---

Best Credit Cards in Canada

Overview

What is the best credit card in Canada? This article is chock full of information on this topic.? Have even more questions? Check out our discussion below in the blog comments!!

When credit cards were first introduced, there were very few types of benefits that you could have. The novelty of a credit card was that you were able to spend money that you didn't have, and there was the convenience of not having to carry cash everywhere. You could make one payment at the statement date and use the credit card companies money for interest free. Interest rates were fixed, and everybody who carried a balance, paid the same amount.

As charge card became more popular and credit card companies became more abundant, more and more benefits were offered to the consumer. At the same time consumers became more knowledgable about credit cards and were demanding more based on their usage.

As soon as different credit cards benefits were available and we had choices, there were "best credit cards" for different spending habits and credit types.

If you have good credit and carry a balance each month then the best credit card for you is a low interest credit card. If you have good credit but don't carry a balance then the best credit card for you are the rewards type credit cards. If you have bad credit or new credit and carry a balance then the best credit card in Canada for you is a low interest secured credit card. If you have bad credit and don't carry a balance then a Guaranteed card with points will be best for you.

Good Credit - Carry A Balance

Low Interest Rate

Apply Today! Capital One - SmartLine™ Platinum MasterCard

If you regularly carry a balance on your card then it's better if you use a low interest credit card. This is a card that gives you lower rate than other cards, based on your credit history. You don't typically receive alot of other perks with this type of card, and the main benefit is that you will save money as long as you have a balance outstanding.

The credit card interest rate that is always critical when you are choosing a card is not the only thing that contributes to how much you pay on your billing statements every end of a month. Interest rate and interest charge are not the same. Both of which have meaning and purpose of their own. For the interest rate, it is the percentage of balance in the credit card used in which the interest charge is based on during computation of payments. On the other hand, interest charge is the amount of money you are going to pay for the interest which was mentioned above that it is based on the interest rate.

For example:

When a credit card has a balance of $2000 at present in the account, this is then multiplied with the interest rate set for the credit card which is usually ranging from 15% to 18% percent depending on the card company.

Illustration:

credit balance X interest rate = total interest charge per year

$2000 X 15% or 0.15 = $300

So, the total interest charge that you are going to pay would be $300.

Apply Today! Capital One - Gold MasterCard®; 11.9% Guaranteed for 3 Years (as long as you pay your bills on time)!

There are 3 ways to determine the interest charges for the credit card user. The card company must stipulate the charges as well as the terms and conditions of the credit card they are going to issue on you. The internet rate is determined on a monthly basis by the credit card company. Check how it is done to educate you and for you to be able to understand how they do it.

• Adjusted Balance

- This starts from the balance you had coming from the previous month card usage. The card company adds all the charges for that month and deducts any payments you have for that certain bill. The company then computes for the adjusted balance. The adjusted balance then is multiplied by the interest rate. But the annual interest rate is divided by 12 months in order to get the interest charge every month. This will then reflect on your billing statement. This type of computation favors the credit card user.

• Average Daily Balance

- In this case, the company is keeping track of your everyday credit balance. The company adds charges and subtracts payments made by the card user. This is the usual way of card companies in computing for interest charges. At the end of a month, all the charges and payment made daily are average to get a single mount where the interest charge is based for its computation.

For example:
During the first 20 days, the client’s balance is $150 and on the 21st day, the card holder used the card to buy a mobile phone for $300. This will then be computed to get the average daily balance. So, (20 days X $150) + (10 days X $300) divided by the total number of days in a month which is 30 days. The average daily balance would be $200.

• Previous Balance

If the adjusted balance method favors the card user, then previous balance method favors the card company. Then again, this method is the simplest way and easily understood by the card holders. In computing for the charge interest, it starts with your balance in a month. For example, you have a balance of $300 at the start of the month and the client paid $100 during the month, the company will be using the balance at the start of the month which is $300. The following month, the company will charge interest on the starting balance less the payment which is $200 even if your bill has reached $500 on that month. This is how previous balance method is computed.

Learning from the different methods on how interest charges are determined, will help the credit card applicants to get the card that is best for them. And these cards are those cards that don’t give much trouble on the interest rate as well as the interest charges that will reflect in the billing statement. This will also be a guide for the card holders to pay on time with their credit card charges or balances to avoid these unnecessary expenses.

Good Credit - Does Not Carry A Balance

Rewards Cards



This type of credit cards are cards that give points which is redeemable for rewards. Most of these cards are point based on their offers. Usually, every dollar spent has an equivalent point coming from the card company or from their tied up shops or merchandisers. They also give double points when they are celebrating anniversaries or special events and also when using the card to a sponsoring company. Everything for these cards is rewards, gifts and surprises. Card users that use these kinds of credit cards want to have convenience especially when they are to settle the payments of their cards every end of a month. Once they have paid their balances, they are able to get a lot of rewards over the amount of usage they have made with their cards. They are collecting points and redeeming rewards as much as they desire. But, this usually depends on the amount of accumulated points the card users have gained and collected.

