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Credit card pros and cons

Determine whether a credit card is right for you with our comprehensive list of credit card pros and cons.

Credit cards can be a convenient way to manage your finances – but they can also be expensive and risky. If you’re deciding whether or not a credit card is right for you, it’s best to compare some of the main benefits and disadvantages to help you make your decision. If you’re still unsure, we’ve created a list of who a credit card may be best suited for – and who should perhaps avoid one.

9 benefits of using a credit card

Some of the perks that come with paying on plastic include:

  1. A credit card is safer than carrying cash. While there’s only a small chance of having lost or stolen cash returned, a credit card can quickly be cancelled if you lose your wallet. Most financial institutions also have security processes in place to protect you if your card has been lost or stolen, or if you suspect your account has been used for a fraudulent transaction. If you’re in any of these situations, make sure to contact your bank to report the issue as soon as possible.
  2. A credit card can build your credit rating. Your credit card account details and payment history make up a key part of your credit profile. If you keep your account in good standing, this information will help you build up a good credit score, which could increase your chances of approval – and better interest rates – for other products such as car loans or a mortgage.
  3. You can get interest-free days. If you pay your balance in full before the statement period ends, you can be rewarded with interest-free days on future purchases for a set period of time. This is also known as the interest-free grace period.
  4. Earn rewards points when you spend. Rewards and travel credit cards allow you to earn points on every dollar you spend on eligible purchases, such as gas and groceries. Rewards credit cards let you earn points to redeem with the providers rewards program for perks like flights with partner airlines, merchandise from the providers store or cash back. Travel rewards credit cards, on the other hand, let you earn flights with specific airline loyalty programs.
  5. You can request a chargeback if you’re unhappy with a product or service. You can request a chargeback through your credit card company if you have a dispute with a merchant – either in-store or online.
  6. Credit cards work in any currency. Although foreign transaction fees usually apply, you can use your credit card overseas to make purchases in a foreign currency. There are even credit cards that waive fees for international purchases, which could be useful if you often shop at overseas online stores or you’re a frequent traveller.
  7. Credit cards give you an emergency line of credit. Credit cards can be a financial safety net if you don’t have enough cash or savings to cover any unexpected costs that arise. Remember that you have to repay everything you owe, though.
  8. Credit cards often have complimentary extras. Credit card features such as travel insurance, purchase protection and extended warranty insurance can save you money and give you peace of mind. Other value-adding features include complimentary flight offers, airport lounge passes and even early access to ticket sales.
  9. You can consolidate debts and save money on existing balances. Balance transfer credit cards allow you to move existing high-interest debts to a new account with a low or 0% promotional interest rate. This can save you money on interest charges and help you pay down your debt faster.

7 disadvantages of using a credit card

The downsides of spending with a credit card include:

  • Paying high interest rates. If you carry a balance from month-to-month, you’ll pay interest charges. Purchase and cash advance interest rates can be as high as 22% APR, sometimes higher, so you can end up paying hundreds or even thousands more than you initially charged in interest if you’re unable to make repayments in full each month.
  • Credit damage. Missed credit card repayments and ongoing debts are recorded on your credit file and can impact your chances of getting a loan down the track, or getting a loan with a competitive interest rate.
  • Credit card fraud. There are a range of fraud schemes that target credit cards. While you can be compensated for illegal transactions on your account, dealing with credit card fraud can still be a time-consuming and stressful process.
  • Cash advance fees and rates. It’s very expensive to use your credit card to withdraw cash or make other “cash equivalent” transactions, such as buying foreign currency or gambling. Using a credit card for a cash withdrawal will attract a cash advance fee worth around 3% of the total transaction amount. It also typically attracts an interest rate of 19.99–21.99% right away. There is usually no interest-free period offered with a cash advance transaction.
  • Annual fees. While you can often get debit cards without annual fees, many credit cards have them. These can cost as little as $25 per year, or as much as $800 depending on the card that you choose. Generally, the more perks you want, the higher the cost of the card annually. If you want to avoid this charge, you can consider a no annual fee credit card — but make sure you look at all the other features to help find a card that works best for you.
  • Credit card surcharges. Businesses sometimes apply a service fee, also known as a convenience fee or a surcharge, when you pay with a credit card. This fee is usually around 0.5–3% of the total transaction cost and is charged for the convenience of paying with plastic. If you’re using your credit card in Canada, a merchant is legally supposed to notify you of the service fee before charging you.
  • Other fees can quickly add up. Depending on your card, you could be charged fees when you miss a payment, fees if you spend over your credit limit, fees for overseas transactions, balance transfer fees and even some rewards programs fees. If you carry a balance or don’t have access to interest-free days, there’s also a good chance interest will be applied to these charges.

