Choosing a credit card

Introduction

A credit card is a card issued by a bank or financial services company that allows cardholders to borrow funds with the intention of paying for goods and services. With these cards, the condition is that cardholders pay back the borrowed money, plus any applicable interest and any additional agreed-upon charges, either in full by the billing date or over time. Interest is the money that you will pay if you do not pay your credit card balance in full by the due date, meaning that you will continue to pay interest until you pay your balance back in full.

With using a credit card, your credit score is one of the most important measures of your financial health. Building a good credit history is a combination of things: making regular, on-time payments, avoiding late payments, keeping credit utilisation under your credit limit, and maintaining a low debt-to-income ratio. For example, if you would like to take out a loan or mortgage in the future, your score shows lenders a glance of how responsibly you use credit. The better your score, the easier you will find it to be approved for new loans or new lines of credit. Additionally, a higher credit score can lead the path to the lowest available interest rates when you borrow.

There are a multitude of advantages with using a credit card. While you will be able to carry around less cash, borrow money instantly to make purchases, and establish a credit history and earn a good credit score, simultaneously there are a list of disadvantages to using these cads, such as: building up more debt than you can handle, severely damaging your credit score if your payments are regularly late or you don't repay, etc.

Choosing a credit card is extremely personal, as each individual has a personalised set of needs and wants. You want to choose a card that minimises the disadvantages as described above as much as possible. The three key differences between credit cards are: the interest rates, the fees, and the rewards and benefits. Depending on how old you are, your income, and other factors, you may require different needs in each category.

Best Credit Cards for Students

When students go into post-secondary, there are a plethora of responsibilities and needs that come with living on your own. For many, this change in their lives can prove to be a jarring shift into adulthood. With that being said, they require a credit card that will support them through this change. The most important aspect of credit cards before purchasing power for students are the rewards.

As many students move away to another city, province, or even country to continue their studies, travelling can prove to be a huge expense. Also, with living on their own, they will need to find a way to feed themselves. Lastly, as they are embarking on a new lifestyle, managing their credit may prove to be difficult. Choosing credit cards with Airmiles benefits, Cash back, groceries, and benefits for those with bad credit will be useful.

Almost all student cards have no annual fee, a low income requirement (or none at all), and are available to people with little to no credit history. Also, the APR percentage of a student card can be quite high. The main difference between these cards are its perks

Airmiles

According to Forbes, these are the two best cards providing Air Mile perks for students:

BMO AIR MILES® Mastercard® - Student	CIBC Aeroplan Visa Card for Students
Pros: Welcome Offer: Get 800 AIR MILES Bonus Miles!* That’s enough for $80 towards purchases with AIR MILES Cash* Min. income: $0 Get 3x the Miles for every $25 spent at participating AIR MILES Partners and 2x the Miles for every $25 spent at any eligible grocery store. Get 1 Mile for every $25 spent everywhere else* Get AIR MILES back every time you spend, plus start building a healthy credit history No annual fee Receive a discount on car rentals Extended Warranty Purchase Protection Cash Advance Interest 22.99% (21.99% for Quebec residents)	Pros: A welcome offer of 10,000 Aeroplan points when you make your first purchase (up to $200 in travel value). One Aeroplan point per $1 spent on gas, groceries and at Air Canada directly. One Aeroplan point per $1.50 spent on everything else. No annual fee. Purchase security and extended warranty insurance. Includes common carrier accident insurance. Includes auto rental collision and loss damage insurance. Get a free SPC+ membership, which offers up to a 30% discount on top clothing brands.
Cons: 20.99% APR 22.99% Cash Advance Interest	Cons: 20.99% APR 22.99% Cash Advance Interest

In this category, CIBC Aeroplan Visa Card for Students may be the better option for those will Air Mile needs, According to Forbes Advisor’s data on average spending, you can earn up to $443.98 worth of Aeroplan points in a year, not including that solid welcome bonus, which is worth up to $200. And while this card can technically earn you over $600 worth of points your first year, Aeroplan points may not be as useful as cash to budget-conscious students.

Cashback

Cashback credit cards offer you the chance to earn cash from the money you spend, by paying you back a percentage of what you spend or giving you reward points. They only make sense if you pay off the balance in full each month and never go over your limit. Otherwise, the interest you pay will outweigh the rewards.

