Best Credit Cards in Canada for February 2024

Card Details: 

You can get a welcome bonus of 10,000 MBNA Rewards.  You’ll get 5,000 points once you spend $500 on purchases, and another 5,000 points when you switch to e-statements.

For the first 90 days, you can earn 4 points per dollar on restaurant, grocery, digital media, and membership and utility purchases. After that, you can earn 2 points per dollar in these categories.

You’ll earn 1 point per dollar on all other purchases. There is no annual fee. On your birthday, you’ll receive a bonus of 10% of the number of points you earned in the previous 12 months.

The card includes mobile device insurance, 90-day purchase protection, and an extended warranty (one additional year).

You can redeem your MBNA Rewards points for cash back, travel, charitable donations, gift cards, and merchandise. APPLY NOW.

Card Details: 

You can get 0.5% cash back on every purchase with KOHO. If you sign up for a premium account, you can get 2% cash back on three purchase categories and 5% when you shop at KOHO partners.

KOHO also comes with a savings account feature that allows you to earn up to 4.5% savings interest on the entire account balance.

You can get up to 6% extra cash back when you shop at KOHO partners. KOHO’s prepaid card is digital-first and comes with an accompanying app. However, it is on the Mastercard network, so it’s accepted anywhere Mastercard is taken. The premium account with the extra 2% cash back costs $9 per month or $84 per year.

For an extra $10 a month, you can open a line of credit for the sole purpose of building credit. It will be reported to credit bureaus each time you pay it down.

Optional plan upgrades are also available with a 30-day free trial. After that, the Extra plan is $9 monthly, while the Everything plan is $19 monthly. Both plans have extra cash back and up to 4.5% savings interest. APPLY NOW.

How Credit Cards Work

A credit card is a payment method that allows you to use the credit provided by your issuing financial institution. You are borrowing money when you swipe your card at a store that accepts Mastercard, Visa, or American Express to make a purchase.

Your credit limit will decrease by the amount you spend on your credit card. Your credit card statement will show you the total amount of all purchases made with your card. You can pay your bill until your following statement is released. You will be charged interest if you do not pay your credit card bill before the deadline and don’t make the payment within the grace period (typically 21 days).

Unpaid balances carry over to the following month. You’ll also be charged a fee if your purchase exceeds your credit limit. If you do not pay off your credit card, your credit score will drop, and your ability to obtain more credit may be reduced. A collection agency is ultimately responsible for collecting the debt. If you do not pay the debt, a collection agency may take legal action, and you could find yourself in court.

Most people never have to deal with that. Cardholders may pay their bill before the deadline (the ideal scenario) or pay their balance as interest accumulates. The cardholder will take even longer to reach zero if they continue to make purchases and earn interest. Carrying a balance forward into the following month while making only incremental payments is expected.

The cardholders who get the best rewards and benefits from their credit cards will pay their bills within the grace period before interest accrues. They receive the total amount of bonuses or cashback offered by their credit card because their debt does not exceed their payments. Their credit is in good shape, and they can build or maintain a high credit score. This makes it easier for them to qualify for bank loans, auto loans, or mortgages.

How to Apply for a Credit Card

Most often, credit cards are applied for via the websites of financial institutions. The institution can accept applications over the phone, or you can visit their branch in person. You will be asked to meet specific eligibility requirements once you click “apply now”.

• You are a Canadian citizen.
• It would help if you were at least the age of majority where you reside.
• The card you use has a minimum annual income requirement for your household or yourself (some cards don’t have a minimum income requirement).

You will then see important card information, such as the annual interest rate and fees associated with your card. The next step is to fill out a form with your personal information, including your name, address, telephone number, employment location, annual income, and more.

The credit card company will then perform a credit report to determine your credit score. This credit check is the primary factor determining whether your credit card application will be approved.

The credit card companies have a range of credit scores they prefer their cardholders to be within. Credit card issuers will reject your application if you have delinquent credit accounts, are chronically late with payments, or miss payments altogether.

If you pay your credit card on time and have no credit accounts that are in arrears, collections, or in default, and you have a credit rating in the range of good to excellent (670 and higher), you will be able to qualify for the majority of credit cards available in Canada.

What Credit Score Is Needed For A Credit Card?

