All credit cards are not created equal.
There are a number of different credit options available to you if you need a credit card. Use this checklist to find the best credit card for you, or to evaluate any card(s) you may already have.
- What are the annual fees? Some cards charge a fee, and some don’t. Others waive the fee for first-time customers but charge the fee in subsequent years. Be wary of low sign-up rates because when the introductory rate ends you may end up paying a higher fee than on another card.
- What is the interest rate and how is it calculated? A low interest rate may not be the deciding factor for choosing a credit card. For example, if you pay your balance off each month and never incur interest charges, you may be more interested in other benefits a card may offer.
- How does the grace period work, if there is one at all? Grace periods refer to the time between the closing date of your billing cycle and the date you have to pay your balance in full. No interest is charged during this period. However, this grace period usually only applies if you are not already carrying a balance and it does not apply to cash advances.
- What are the incentives or loyalty benefits? Be careful that loyalty benefits outweigh the potential higher interest rates and fees you may pay. Getting rebates or frequent flier miles is usually not a good reason to choose one card over another unless everything else is equal.
- What is the fine print? Read credit card agreements carefully and ask questions of the lender if you are not clear about something. For example, is there a fee for foreign currency transactions (you buy something when traveling in another country)?
- Have changes occurred to your credit card since you first signed up? Agreements change over time. When you receive notices in the mail that a change has occurred to your credit card agreement make sure you understand what that change is and re-evaluate whether the card is still the best choice for you.
For more information about financial well-being, the following resources may be helpful.
- MoneySense Magazine (Canadian resource). www.moneysense.ca
- Invest in your financial well-being. Government of Canada. https://www.canada.ca/en/financial-consumer-agency/news/canadas-financial-literacy-blog/invest-financial-well-being.html
- Canada’s Financial Literacy Blog. Government of Canada. https://www.canada.ca/en/financial-consumer-agency/news/canadas-financial-literacy-blog.html
- Canadian Financial Calendars. My Money Coach (From Credit Counselling Society). https://www.mymoneycoach.ca/resources/financial-calculators
- Credit Counselling Society. https://www.nomoredebts.org/
- Mortgage Affordability Calculator. Canada Mortgage and Housing Corporation (CMHC). https://www.cmhc-schl.gc.ca/en/finance-and-investing/mortgage-loan-insurance/homebuying-calculators/affordability-calculator