BMO® CashBack® Mastercard® - Student	RBC Cash Back Mastercard
Pros: Competitive welcome offer of 5% cash back. 3% cash back on groceries (up to $500 per month). 1% cash back on recurring bill payments (up to $500 per month). 0.5% cash back on all other spending with no limit. No annual fee. Flexible cash back redemption (you can redeem for any amount at any time). Financial insights. Extended warranty and purchase protection.	Pros: 2% cash back on groceries (up to $6,000 annually). 1% cash back on all other purchases with no limit. No annual fee. Extended warranty insurance and purchase protection.
Cons: $500 per month limit on the 3% grocery cash back (you’ll then earn the base 0.5% cash back rate if you exceed the limit). $500 per month limit on the 1% recurring bills cash back (you’ll then earn the base 0.5% cash back rate if you exceed the limit). APR: 20.99%	Cons: No welcome offer. You can only earn the 2% cash back on groceries on the first $6,000 in annual purchases, after which you’ll earn the base rate of 1% cash back. You can only redeem your cash-back credits that appear on your January statement (provided your account is in good standing and you have over $25 in cash back, otherwise the cash back rolls over to next year). APR: 20.99%

In this case, The BMO® CashBack® Mastercard® - Student is the better option. This credit card with no annual fee is considered the best option for students in Canada for several reasons, with one notable feature being its attractive welcome offer of 5% cash back on all purchases for the first three months. This makes it ideal for purchasing items such as textbooks and other student necessities. Additionally, it is chosen because it rewards responsible spending by offering the highest cash back on essential items such as groceries and bills, and provides tools to help manage a budget. According to calculations made by Forbes Advisor, it is estimated that users can earn up to $312 in cash back per year with this card. If you take advantage of the welcome offer, which has a maximum value of $125, it is possible to earn $437 in cash back in the first year, which can be redeemed at any time, for any amount. Overall, the combination of the welcome offer, high cash back rate on essentials, flexible redemption program and added benefits make this card the top choice for students.

Bad Credit

The Plastk Secured Visa Rewards card is a good option for students who have accumulated debt or want to focus on establishing a credit history rather than earning rewards. This secured credit card operates differently than other cards, you will put down a deposit (minimum of $300) and that will be your credit limit. By making purchases and paying off the balance on time every month, you will be able to build a positive record of paying off debt and thus establish a good credit history. One unique feature of this card is the ability to earn points that can be redeemed for statement credits, member events and other perks, with a value of 250 points per dollar. For a limited time, new members will automatically receive 5,000 points, worth $20, which can be redeemed after three months and the card comes with an interest-free grace period of 25 days. The card does have a monthly fee of $6 and an annual fee of $48, which can be easily budgeted for by most users.

Plastk Secured Visa Rewards Credit Card
Pros: Great for those attempting to build (or build back) their credit Deposit-based system makes the card very easy to be approved for Welcome bonus: 5,000 points ($20 cash value) plus a no interest for 25 days Collect points to redeem for statement balances, events, and other perks No minimum income requirement Only spend money you’ve already put up as a deposit - helps to curb overspending and teach students credit literacy
Cons: Annual and monthly fees could pose a challenge for users on a fixed budget Annual Fee: $48 Interest Rate: 17.99 % $6 Monthly Maintenance fee Standard interest rate of 17.99% shoots up to 29.99% after two missed payments - could be dangerous for some

Best Credit Cards for individuals with families

When looking for a credit card as someone with a family, it's important to take into consideration what added rewards and perks work best for you. It is also important to take a look at your income and decide which cards APR is best suited for your family. All Families are different, so taking the time to compare and contrast different cards and their incentives may seem like a time consuming, arduous task. However, at the end of the day looking into which cards offer the best cash back services, and which ones offer the best point systems for stores you frequently shop at could help save a lot of money for you and your loved ones. Choosing the right card is an important task, and it should be deemed as such.

Amazon Prime Rewards Visa Signature Card	PC Financial® World Elite Mastercard®	American Express Cobalt® Card	CIBC Dividend® Visa Infinite Card
Pros: Earn a $100 amazon card upon joining Easy reward redemption No foreign transaction fee Unlimited 5% back at Amazon and Whole Foods Visa Signature benefits No annual credit card fee 2% back at restaurants and gas stations Has travel and emergency assistance, lost luggage reimbursement, baggage delay insurance and travel accident insurance	Pros: 21 day interest free grace period on new purchases 20.97% Purchase interest rate $0 annual fee 30 points for $1 spent Comes with car rental collision/loss damage waiver insurance and up to $1 million in travel emergency medical insurance for 10 days of departure Identity theft assistant services Purchases are protected for 90 days incase of loss theft or damage	Pros: Earn 150,000 points in the first year by spending $30,000 30,000 point welcome offer, Earn 180,000 points in your first year transfer the points you earn to popular airline and hotel loyalty programs Earn $300 and more points in a year. No minimum income requirement Good if you want more access to rewards	Pros: 5 points per $1 spent on groceries and restaurants 3 points per $1 spent on streaming services 2 points per $1 spent on gas, transit, and travel 1 point per $1 spent on all other purchases Welcome bonus $600 or 30,000 points no annual fees for the first year as a new primary cardholder Offers hotel upgrades One of the best cash back cards
Cons: Best for people with a credit score of 670 to 850 Outside of Amazon family spending, other cards can have better deals and rewards Best for prime members, if you are not a prime member the amazon rewards visa card is better, as the 5% back is only for prime members.	Cons: Points can only be redeemed at increments of 10,000 Best if you shop at Superstore, No-frills, shoppers drug mart etc. Aimed at higher income households so $80,000(personal) to $150,000 (household) Enforces an annual $150,000 minimum spending requirement 22.97% cash advance	Cons: Not all stores accept amex No travel medical coverage for cardmembers over the age of 65. Used to have exclusive perks but there aren't any at the moment Not ideal as main credit card	Cons: Minimum income requirement of $60,000 per year. $120 annual fee (waived for the first year). High credit score to qualify (760-900). Foreign transaction fee of 2.5% Annual fee of $120
APR: 17.99% - 26.99%	APR: 19.97% Cash advance rate 22.97%	APR: 20.99% on purchases and 21.99% on funds	APR: Regular APR min: 20.99% Regular APR max: 24.99%