However, these cards come with an annual fee depending on the company. Occasionally, companies waived these annual fees but this is done when the card holder pays off the balance regularly every end of the month. What makes this card more interesting is that these cards offer less annual fees or no annual fee charges.

New Credit / Bad Credit

For a card applicant who doesn’t have a credit history, these cards are available. These cards are used to build up a credit history in order for them to be qualified to apply for conventional cards or special kind of cards. Credit cards under this category are also for those card holders who encountered problems in the past with their finances. This is caused by either not being able to pay their balance or they got bankrupt due to too much credit usage. The credit cards offered in this portion are categorized into three. The categories go as follows: Secured credit cards, Carry a Balance and Don’t Carry a Balance.

Secured Card

Apply Today! Capital One - Guaranteed Secured MasterCard®

Credit card companies are catering card applicants who don’t have a past history with their past use of credit cards. Sometimes, these clients can’t avoid having bad credit history which could also affect their credit rating. Some don’t have any credit history yet as they are first timers in applying for a credit card. These credit cards are the key in getting a good start of building an excellent credit history again. These cards also offer less interest which means less risk for the client to be troubled in paying their balances. All of the card applicants are guaranteed to have the card which means that whether you are a first time credit card applicant or not, everything is granted.

Carry A Balance

Credit balance is what comprises the credit card. The card holders can use the balance within the card until reaching the credit limit. But it doesn’t stop there since the client can extend the usage of credits beyond the credit limit but certain charges will be given. Low rate cards are offered and this does not let the card users get into trouble. These credit cards are the key in getting a good start of building an excellent credit history again. This cards are for clients who has bad or fair credit as well as new credit card holder who has none or limited credit. In addition, a client who has bad credit history belongs in this category.

Don't Carry a Balance

Coming from the category, it says don’t carry a balance. This means that these cards don’t have a credit to use but is based on the monthly payment you are making every month. But the focus of the card holders here is the rewards given. So many different rewards are offered with these cards. It may be travel, merchandise or gift rewards. Best Credit Cards in Canada. Card holders are considered convenience users as they use the card credit and pay them off each month when their billing statement is received. They spend less but get many rewards points in the process. The acquired points can then be redeemed with rewards. In addition, cash backs are given in certain percentage of the purchases made.

For the perspective of this article, the best credit cards in Canada relate to two categories: Low Interest Credit Cards and Rewards Credit Cards. Good Credit And Bad Credit.

Low Interest Credit Cards

Apply Today! Low Rate Guaranteed MasterCard®

Carry a balance or Not

Typically if you carry a balance, then you will need the lowest interest credit card possible to keep your costs down. You must keep in mind that these interest charges are being added up to your bill and you must settle this every month. The higher balance you are not paying with the company, the bigger the interest rate. That is why credit card users are certain with the interest rate. They go for a card that has very low interest rate to keep them safe from any financial problems in time of paying the bills. Furthermore, when the interest is low, they are not afraid to spend much compared to high interest charging cards which almost doubles your balances during settlements.

Types of Interest Rates

Based on your usage of the credit cards there are various types of interest rates charged.

Interest rates are the card companies’ source of revenue. There are specific interests that these card companies charge the card users depending on what kind of transactions they are dealing with. Usually, card users are subjected to annual interest rate because this is automatically activated once a card user has started to purchase or use the credits of the card. But it will still depend on the cards you have in hand. For cash back cards, they have a different rate compared to a regular or ordinary conventional card. The interest rate for cash back cards is at 17% based on the average of the different card issuers. For cards that have high credit limits and have exclusive benefits and features, it is commonly at 22%. For low interest rate credit cards, the card issuer gives the lowest possible interest rate which is at 10%. Other variable cards then have an interest of 14%. Other interest rates are charged only when they have made a certain transaction like balance transfer or cash advance. The average interest rate that the card issuer gives to the client in doing a balance transfer is at 16% where in cash advance service, it is at 17%.

This interest rate is charged and added to the billing statements given after end of a month. Interest rates are one way of the card issuer to remind their card holders that they must pay the amount of credits they have used or settle what is reflected on the account. These interest rates vary in different percentage but card users can surpass this only if they are punctual in paying what they need to pay. Clients need on to take note of their payables every month and once settled, paid interest charges won’t be given or added to their accounts. Another tip for the card holders is that they must not use the card beyond what they can afford to pay. When a client gets into financial trouble, this is the best time for interest rates to barge in to your account building your billing statement very fast to the point that you can no longer pay what is due for payment. Bankruptcy will then set in making everything miserable for the card holder.