Credit scores are three-digit numbers between 300 and 909. Lenders use this number to determine whether you are creditworthy or, in other terms, if you can pay back your loan on time. Your creditworthiness will be higher if your number is high. This means lenders will approve your credit card application more readily if they consider you a low-risk applicant.

Credit card applications will determine the score required. You must have a good or excellent credit score if you apply for a premium reward credit card. This means anywhere from 725 to 9000. This does not mean that you will be denied a credit card. Credit card applications are assessed individually, and your credit score is not guaranteed approval.

Even if your score is below 650, applying for a secure credit card is still possible. You need $500 for the deposit, which will serve as your credit limit and be used in case you fail to pay. There are also prepaid and neo-credit cards, which work as credit cards and can be used anywhere they are accepted. They are preloaded or function as a debit card. Most of these cards don’t ask for credit histories; some even allow you to build credit at a cost.

Types of Credit Cards

In Canada, there are different types of credit cards. Different credit cards are available to suit the other spending habits of cardholders. You will see the following types of credit card:

Rewards Credit Cards

These cards reward spending. They do this in the form of cashback or reward points. How many points or cash back percentages you get for a purchase depends on your spending, the retail partner you use and the category of purchases you make. For example, grocery, gas, transportation, travel, dining, and online streaming are some of the most common types that offer a higher rate of cashback and reward points. Most of these cards offer a flat cashback rate or rewards for all purchases, regardless of the category.

Reward points are usually redeemable for travel, merchandise, gift certificates, event discounts and charitable donations. Cashback can be redeemed by transferring it to your credit card statement as a credit.

No-fee Credit Cards: Rewards With Little Cost

Few credit cards have no fees because they charge late payments, NSF, and other charges. In addition, all credit card holders pay interest if they do not pay their monthly balance in full. When people refer to credit cards with no fees, they usually refer to them with no annual fees. Cards with no annual fees are helpful because they save money, and some offer rewards. This means you can earn cash or points without a high price.

Black Credit Cards: Good Luck Trying to Get One

In Canada, there aren’t that many black credit card options. The American Express Centurion Card is a card that is known colloquially as “The Black Card”. This card and others at the same level are marked by exclusivity. These cards are only available to those with perfect credit and high incomes. You will receive several expensive and exclusive perks if you are chosen to be one of them. This includes a concierge who can get you anything you need anytime. Even if you are eligible for the black card and invited to its luxurious benefits, you will still have to pay an initiation fee of $10,000 and an annual fee of $5,000.

Aeroplan Credit Cards: For Frequent Air Canada Flyers

You can apply for a free membership through the Air Canada website. If you make frequent flights with Air Canada or its sister airlines, then consider joining their Aeroplan reward program. By applying for membership on the Air Canada site, making purchases with Aeroplan’s retail partner partners in Canada, and presenting your Aeroplan card, you can earn Aeroplan points toward free Air Canada flights and other perks such as companion fare and checked baggage. Aeroplan credit cards can accelerate making Aeroplan points, allowing you a free flight. Sometimes, the welcome bonus is enough to cover a single-way flight.

Air Miles Credit Cards: Best for Airline Flexibility

Air Miles will allow you to earn miles towards free flights with virtually any airline. You can collect miles with Air Miles for free flights with almost any airline. Air Miles can help you earn Air Miles more quickly. However, the program is currently limited to Canadian Tire and The Bank of Montreal, meaning you cannot collect Air Miles anywhere else but with your Air Miles card. Air Miles redemption is less straightforward than Aeroplan, with each mile worth a fraction of a cent, depending on the destination, airline, distance, and time of year.

Balance Transfer Credit Cards

Credit cards with balance transfers are designed for cardholders who carry a credit balance. Balance transfer credit cards offer a low interest rate or no interest on transfers for a certain number of months (known as the “promotional period”) or for as long as they hold the card.

If you have a balance from another credit card, you can transfer it to the balance-transfer credit card. You will pay less interest or none at all for a certain period. You have a greater chance of paying a large portion or the entire balance of your credit card.

You should be aware of a few things before transferring your balance to a credit card that allows balance transfers. There is usually a fee for transferring balances, typically 3% of your total balance. While the transferred balance qualifies for a no-interest or lower-interest rate, new purchases on the card are charged at a different and likely higher purchase interest rate.

