and this information is recorded on your credit report and informs your credit rating.
Over time, when you use credit cards wisely and pay your bills on time, your credit score increases from poor to bad and then excellent.
A good credit score makes it easier for you to qualify for competitive rates when you need a personal loan or mortgage. You can also ask your bank to increase the lower credit limit you started with when your credit score improves.
Interested in what your credit score is? You can check it for free using Borrowell.
Some other reasons why you may want to get a credit card (in addition to building your credit history) are:
Greater Security: Most credit cards come with zero-liability protection, which means that if your card is used for unauthorized transactions, you are responsible for the loss. Cash in the bank often does not offer this protection.
Free Rewards: You can enjoy free rewards and perks from your credit card. This could be in the form of:
- Earn cash back, i.e. earn cash back on every dollar you spend using your card.
- Earn points: earn points you can redeem for free flights, merchandise, hotels, car rentals, and more.
- Insurance coverage such as comprehensive travel insurance (e.g. emergency medical, trip cancellation, hotel/motel burglary and travel accident) insurance, extended warranty, purchase protection, and more.
Interest-Free Loan: A standard unsecured Canadian credit card offers an interest-free period of 21 days or so. During this “grace period,” you don’t pay interest fees. A 0% balance transfer credit card can save you a lot of money in fees for 6 months to 1 year.
Convenience: Some merchants simply do not accept any other form of payment other than a credit card. Renting a car? booking a flight? Shopping online? Need quick cash for emergencies? A credit card works really well…you just need to remember to pay off your outstanding balance on time.
Closing Thoughts
To get started, apply for a credit card when you are opening your first bank account in Canada. If you go with one of the newcomer chequing account offers at the big banks, it is likely you would be able to get a credit card approved at the same time.
In some cases, newcomers or people with no credit history may be required to put down a security deposit to be eligible for a credit card, i.e. secured credit card. Or you may decide to get a second credit card from another financial institution so you can grow your credit history and score faster.
After obtaining a credit card, plan to grow your credit score by paying off your balance on time and in full and limiting your credit applications.
For more ideas on how to improve your overall financial picture, check out this post on how to raise your credit score fast.
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