Canadians are increasingly shifting their spending habits to a digital world. While the COVID-19 pandemic has accelerated this evolution, it was happening before the crisis. More people now value contactless payment and ecommerce purchases, and it looks like this is a permanent shift.
For Canadians making a switch to digital transactions, the good old-fashioned credit card is both a safe and familiar payment choice. Credit cards allow customers to explore a new era of contactless finances without compromising on traditional purchases. It’s possible to use a credit card to pay for products and services online or at a brick and mortar store.
That said, the credit card market is relatively complicated simply because there is so much choice. Dozens, if not hundreds, of credit cards are available in Canada, and no two are equal. Firstly, there are different types of credit card, such as rewards cards and balance transfer cards. Secondly, banks and financial institutions have different deals available.
Amid the economic turmoil millions are facing because of COVID-19 and lockdowns, understanding which financial solutions are best has become more important than ever. This is especially true in the saturated credit card market, which is why shopping around for credit cards is the best choice.
Choose the Right Type of Credit Card
As RATESDOTCA points out, using an online comparison tool can help customers find the best credit cards in Canada. More importantly, comparison sites are becoming popular because they help consumers find the right credit card for their specific needs.
When comparing credit cards online, there are some things customers must consider:
Different Types of Credit Card
There are three different types of credit card available in Canada. Which you choose will depend on your individual needs:
- Bank-issued Credit Cards: The most common credit card in Canada is one issued by a bank or other financial institution. As the most versatile solution, these credit cards can be used for all kinds of purchases and come with various perks. Depending on the card you choose, there are different annual fees, rewards programs, rebates, travel insurance, low interest offers, and other perks available.
- Store Cards: As the name suggests, these credit cards are tied to a retail outlet or service provider. Customers use these cards exclusively at the carrier’s stores, although they usually have high interest rates for late balance payments. One of the benefits of this type of credit card is access to store discounts and reward programs.
- Travel/Entertainment (charge) Cards: Because they have unlimited credit limits, these cards must be paid off in full through each payment cycle. That means cardholders are required to pay off their balance each month. Charge cards are known for carrying high annual fees and high interest penalties for late payments.
What Is the Credit Card For?
Whether you’re adding to a collection or getting your first credit card, it’s important to assess why you want a card. Your reasons should play a major role in deciding what type of credit card to compare and apply for. Common reasons to get a credit card include:
- Building credit: Many first time borrowers use a credit card as a first step to building a robust credit score ahead of larger purchases such as a loan or mortgage. Cards with a low APR or no annual fees are useful for credit builders.
- Frequent traveler: Credit cards are handy for travelers because they are an accepted payment in most parts of the world. Some cards offer specific travel-related perks, such as travel rewards, air miles, or hotel deals.
- Balance transfers: Some people move funds between accounts or credit cards to make payments more efficient. For this purpose, a card with 0% balance transfers (or no-fee balance transfers) is a good choice.
Comparing Credit Cards Makes Sense
Many Canadians make the mistake of choosing the first credit card they are offered. Maybe its from their bank and they assume as an existing customer the bank will offer a good deal. Sometimes it’s just a matter of not knowing there are better offers available. The only way to find the best credit card deal is to compare cards.
While that sounds like a frustrating and time consuming prospect, especially if you’re not sure what to look for, comparing credit cards is easy. Thanks to online comparison sites, you can check a selection of credit cards based on your personal needs. It’s easy to check cards by type, lender, and bonuses.
Comparing credit cards ensures you get the best credit card to meet your needs, with the best perks included.
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