Apply Today! Capital One - Aspire™ Gold MasterCard®

Introductory Interest Rates

An introductory rate is an interest rate that is given at the start of the card holder’s use of the card. It is only available for a specific span of time. After the time has expired, the interest rate will return to its original rate. Best Credit Cards in Canada. Commonly, the introductory rate ranges from 0% to 4%. This is one way of the card issuers to attract card applicants because this can give much saving for the client when introductory rates are low or at 0% for 4 months up to 12 months. Cardholders can best take advantage of the low introductory rate by paying the credit used before the rate gets back to its usual rate.

Purchase Interest Rates

This interest rate varies depending to what card you have applied for. If you have gotten the low interest rate cards, then the purchase interest rate is low compared to other cards. What differs then are the benefits and features of the cards. For ordinary cards, interest rate plays at around 16% to 19% compared to low interest card which is at 12% to 14%. This purchase interest rate is charged once you have not settled your payable before or on the day of the due date. The interest amount is added directly to your account and when the next billing statement is received, it is reflected on the account.

Apply Today! Capital One - Aspire™ World MasterCard®

Balance Transfer Interest Rates

Average balance transfer interest rate is at 16%. This is based on the different rate coming from various card issuers. Client who transfers balance to their other credit cards try to check and compare the rate to where they are able to save more. Best Credit Cards in Canada. Most of them transfer balance from their high interest cards to their low interest cards so that when they are not able to pay the bills on time, they are charged only with low interest rate. But the client settles the payable bills of the high interest credit card on time so that no interest is charged in the account. They just keep on doing balance transfer but the balance goes to the low interest card where that card will be utilized for purchases or other transactions.

Cash Advance Interest Rates

For cash advances, the common interest rate is at 17% after averaging most of the card issuers’ respective rates. This type of transaction is not too common but is there in case the card holder wants to use the service. Usually, card users depend on the credits they have used. Cash advance are utilized when the client does transactions that involve cash. Most of the businesses now accept credit cards to where the payment is deducted. Almost all credit cards are accepted to millions of locations around the world. It is then safe to bring only a credit card rather than bringing along cash. The client will also be able to trace out the expenses made because in the billing statement, everything is in detail or itemized on where you have used your credits.

Rewards Cards

We're assuming with this discussion that any person that uses a rewards credit card DOES NOT carry a balance on his/her account.

Dollars spent

If you don't carry a balance on your card then certain cards give more benefits. If you're a higher spender, it is more beneficial to use certain cards, as they have greater benefits and rewards. Every time you spend a dollar, it is equivalent to a point that you can collect. These points can then be redeemed with rewards offered by the card issuer or the companies that they have tied up with. Usually, rewards come in gift certificates, merchandises or the services that their companies offer.

If you are a convenience user of the credit card then this cards give much advantage on you. The client can spend less but gets so many rewards by just collecting points and taking advantage on the offers that the card companies give. Some card issuers give double points offer or bonus points which help the card holder gather much point and redeem it with the rewards.

Travel Rewards Points Discussion

Types of Points Collected

The points that are collected by the card users are usually coming from the purchases they have made. Some comes from the dollars spent in which every dollar is equivalent to a point. Other cards give extra or bonus points when special event happens like anniversaries or other events. These points are accumulated and would be redeemed or exchanged with rewards that are offered by the company. Travel, hotel reservations, merchandise, insurance and gift certificates are the usual rewards offered.

Annual Fees

This is a fee charged by the company for having their card. This is one of the sources of the card companies’ revenues and in payment of the service they have provided. Annual fees usually have an average range from 0% to 10% depending on the card company. The card issuers waived the first year of the annual fee but would charge the client of the amount on the succeeding years of card usage. Annual fees are waived by the cards company even if it’s not on the first year once the card holder pays the billing statement given on time. Another way is when the card user most of the time reaches the credit limit of the card and settles the payable before or on the due date of payment. This will give savings to the card user as the annual fee comprises a certain amount.

Insurances Offered

The credit card comes with many benefits and one of it is the insurance that the card gives to the card user. There is a great deal of insurance provided by the card companies but it really depends on the card you have applied for. The card can give accidental insurance, financial insurance, merchandise insurance and a lot more. These are offered as a way of a marketing strategy of the company. This will attract the clients to apply for their cards as the cards have a lot of benefits and features being offered.

References

Best Capital One Credit Cards Canada

Best MasterCard Credit Cards Canada

Best Secured Credit Cards Canada

External Links

Canadian Credit Cards

Financial Consumer Agency of Canada

Determining Credit Card Interest Charge

SEE ALSO

Canadian Credit Cards - Gas Cards

Rewards Credit Cards

CashBack Credit Cards

BEST CREDIT CARDS IN CANADA