Compare credit cards

If you’re ready to get a credit card, the next step is to pick one that best fits your needs. Below, you can search through different types of credit cards.

1 - 10 of 43
Name Product Welcome Offer Rewards Purchase Interest Rate Annual Fee Min. Credit Score Description
RBC Cash Back Mastercard
Up to 2% cash back
Min. recommended credit score: 650
Neo Credit Mastercard
Get $25.00 + up to 15% cash back
Up to 5% cash back
19.99% - 29.99%
Min. recommended credit score: 600
Get $25 when you sign up for the Neo Financial Mastercard. Plus, earn bonuses like 15% cashback on your first purchase at most partners, and earn an average of 5% cashback at partner stores and at least 1% cashback guaranteed.
6,000 points
1.5 points per $1 spent
Min. recommended credit score: 660
Get 6,000 Avion points when you get approved for the card.
Tangerine World Mastercard
10% cash back
Up to 2% cash back
Min. recommended credit score: 600
Earn 10% cash back (up to $100) when you spend $1,000 in the first 2 months. Valid until October 31, 2024. Plus, get a 1.95% interest rate on balance transfers for the first 6 months.
American Express Cobalt Card
15,000 points
Up to 5x points per $1 spent
Min. recommended credit score: 700
Earn up to 15,000 Membership Rewards points in your first year. Earn 1,250 Membership Rewards points for each monthly billing period in which you spend $750 in purchases. That’s up to $150 towards a weekend getaway or concert tickets.
BMO CashBack Mastercard
5% cash back
Up to 3% cash back
Min. recommended credit score: 660
Get 5% cash back on all eligible purchases in the first three months of card membership (up to max. spend of $2,500). Plus, get a rate of 0.99% on balance transfers for 9 months. A 2% fee applies to transferred balances.
Tangerine Money-Back Credit Card
10% cash back
Up to 2% cash back
Min. recommended credit score: 600
Earn 10% cash back (up to $100) when you spend $1,000 in the first 2 months. Valid until October 31, 2024. Plus, get a 1.95% interest rate on balance transfers for the first 6 months.
12,000 points
3 points per $1 spent
Min. recommended credit score: 660
Get 12,000 Avion points when you get approved for the card.
BMO eclipse rise Visa Card
Up to 5 points per $2 spent
Min. recommended credit score: 660
Earn up to 25,000 bonus points.
BMO Preferred Rate Mastercard
0.99% rate on balance transfers for 9 months
$0 annual fee for the first year ($29 thereafter)
Min. recommended credit score: 660
Get a rate of 0.99% on balance transfers for 9 months with a 2% transfer fee. Plus, get the $29 annual fee waived by your first anniversary.

Quick comparison

Advantages versus disadvantages of using credit cards comparison table

Should I use a credit card?

Credit cards are suited to certain types of people, but not others. As well as considering the pros and cons, you may like to look at the following factors to help you decide if a credit card is right for you.

A credit card may suit you if you:

  • Are at least 18 years of age
  • Are a Canadian citizen or a permanent resident
  • Have a regular source of income
  • Regularly pay your bills on time
  • Want to keep certain transactions separate from your everyday bank account
  • Are looking to earn rewards for your spending
  • Need more flexible cashflow
  • Can afford to pay a little extra for the convenience
  • Often shop online

A credit card may not suit you if you:

  • Don’t meet the age or residency requirements
  • Often struggle to pay bills on time
  • Don’t have a regular source of income
  • Have poor spending habits
  • Can’t afford annual fees or interest charges
  • Have bad credit
  • Are happy to just use a debit card

Bottom line

If you’re thinking about getting a credit card, it’s important to consider the benefits and disadvantages they offer based on your own personal financial circumstances. As well as helping you decide whether a credit card is right for you, this process can help you narrow down the range and type of credit cards to compare so that you can find an option that works for you.

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Adrienne Fuller's headshot
Head of publishing and editorial

Adrienne Fuller is the former head of publishing at Finder US. With a decade of experience creating guides in finance and education, she aimed to deliver the accurate and transparent information she wished she had when she made some of life's important financial decisions. Adrienne has a BA from Colorado College and loves to hike with her two Catahoula dogs. See full bio

Emma Balmforth's headshot
Co-written by


Emma Balmforth is a producer at Finder. She is passionate about helping people make financial decisions that will benefit them now and in the future. She has written for a variety of publications including World Nomads, Trek Effect and Uncharted. Emma has a degree in Business and Psychology from the University of Waterloo. She enjoys backpacking, reading and taking long hikes and road trips with her adventurous dog. See full bio

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