Credit Cards

How To Apply And Compare Credit Card Deals In Canada

Compare Credit Card Deals Canada

Before Applying Review This Credit Card Checklist

There will always be credit card offers dangled in your face from just about every available outlet.

However if you’re a serious shopper before applying know the facts and compare credit card deals so you don’t get left in the dark.

I want the shiny black credit card because it makes me look rich and successful.

Don’t laugh there are people out there that believe that if they can get their hands on a black credit card with a bit of gold they are rolling in it.

In fact, most often they are rolling in debt especially if they can’t pay back the money they’ve used.

Do you read the fine print before applying for a credit card? No, well you should.

Just like baking a cake you must have all the ingredients for it to look good and taste good.

If you miss one ingredient you might ruin the cake and it ends up in the garbage costing you money, but you still paid for it.

The same goes with applying for a credit card in Canada always know what you are getting yourself into so there are no surprises you end up paying for.

Just about every credit card comes with credit card benefits and if you choose the right card that fits your purpose of lifestyle you’ll reap the rewards.

For example, you may want to apply for a Rona Credit Card because you are a builder and buy lots of tools and materials from Rona.

Like CBB reader Mark states below he wants to think ahead about his credit cards just in case something were to happen and rightfully so.

Who will pay your credit card if you were to fall ill or die? Your money might end up frozen by the bank without any fund to pay your bills.

We experienced this the hard way when my father-in-law passed away and my mother-in-law had no money to pay for her living expenses.

The last thing you want is a credit card going into collections because then it is becomes a hassle.

Dear Mr. CBB,

I’m looking into my options for getting a new c card and was wondering if you had any tips on how to choose the best credit cards in Canada?

I’d like to obtain a new c card because I don’t feel the Visa MasterCard or Platinum Card that I currently own are giving me enough rewards and the interest rates are far too high at 23% and 21%.

My credit card limit on one is $25,000 and the other is $5000 which I use more for online shopping.

What if something were to happen to me and I couldn’t pay it off?

I probably worry too much but I think it’s best to understand what could be ahead if something were to happen although I only spend what I have cash for in the bank.

Although I use my credit cards for just about everything I want to make sure that I’m getting the best value for the credit cards I own.

Ideally I would favour a cash back credit card over a rewards credit card because I can then use the money for whatever I want as opposed to a specific store but with little to no annual fee.

How did you choose the credit cards you own and what value have they brought to your finances?

Should I cancel credit cards that I don’t use?

Thanks,

Mark. K

Hi Mark,

Thanks for emailing me your questions today. I will try to answer them to the best of my knowledge below sharing some of our experiences and I hope you find it beneficial to making your final decisions.

Credit cards can impact your credit rating negatively or positively so it’s critical you understand the pros and cons of both. Ideally having a steady income is one of the most important things to consider before applying for a credit card and what your debt to income ratio is.

Mr.CBB

What is a Credit Card?

A credit card is a method of borrowing money from a bank where you have to repay them monthly what you owe plus an interest charge.

Credit cards can also be used for cash advances where you take the cash in hand or for balance transfers.

The interest charge is the thank-you to them for lending you the money to buy whatever you needed to buy with their credit card.

Secured Credit Card vs. Unsecured Credit Card

A secured credit card means you gave the bank money to hold on to in the amount that the credit limit is on your card. This way they can use it if you default on payment.

It’s like collateral until you build credit where you may be offered an unsecured credit card with no collateral.

It’s all in the name of trust and your financial footprints (credit score/credit report) as it should be because I wouldn’t just lend money to anyone.

Compare Credit Card Deals

One of the number one things I suggest you do if you plan on applying for a new credit card is to do a comparison check in the country where you live or want to own a credit card.

When I was in the UK I was the King of comparing prices online and I still own my MasterCard just in case I go home and need it. It doesn’t affect my credit score in Canada though.

There are a few things you will want to find out when you compare credit card deals such as introductory interest rate, annual fee, rewards and other charges so you can compare apples to apples when shopping for a credit card.

Using a comparison website

Now that I’m in Canada I do the same thing by accessing a simple Canadian credit card comparison website that will show you available credit cards and what they can offer you.

This is key to finding the right credit card fit for the owner and I never suggest just applying for a credit card because it was offered to you on a whim.

Credit Card Application

You can apply for a credit card

  • By Phone
  • By Mail
  • Online
  • In person

We get phone calls almost every other day, credit card applications via mail, internet credit card application offers and offered applications at the checkout or front entrance of a grocery store or department store.

Personally, If I’m going to fill out a credit card application at any of the above I will do my research first.

I have watched people sign up at stores because they are offered a free prize by spinning a wheel or a one-time discount for the day.

That’s peanuts to the credit card company and to be honest you will likely end up paying for that introductory freebie.

  • Do your homework
  • Know what you want
  • Know why you want it
  • Can you afford the interest now or in the future
  • What will you do if something happens

Before even considering applying for a credit card if you have any debt you may want to sort out paying that first. There’s no gains in applying for a credit card with debt you already can’t repay.

This type of behaviour will only dig you deeper into the poor house so take a step back and consider why you want another credit card and how you will pay off the debt you currently have.

My Credit Card vs. Mrs. CBB’s Credit Card

When I first moved to Canada the only credit card applications I was able to fill out was for Sears Canada and I got a $500 LIMIT.

There was a catch though because it was a secured credit card but I was fine with that because I wanted to build credit in Canada.

As mentioned above a secured credit card meant that I had to give them $500 to hang on to so I could prove to them I would use the credit card and pay it off on time.

