Credit Cards

The Ultimate Canadian Credit Card Application Guide

credit cards Canada

The Credit Card Application Process In Canada

Filling out a credit card application and getting approved doesn’t mean that you have extra income.

What it does mean is that you have a plastic card with a money allowance that you must payback.

If you don’t pay it back in full at the end of the month that plastic card will add interest on to the amount owing.

The interest amount is set by the plastic credit card before you even apply.

By only paying the minimum balance you’re not only increasing the debt repayment but it’s going take longer to repay.

There are many things you need to be aware of before filling out a credit card application in Canada.

As a permanent resident in Canada, I’ve been through the entire Canadian credit card application process from start to finish.

Let’s explore the process involved when considering filling out a credit card application in Canada.

I’m certain there are things you’ll already know such many credit cards come with rewards or first-time credit card application perks.

Credit Card Transactor

We are what the industry calls a ‘transactor’ since we pay our credit card in full each month and never carry a balance.

Being a transactor is opposite the revolver whom credit card companies love since they make the most money from them.

However, being a transactor means you get your pick of some best cashback credit cards and rewards cards on the market.

Don’t worry revolvers you still get your pick of credit cards because these companies still want your business.

Currently, we use these 4 credit cards that serve us well for rewards and cashback.

Related: How we earned over 5 Million PC Optimum Points With Our PC MasterCard

We do not own any credit cards with annual fees.

  • President’s Choice World Elite MasterCard for PC Optimum Points
  • Canadian Tire Triangle MasterCard for CT Money
  • Costco Capital One Credit Card for CashBack
  • TD Visa for CashBack

Determining Your Credit Card Needs

What do you want a credit card for?

Make a list of what you’d like from your ideal credit card.

Perhaps you travel and would benefit from a travel rewards credit card.

If you’re like us you may want a credit card that offers rewards points to put towards your groceries and health and beauty needs.

Also, if cashback is a plus for you there are ample credit cards who offer this type of incentive.

What you will want to do is apply for the credit card that you will use the most and will meet your overall financial needs.

Related: How to apply and compare credit cards in Canada

Elite Status

Another credit card need you may want to examine is:

How fast you can reach elite status with your credit card company.

When you start with a credit card you may get the basic credit card but as time goes on you may be able to move up.

However, if you meet the requirements of their top credit card you can walk your way into that without a hitch.

Some companies will bump you to a new shiny credit card that offers holders more perks

Rewards Expiry or Restrictions:

Also, keep in mind whether the credit card you are applying for has any restrictions on their perks or rewards.

Always find out whether these rewards, points or perks have expiration dates so you don’t find out you’ve come to lose what you worked hard to earn.

Costco Capital One Credit Card vs. Canadian Tire Triangle MasterCard

Once you find the credit card that you want to apply for you may also find they offer a sign-up bonus to new cardholders.

At Costco, we received $10 off our credit card bill when we spent $50 on one order. (like that was hard)

Our Capital One MasterCard with Costco also offered us cash back virtually everywhere we shop and not just at Costco.

The CT MasterCard I have is great if you want to shop at Canadian Tire but we get more bang for our buck with groceries and membership fees with Costco and President’s Choice.

At Costco, for example, we earn 3% on restaurant purchases, 2% on gas purchases, 0.5% on the first $3,000 spent annually on all other purchases, and 1% after that. No annual fee. It also doubles as our Costco membership card.

Our Canadian Tire MasterCard offers us 4% back in CT money and we can redeem points at SportChek, Atmosphere, and Mark’s Work Wearhouse.

We also get 5 cents back a litre in CT money when we fill up at local Husky gas stations although I mainly fill up at Costco as it’s the cheapest.

Teaching Teenagers About Credit Cards

If you have teenagers at home going through the credit card application with them is a solid plan for education.

Not only will they learn about how to apply for their first credit card but what happens when you pay it on time and in full.

You’ll also have them explore the dark side of credit cards by allowing them to understand what will occur if they only pay the minimum balance.

When the time comes that your child is ready for their first credit card they will feel confident they are making an informed decision.

As an immigrant to Canada, you’ll certainly want to pay attention to building your credit score and the secured credit card application process.

 Credit Card Application Variety

Before you being searching for your perfect credit card you may want to consider 3 things.

When you get your credit card statement there is a date on that you must pay it by and this timeline is interest-free.

Even if you pay the credit card late by one day you’ll still get done for interest.

Always understand what the interest-free period is on the credit card you are applying for and the implications of late fees.

  1. Late Payment Fees
  2. Annual Fee
  3. Foreign Transaction Fees

There are many amazing credit cards on the market and some of them come with annual fees.