Low-Interest Credit Cards

Low-interest credit Cards offer a combination of low-interest rates for purchases, balance transfers and cash advances for the duration of your credit card’s validity or a promotional period. Once the promotional period has expired, the low rate will return to its usual pace, such as 19.99% for purchases and 24.99% for cash advances or balance transfers.

Credit Cards with 0% APR

No-interest credit cards are a close cousin of low-interest credit cards. Cards with 0% interest rates offer 0% annual charges on purchases, either for a short time or until the card expires. No credit card offers 0% APR forever in Canada. It’s usually a promotional rate offered to cardholders for the first 3, 6 or 12 months they have their account. After the promotional period, the annual interest rate on purchases usually reverts to the more standard rate, like 19,99% or 20,99%.

Student Credit Cards

Students studying in a postsecondary institution can apply for Student Credit Cards. These cards are available to Canadian students who have no credit history. These are usually copies of the regular credit cards the issuer offers, with the same benefits and rewards.

A student credit card does not require a history of credit. However, this doesn’t mean that there are no requirements. The prospective cardholder will usually need regular income to pay the upcoming credit card bills. Student credit cards typically carry higher interest rates than non-student credit cards because students are often first-time borrowers and may be viewed as a greater credit risk.

Credit Cards to Build Credit

All conventional credit cards can build or diminish credit because they report the spending and repayment habits of the cardholders to credit bureaus. If you have been deemed a credit risk, and your credit score has dropped to the point that you cannot get credit the traditional way, you can rebuild your credit with several credit cards. These are some of the cards that will help you build your credit.

Secured Credit Card

Secured credit cards must have a deposit, which doubles as a credit limit. The warranty can cover purchases made on the card if a secured cardholder cannot pay. A fast card user will pay their assets as usual with a credit card. However, every payment they make is guaranteed to be reported by the credit bureaus. This will increase the user’s score faster than a standard credit card. After a few months of responsible use, you might be offered another secured credit card.

Prepaid credit cards

Prepaid Credit Cards may also be able to help you establish credit. You load money onto these cards and use them until they run out. Cards such as the KOHO Prepaid Mastercard report your monthly payments to credit bureaus for an additional $10. This helps you build credit.

Unsecured credit cards

There are also regular, unsecured cards, which don’t require applicants to have a high credit score. They will also report the payments to credit bureaus, helping those with poor credit improve their scores.

Business Credit Cards

Business Credit Cards support business owners by tailoring their cards to the costs associated with running a business. Usually, they have a longer application process, which includes the applicant’s individual income and the business’s income.

Many business credit cards offer rewards and perks geared toward business expenses. They include higher rates of cashback and rewards points for purchases considered typical business expenses. Examples include travel, office supplies, internet, phone, or other bills.

Businesses can also take advantage of the free inclusion of multiple employees in a credit card account. They will receive insurance coverage for their business, such as extended warranty, purchase protection, rental car damage/loss insurance, and emergency travel medical insurance. Business credit cards have expense-tracking features and zero-liability plans in the event that an employee makes an unauthorized transaction.

Credit Card Companies in Canada

Credit Card Issuer	Network
BMO	Mastercard
Scotiabank	Visa & American Express
RBC	Visa & Mastercard
TD	Visa
National Bank	Mastercard
CIBC	Visa
American Express	American Express
Brim Financial	Mastercard
Canadian Tire Bank	Mastercard
Rogers Bank	Mastercard
ATB Financial	Mastercard
Simplii Financial	Visa
Refresh Financial	Visa
Tangerine	Mastercard
Vancity	Visa
Walmart	Mastercard
Wise	Visa
Costco	Mastercard
Wealthsimple	Mastercard
Manulife	Visa
Meridian	Visa
Neo Financial	Mastercard
Mogo	Visa
KOHO	Mastercard
Laurentian Bank	Visa
PC Financial	Mastercard
Home Trust	Visa
Desjardins	Visa & Mastercard
Coast Capital Savings	Visa
MBNA	Mastercard
Capital One	Mastercard
Canadian Western Bank	Visa & Mastercard