If I didn’t they had my $500 and would use it and I screw up my credit before even getting it. That wasn’t going to happen.

I also was an additional card holder with PC MasterCard but my wife was on the hook if anything were to happen.

So, I kind of fell into the PC MasterCard back 10 years ago but we still have the same credit card but only the PC World Elite MasterCard which gives us far more Optimum Plus rewards points than ever before.

Right now we are sitting at just over 4 million Optimum points which equals $4000 to spend on groceries, clothing by Joe Fresh or anything PC, Loblaws or Shoppers Drug Mart related.

We love this card but at first I wasn’t so sure although it has given us back more than we had ever imagined so we are sticking with it.

The interest rate is high but to be honest most credit cards will always have a relatively high interest rate after an introductory interest rate  or zero interest rate credit card offer runs out.

It’s important to understand what you apply for now might not be what you get 6 months down the line. Some people work their way into a credit card balance transfer just to offset higher interest rates.

Applying for too many credit cards

Additionally, you may not want to keep opening and closing credit card accounts because that may send a red flag to creditors that you like to bounce around.

I do suggest if you are holding on to a credit card that you don’t use or has no balance on it to cancel it because then it will free up credit that you aren’t using.

If you are sitting on credit you aren’t using that might impact your overall credit score or when you go to apply for a mortgage or a car loan creditors might think you have too much available credit.

Canada's Credit Score Range
Canada’s Credit Score Range

This becomes a risk to them because they don’t know if you will pay back your loan on time, if at all.

They can also see how many credit cards and other loans you applied and were approved or denied as it will be on your Canadian credit report.

You might as well do away with it and find something that appeals to you that you will use and gain from rather than a credit card that collects dust.

My Credit Card Loyalty Rewards

My credit card is the Canadian Tire MasterCard which I use for just about everything because I enjoy the Triangle rewards and tend to buy lots of stuff at Canadian Tire, Marks Work Warehouse, SportCheck , Atmosphere and PartSource.

It is the credit card I use the most because it fits my lifestyle.

Just the other day we went to SportChek Canada and bought our son a pair of Rip Zone winter gloves that were $39.99 on sale 30% off which was the best we could find.

Our son struggles with his gloves so instead of being the frugal parents we were getting them at the Dollar Store we decided to spend the money and get gloves that go over his sleeve to prevent snow from coming in.

When we checked out at the cash they asked if we wanted to use cash back from the $60 in credit card rewards that we had on our Canadian Tire MasterCard and I piped up and said, SURE.

We did the happy dance, free gloves.

I honestly had no idea that SportCheck was on my list of stores to use cash back with my Canadian Tire Credit Card which prompted me to look further into the details.

These are things that credit card owners fail to read and I”m just as guilty as mentioned so my advice is to read everything about a credit card you are interested in before the credit card application process begins.

Keep in mind that your credit card company can change the rules or add new rules to your credit card after you apply but will always send you a pamphlet with your bill or notification online to alert you.

Annual Percentage Rate (APR)

The APR rate refers to the annual percentage rate on your credit card as the monthly interest rate will be different.

To find out what your monthly interest rate will be divide the API number by 12. It’s that simple.

If you have a credit card offer with an 20% APR / 12 and your monthly interest rate will be 1.6%.

Annual Fee

Some credit cards want you to pay for an annual fee just to become part of their credit card gang. The higher the fee on the credit card the more perks it comes with.

It may be a one time fee which you can pay upfront or added to your bill which you will end up paying interest on if you don’t pay it off.

Loyalty Rewards./Incentives

What will the credit card that you are applying for offer you in terms of rewards and incentives and are they in line with what your goals are?

Personally I would write out what you would like to get out of a credit card and then compare credit card deals from that perspective.

Interest Rate

What will be the interest rate on the credit card once any introductory offers are over?

If after an introductory rate ends the typical interest rate applies and you need to know this number ahead of time.

If the credit card you are applying for has no interest rate offers attached this is where you will want to know what exactly the starting interest rate will be.

Minimum Payments

What is the minimum payment or how is it calculated each month on my credit card statement?

If you don’t pay your credit card in full each month there will be a minimum payment due which is typically a percentage of the amount you owe.

Introductory Interest Rate

Will there be an introductory interest rate on the credit card you are applying for and how long will it last?

Many credit card companies will entice you with a 0% interest rate or a very low interest rate for x amount of months.

Other Charges

Read the fine print in the credit agreement to see if there are any other charges that might apply to the credit card holder.

This is very important and a step that many credit card holders get lazy about.

Credit Limit

How much of a credit limit do you want if it is offered to you? You don’t have to take what they give you, negotiate.

Cash Back

Will the credit card offer cash back options? Not all credit cards offer the cash back option but if the one you are applying for does make sure to read the provisions.

Sometimes the cash back interest rate is far higher than that of just the credit card balance each month.

Penalties

What are all or any of the penalties you can incur if you don’t pay your bill on time each month?

If you don’t pay your credit card in full you will at least have to pay the minimum balance which is likely only interest.

A late payment charge, penalty rate or default rate of your credit card account even if paid one day after the due date most likely will apply and they can be hefty.

You might even find that the credit card company will increase your interest rate if they are not satisfied with your repayment.

If you struggle to keep up paying the minimum balance or miss payments you may be in big doo-doo with the credit card company.

Understand what you are getting yourself into before you apply and not after the damage is done to your credit.

Bottom Line

Before you rush out to apply for your next credit card make sure to investigate and compare credit card deals that work for you and not against you.

Discussion: How did you decide on what credit card to apply for before you applied? Did you make any mistakes that you learned from? Share your comments below.

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