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Finder’s free service makes it easy to compare credit cards. Here’s a comprehensive guide to help you navigate your choices and understand the features and fees that come with this convenient source of credit.
How credit cards work
Credit cards are a form of unsecured credit that allows you to borrow money from a credit provider without having to pay it straight away. You’ll have a minimum of 21 days to repay the balance before you’ll start to incur interest – with some cards offering up to 55 days interest-free. Credit cards are different from debit cards which are tied to actual money in a savings account. While banks are the first place most people will go for a credit card, there are many credit unions, stores, supermarkets, airlines and stand-alone credit card companies that issue credit cards too.
A wide range of credit cards exist on the market, including cash back, balance transfer, rewards, travel, no annual fee, no foreign transaction fee, student, business and many others. The right credit card for you will often depend on your lifestyle and your financial goals. There are also prepaid cards on the market.
We’ve chosen the cards on this page based on the providers available through Finder. These cards are not representative of the entire market. Our top credit cards offer the following:
Attractive perks for a range of spending categories including dining deals, grocery discounts and travel rewards.
Welcome deals and promotional offers for new users.
Opportunities for cash back.
Competitive interset rates on purchases, cash advances and balance transfers.
No single card will be the best choice for everyone, so compare your options before picking your new card.
How to apply for a credit card
1. Figure out what you want and need
Think about what you will use your credit card for, how often you plan to use it and which rewards and perks are of interest to you. Consider balance transfer offers, interest rates, annual fees and rewards when you compare credit cards. Compare different types of credit cards to find the one that suits your needs best.
2. Shop around
There are hundreds of credit cards on the market. Once you’ve narrowed down your options to the type of credit card you’re interested in, compare eligibility requirements and other features like interest rates, annual fees and rewards programs.
3. Fill out the application
Once you’ve picked a card, apply online and follow the steps to complete the application. You’ll need to provide personal details including your contact details, income and your Social Insurance Number. Many credit cards offer near instant approval – which means you could know within 60 seconds or less whether you’ve been approved for the card or not.
4. Get approved and receive your card
Once you’ve been approved for your new credit card, you should receive it in the mail within 7-14 days. Clear instructions will state whether you need to call to activate your card or whether you can login to your online banking.
To help you find the right card for you, there are a few factors to consider when you compare credit cards and your various options.
Your income. This is one of the biggest factors as credit card providers want to know you’re able to pay back your debt. Generally speaking, the higher your income (not necessarily from employment), the more likely you are to get approved.
Your credit score.Your credit score will play a big role in the type of credit cards available to you. The higher your credit score, the better the terms and rates that you’ll get. A score of 650 is often considered the “magic number” to get approved for a standard credit card.
Your age. You need to be at least 18 (or the age of majority in your province or territory) to apply for a credit card. If you’re young, you’re likely to have a limited credit history. You could consider student credit cards that will improve your credit score over time and qualify you for better deals.
Your personal interests. Some credit cards offer rewards that may compliment your lifestyle and interests. If you travel overseas, an Air Miles or travel credit card might be a good choice. If you frequently buy gas at a specific gas station, you could take advantage of a credit card that offers discounts.
Your financial situation. It’s not ideal to get credit cards just to fill the gap between income and expenses. Debt from credit cards can spiral out of control if the outstanding balance is not paid back regularly. Credit cards should instead be used to help you achieve your financial goals. For example, if you need to make a big purchase that you want to pay off over time, low purchase interest credit cards could help you do this without having to pay extra in interest.
Eligibility criteria
To apply for a credit card, you’ll need to make sure you meet the eligibility criteria. Just like with any other loan application, there’s no guarantee that the application will be approved. While eligibility criteria can vary between specific credit cards, it usually includes the following:
Age. Be at least 18 years of age, or the age of majority in your province or territory. If you’re under 18, you can usually become an authorized user on a parent or guardians credit card.
Residency. Be a Canadian citizen or a permanent resident with a Canadian residential address. However, some providers offer cards to temporary residents or those on certain visas – but either way you’ll need a Canadian address.
