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Creditors recognize that Canadians represent a sizeable segment of the credit card market, and they have responded by offering a wide selection of cards specifically designed for Canadians. The up side to this is that you will have an abundance of Canadian credit cards from which to choose. On the other hand, the sheer selection of cards might make the shopping process a little intimidating for some. That is what this page is designed to help you with-selecting the right card for you.
Five Simple Steps to Choose Your Canadian Credit Card
Credit card agreements can be horribly complex, but if you follow these basic five steps when shopping for your card, you will find the ideal Canadian credit card for you in no time.
- Determine how you will use your card. Take a minute to reflect on your patterns of credit card use. Are you someone who always pays your bill off in full each month? If so, annual fees and extended grace periods might be more relevant to your decision. If you know you tend to carry a balance month to month, finding lower APR's should probably be your first priority. Do you intend to take advantage of the cash advance feature on your card? Then pay special attention to the cash advance APR's and any relevant fees. If you tend to use the cash advance feature frequently, then you'll want to select Canadian credit cards with the lowest cash advance APR's and fees.
- Know all the APR's on the card. Typically, Canadian credit cards come with several APR's for different situations. You should make sure you know all of the rates and when they apply. Typical rates include purchase APR's, balance transfer APR's, cash advance APR's, introductory or promotional APR's, and penalty/default APR's (what you'll pay if your payment is late). Another important piece of information is whether these APR's will be fixed or variable. A variable rate APR is tied to the prime rate, which will fluctuate over time. A fixed rate means your rate will generally remain the same despite the prime rate, but creditors can and do change even their fixed rates. Know when they can do this.
- Find out what your grace period is. This is especially important for those of you who pay off your balances each month to avoid finance charges. A grace period is how much time you will have to pay off your balance before you are assessed finance charges. The grace period generally only applies to new purchases, not to cash advances or balance transfers. If you intend to pay off your balance each month, then look for longer grace periods to avoid premature finance charges.
- Know how your finance charges are calculated. How your Canadian credit card company calculates your finance charges can make a big difference in how much you end up paying. Finance charges mainly depend on two factors: the APR and the outstanding balance. Look through the card agreement to determine if your finance charge is calculated using the adjusted balance, previous balance, or average daily balance method. You will also want to know whether your balance will be calculated over one or two billing cycles. Generally speaking, the one-billing-cycle method tends to yield lower finance charges. Also find out if your outstanding balance will include or exclude new purchases because this can also impact your finance charges.
- Determine what fees are charged and when. If you're not careful, there are some Canadian credit cards that can bury you in fees you weren't even aware of because you didn't do your homework. Before you commit to a card, figure out if the card has any of these fees and how much they are: cash advance fees, annual or membership fees, late payment fees, balance transfer fees, over-the-limit fees, set-up fees, credit limit increase fees, bounced-check fee, and any other fees mentioned in the agreement.
If you still have questions please contact us.
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