This is a fee you pay to have that credit card but it comes with perks that other credit cards do not.

If you are a traveller you’ll want to make sure you understand the fees involved when you use your credit card out of the country.

For example, if you go to Cuba and use your credit card at the corner store you’ll pay for the exchange and a transaction fee or FX Fee.

Some Canadian credit cards offer no transaction fees however you must do your research and qualify for the credit card.

Otherwise, be prepared to pay an FX fee when your transaction passes through non-Canadian banks.

Credit Card Qualification Requirements

Every credit card company has certain qualifications that they measure new applications by.

It’s important to keep all of your documents organized when filling out an application many of which are online.

Credit card companies may ask for supporting documents such as:

  • Passport or Permanent Resident Card or Residential status in Canada
  • Full legal name and date of birth
  • Home address and phone number
  • Pay Cheque Stubs or information about your current and past employers
  • Income tax returns
  • Driver’s Licence
  • Social Insurance Number (optional)
  • Gross annual income

Canadian Credit Card Application Age Requirements

How old do you have to be to fill out a credit card application?

Credit card age requirements

Compare Canadian Credit Cards Before Applying

Selecting the right Canadian credit card is a process that you should review as it should meet your needs.

For example, there are many types of Canadian credit cards available with different interest rates, annual fees, rewards, and cashback.

First off, take a few moments to write down why you are applying for a credit card and what you’d like from it.

  • Are you willing to pay annual fees for a credit card?
  • How often will you use the credit card?
  • Are you able to pay the credit card statement in full each month?
  • Am I reliable with money?
  • Do I meet the requirements of the credit card I choose?

Don’t waste your time applying for the wrong credit card especially if you don’t qualify to do so.

The more people that browse our credit history the more it impacts your overall credit score.

For example, the PC World Elite MasterCard that we currently use requires a household income of $80,000 to $150,000 just to apply.

Best Ways To Get Your Credit Card Application Approved

If you want to speed up the process of applying for a credit card there are ways you can prepare yourself ahead of time.

Walking blindly into a credit card application can hurt you especially if you get denied and you’re not sure why.

Below are some tips to help get your credit card application approved all of which I’ve applied during my finance journey.

Related: How credit card tracking can save you from overspending (free budget binder printable)

1. Improve Your Credit Utilization Ratio

Credit Utilization Rate

Lower Your credit utilization ratio also known as a credit utilization rate.

Your credit card utilization ratio makes up 30% (top score) of your credit score where the rest is your payment history.

To simplify this it equates to the amount of credit you are using divided by the amount of credit you have available.

So, if you have a credit card debt of $1000 and the availability of $5000 on all credit cards in your name you have a 20% credit utilization ratio.

If you’re not sure what credit and the debt you have you can order your credit plus round up all of your credit card statements.

Every credit card statement will tell you how much money is owing on the credit card, interest rate, and how much available credit you have.

The credit bureau when determining your credit score looks at individual credit as well as overall credit available to you.

If you aren’t using your available credit that means they can’t give creditors and accurate picture of the way you pay your bills.

This is why it’s important to use your credit cards or other credit available to you to build a credit history.

You don’t have to be perfect in the eyes of the credit bureau or a creditor you just need to be reliable.

2. Understanding Revolving Credit

Revolving credit means there is no end to the availability of credit once you pay your bill and the amount of credit used revolves back into itself.

For example, if you have a $500 limit on a credit card and use $100 you have $400 of credit left on the card.

The amount of money you owe has no end date as a mortgage would.

When you pay that $100 in full that amount revolves back into the credit availability.

On the other hand, if you only pay the minimum balance what’s left carries over into the next month.

You’ll also have interest tacked on to what you don’t pay which only prolongs the process of paying it off in full.

It’s like in one door out the other and back again and sometimes extra sneaks in on top (interest).

As long as you meet the minimum requirements and don’t reach your credit limit there’s no end date.

Your credit utilization rate will come from your revolving credit that makes up your credit score.

Loan Installments

With a car loan, mortgage, or other bank loans, for example, this is different as they present with loan installments.

Your mortgage, for example, must be paid weekly, bi-weekly or monthly and you know how much you MUST pay.

These types of loans are called installment loans where you don’t get a minimum payment.

You get a payment and you better pay it. Catch my drift?

These types of loans are based on your debt to income ratio which calculates how much debt you have in comparison to your gross income.

3. Tell The Truth On A Credit Card Application

If you’ve ever considered lying on a credit card application don’t bother as it doesn’t do you any good.