Credit score. Many credit cards have a minimum recommended credit score that you must meet in order to be eligible for approval. While it varies between cards, the average minimum credit score tends to sit around 650.
Income. Some credit cards will require that you make a certain amount of money each year in order to qualify. Minimum annual income usually sits around $12,000, while more prestigious cards can require minimum personal incomes of $60,000 – $80,000 a year.
What are the costs of a credit card?
Repayments. You’re free to repay as much as you like as often as you like. You’re required to make the minimum repayment when your statement is issued. The minimum repayment is usually 2% or $10 of your outstanding balance. You will pay a late payment fee if you don’t make the minimum repayment by the statement due date.
Annual fee. This is the cost to own a credit card. The annual fee ranges from $0 to hundreds of dollars depending on the credit card type. The credit card annual fee is typically deducted from your available credit and accrues interest at the purchase rate if it isn’t paid in the first statement period.
Interest rates. Interest is the price you pay to borrow money. Credit card interest rates are much higher than other types of financing because credit cards are an unsecured product; financial institutions have no recourse to take your assets if you default on your repayments.
Other fees. Other fees you may run into include late payment fees, overlimit fees (a fee for spending more than your credit limit), rewards program membership fees and cash advance fees. If you’re doing a balance transfer, you will also likely incur a balance transfer fee.
Important credit card features
To get the most out of the process when you compare credit cards and ultimately choose the right one for you, it is important to understand the different features that are included within credit card deals.
Credit limit
Your credit limit is the maximum amount you can spend on your credit card at any one time. Your limit is calculated by the card provider and will depend on various factors including your credit score and your annual income.
What happens when you go over your limit will vary depending on your card issuer, but at a minimum, you’ll usually be charged an additional fee and your credit score will be affected. Other penalties might include increased interest rates, reduced credit limit and freezing your credit card until your balance is back within the maximum amount allowed.
Credit card fees
Many credit cards charge an annual fee, however some providers might waive the fee for 12 months as part of a signup deal.
A balance transfer fee is levied when you transfer your balance from one credit card to a new one and is a percentage of the transfer amount. This rate is usually between 1% and 3%, but can be as low as 0% on some cards.
Additional fees are also levied when you withdraw cash from an ATM, exceed your credit limit and use your credit card overseas.
Interest rate
The interest charge on a credit card will be shown as the APR. APR stands for Annual Percentage Rate and is the amount you’ll pay to the card issuer on top of the money you borrow. The APR includes the interest rate as well as any fees and is averaged out over 12 months.
You’ll only pay interest if you don’t pay off your balance in full before the end of the interest-free grace period.
Grace period
Credit Cards often carry an interest-free grace period during which no interest will be charged on an outstanding balance. It can also be seen as the period from when the billing cycle closes to when the outstanding amount is due on that bill. The period varies greatly between card issuers and can be anything from 21 days to 55 days.
You’ll benefit from grace periods if you pay your balance off in full every month as it’s only applicable on new purchases and, in most cases, not available on cash advances or balance transfers.
Security
Credit cards are secured by a CHIP and PIN system for physical payments and by a 3 digit security code for online payments. If a fraudulent transaction does occur, your bank or credit provider has to refund you unless they have an adequate reason for refusing such a refund.
You can also get protection for any purchases you make up to 90 days usually with purchase protection.
Rewards
Rewards credit cards are a good way of getting compensated for making purchases with your credit card. The type of rewards will vary but may include cash back, miles and rewards points.
These rewards will either pay you back a percentage of your purchase at particular retailers or reward you in points for discounts and vouchers.
Sally McMullen is Finder's credit cards and frequent flyer editor by day and a music maven by night. She's also one half of the Pocket Money podcast. Her byline can be spotted on Yahoo Finance, Dynamic Business, Financy and Mamamia as well as Music Feeds and Rolling Stone. Sally has a first-class Honours degree in Communications and Media Studies (majoring in Journalism and Professional Writing) from the University of Wollongong.
Learn how you can earn rewards and rebuild your credit score when you make purchases with the Plastk Secured Visa Card.
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finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
