Choosing the Right Credit Card Application

Comparing credit card offers can be a nightmare task if you are unfamiliar with all of the options and fine print that goes with each credit card application. Typically, all card offers now have some form of extra or bonus to entice you to select their card. What they don't tell you up front is that many of these "bonuses" also contain hidden conditions that can get you into hot water if you are not careful during the selection process.

Do you plan on carrying a balance? - Generally cards that offer reward incentives carry a higher APR, if you don't plan on carrying a balance then this does not affect you. Also many of the rewards programs have restrictions on them when you miss a payment or when your account is not in good standing.

Do you like to save a little on your retail purchases by getting cash back from the merchant? Do you have a favorite hotel you always use when doing business travel? You need to ask yourself what you will be using the credit card for first and then select the offer to match your needs, not the other way around.

Are you adding a card to your portfolio or replacing one? - If you are looking to replace a card you currently have, you want to ensure that the new card allows balance transfers; you will also want to investigate the fees associated. Many cards offer a zero interest introductory rate on balance transfers. Some offer zero interest until the balance is paid off - a very attractive incentive if you are transferring a large sum.

Reward Programs

There are many types of rewards programs and even more combinations of rewards as card issuers compete for your credit dollars. In general though cards come under; airmiles, cashback or retail points rewards.

Miles - You earn Miles for airline ticket purchases or other predetermined purchases

These cards are designed for the "frequent" flyer. If you do not fly often and are hoping to earn a trip with one of these cards think again. Miles cards almost always have a $75 - $100 annual fee. By the time you earn a flight through retail spending you will have paid this fee a few times. Generally the airline associated with the card with offer double points when you fly with them.

If you are a person who uses your credit card a lot and pay your credit card bill in full each month then this type of credit card may be worth applying for.

Points - You earn a predetermined ratio of points to dollars spent on purchases

Retail points programs are one of the most popular types of rewards offered. While each program may have slightly different options and merchant selections they all have one commonality; you earn points which can be converted to a dollar amount and used to offset a retail purchase at an approved merchant. A typical example is the "Gift Card" craze that seems to appear each holiday season.

These cards are designed for people who do a lot of retail spending. If you have a favorite store find out if there is a credit card that will reward you for shopping there.

Cash Back - receive up to 5% of your purchase back in cash when using your card for purchases

Cash back rates vary by card offer but in general you will see rates of 1 - 2% and all the way up to 5% is possible to find. Remember to pay your bill each month since you don't want to use your cash back money to pay interest charges on the balance you carry.

Cash back cards can also be tied to a service or merchant such as gas cards, hotel cards, auto rebate cards and many others.

To fully take advantage of the incentives that come with your credit card remember when applying you should ask yourself: will I be paying my bill on time each month? If the answer is no, then perhaps you should look at a lower interest rate card rather than an incentive based one.

See Also

Best Credit Cards Canada

Best Balance Transfer Credit Cards Canada

Best Cash Back Credit Cards Canada

Best Capital One Credit Cards Canada

Best MasterCard Credit Cards Canada

Best MBNA Credit Cards Canada

Best Visa Credit Cards Canada

Best Secured Credit Cards Canada

Travel Credit Cards Canada