Whether you get approved or not will be based on provided documentation and a credit history investigation.

You will only delay the process or potentially risk getting denied for the credit card.

If you have too much dent, can’t pay back credit card debt ask yourself if you need another.

When you find that you are struggling to pay back existing debt consider a balance transfer credit card option.

4. Apply For A Credit Card Where You Bank

One of the fastest and probably easiest ways to secure a credit card in Canada is to apply where you bank.

They will already know who you are and have a background in your credit history.

If you’ve already built a relationship with your bank and have other services with them that might help get you approved.

Related: 5 Ways To Save Money With A Credit Card

5. Credit Score And The Credit Card Application

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

If your credit score is not at a place that you are comfortable with then work on improving it.

Again, you don’t need to be perfect just prove to creditors that you are worth their time lending you money or credit.

First of all, if you find any errors in your credit report you need to address them immediately.

Start by paying all of your credit card debt off in full and stop accruing any further debt unless it’s paid in full.

If you have a credit card for example and you pay it off charge something to it again but pay it in full.

Continuing to do so will build your credit and repayment history with that particular credit card company.

This information will show on your credit report where creditors will decide whether they want to approve you or not.

If your credit score is not up to snuff you may want to consider holding off with that credit card application.

Applying for credit cards and other loans too much where your credit report is accessed may lower your credit score.

In other words, the less the better that companies have to browse your history.

Building Credit In Canada

You may be a student, new immigrant or working on rebuilding your credit where a secured credit card may work for you.

If you are like I once was both a student in Canada and a new permanent resident with no credit history it can be tough to get approved.

The process of building my credit in Canada meant that I needed to show creditors I was reliable.

My first credit card was a secured card via my wife’s President’s Choice Bank (now Simplii Financial) where she was responsible for the card while I would be building credit under my name.

She opened her PF Financial MasterCard about 20 years ago and now have theblack PC World Elite MasterCard.

Secondly, I was able to get a $500 secured credit card from Sears Canada (no longer around) which I used as much as I could.

Basically, I had to give Sears $500 cash that they held just in case I didn’t pay my credit card bill.

I made sure to put every purchase I could on my credit cards and paid then in full each month.

As well, I put household expenses in my name such as Rogers, Union Gas, Reliance and Hydro to further build credit.

If you’re a student your parents may be able to co-sign for you as my wife did to help you build your credit history.

In no time I was able to fill out credit card applications without worry that I’d be denied.

You can’t rush the process but if you do it right you’ll get to the finish line as I did.

Credit Card Application Denial

Why did my credit card application get denied?

There are many reasons why you were not approved for a credit card many of which you can improve on before applying again.

Every credit card application will come with requirements set out by the company or bank.

It’s important to review the eligibility requirements before you being the application process.

Related: Top Canadian Credit Cards To Get Approved With Bad Credit

By doing so you can fix what is needed so you won’t have to face a denial.

  • Too Many Credit Cards (Your credit utilization ratio is too high)
  • Credit Score Too Low or Non-Existent (Permanent resident, first credit card)
  • Employment Eligibility (No job, Casual or part-time, and not a permanent position.
  • Income Eligibility  (not meeting the income level needed for the credit card application you are applying for)
  • Non-Resident of Canada

When you get denied for a credit card all you can do is fix the problems that were listed and try again.

How To Apply For A Credit Card

There are three ways you can apply for a credit card in Canada.

  1. In-Person
  2. Online
  3. Telephone

If you aren’t comfortable with technology and your finances you go straight to a bank, grocery store or department store to fill out a credit card application in person.

Online credit card applications are one of the most popular ways for Canadians to apply for a new credit card.

The process is simple and you can do it from the comfort of your home.

Thirdly, calling the company direct and applying over the phone for a credit card is also an option.

Whichever you choose you’ll find the credit card application process to be the same or similar to one another.

Take Your Time With A Credit Card Application

Overall, before taking the leap and filling out a credit card application when you are put on the spot while shopping, online or you get a phone call, do your research.

Many times I’ve walked into a store and there are booths set up and I’ve been approached to apply for a credit card.

I’ve also been swooned into playing contests at department stores or offered an instant rebate or discount for approved applications.

A $15 dollar credit or gift fro a department store is nothing compared the financial disaster a credit card can make if it’s not the right time for you.

No one cares more about your money than you so never feel rushed into the process of owning a credit card.

Discussion: What other tips would you offer to someone looking to fill out a Canadian Credit Card Application?

If you have any experiences you’d like to share I’d love to hear about them.

MR.CBB

 

 

 

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