Out of the four credit cards explored, the best one for families in Canada is the PC Financial® World Elite Mastercard®. While all families are different, the most helpful one for day to day life would be this one. While it may enforce a minimum annual spending limiting, out of all the cards it has the best perks and has less limitations. Cards Like the Amazon Prime Rewards Visa Signature Card, is a viable option, but a good chunk of the perks are only available if you are an amazon prime member, and it's only good if you shop at amazon, or companies owned by amazon. The CIBC dividend card is also an option but it has a higher APR and you also have to pay an annual fee of $120, and the American Express cobalt card is really only good if you want to use it as a secondary credit card as not all stores take AMEX. Overall the PC financial Mastercard, is the best option of the four cards explored for a family as it has a lower APR and it also has $0 annual fees.

Best Credit Cards for Seniors

Although senior citizens do not need to raise their credit score, they have less of a need for them. Seniors are not part of the main demographic for credit cards either, but what if a senior was in the market for a good credit card? What would be of the most use for them? For senior citizens, they typically only have themselves or a spouse to mainly provide for and chances are that they won’t do a lot of travelling. A lot of credit cards offer travel benefits, but if there are fees that “pay” for those benefits, would it be worth it for them? Being fairly new commodities, seniors may have a harder time navigating and managing credit cards so it would be important that they have hassle-free and simple credit cards that have little to no hidden fees or conditions.

SimplyCash Card from American Express	Scotiabank Momentum Visa Infinite	PC Financial World Elite Mastercard*
Pros: $0.00 annual fee $100,000 travel accident insurance $0.00 income requirement 2% cash back on eligible gas and grocery purchases (max. $300 annual) 1.25% cash back on everything else 10 month welcome offer of $10 statement credit every monthly billing period when spending $300 No cash back limit at base rate	Pros: travel insurance (includes emergency medical) New mobile device insurance Visa infinite services No annual fee in first year 4% cash back on eligible groceries and recurring bills 2% cash back on eligible gas and public transport 1% cash back on everything else Access to customer service help online and in person 10% cash back on all purchases for first 3 months	Pros: PC Optimum loyalty program $0.00 annual fee 45 points per $1 spent at Shopper Drug Mart 30 points per $1 spent at Esso, PC Travel, or Loblaws 10 points per $1 spent anywhere else Travel emergency medical insurance Car rental, collision, or loss protection Concierge service Hassle-free redemption
Cons: Not widely accepted in Canada Cash back only applied as credit against card’s statement once a year $21.99 cash advances	Cons: $120 annual fee $60,000 income requirement ($100,000 household) 22.99% cash advances	Cons: 22.97% cash advances (21.97% in Quebec) No welcome offer $80,000 income requirement ($150,000 household)
APR: $20.99 on purchases	APR: 20.99% on purchases 22.99% balance transfers	APR: 20.97% on purchases

Out of the three credit cards compared above, the PC Financial World Elite Mastercard* is the best option for senior citizens in Canada. Although all are considerable options, there are a lot of rewards and offers that would not be of much use to seniors. The Scotiabank is the only card with an annual fee and although it is a reasonable price, it is way too high when compared to the other two options with no no price. While the American Express and Scotiabank card offer good cash back percentages, the PC financial card is the only one that offers points that contribute directly to a rewards program. This is the most hassle-free and easy to manage method of savings which would be the best option for seniors. Although only by a 0.03% difference, the PC Financial card has the lowest APR. The only major potential issue with the PC Financial card is that the required income ($80,000 / year) is also the average earnings of seniors in Canada which may mean that lower-earning seniors may not be eligible for the credit card.

Conclusion

As discussed, the top three credit cards were CIBC Aeroplan Visa Card for Students (students for air travel), The BMO® CashBack® Mastercard® (students for cash back), Plastk Secured Visa Rewards Credit Card (students with bad credit), PC Financial World Elite Mastercard* (families), and PC Financial World Elite Mastercard* (seniors)

Credit card quiz

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Resources

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CIBC Dividend Visa Infinite Card | Special Offers | CIBC. (n.d.). https://www.cibc.com/en/special-offers/cash-back-cards-affiliates.html?mktgSourceCode=962

American Express Cobalt® Card | Amex CA. (n.d.). https://www.americanexpress.com/ca/en/credit-cards/cobalt-card/?CPID=100322870

Reeves, C. (2022, November 29). CIBC Dividend Visa Infinite Review: The Best Cash Back Credit Card In Canada. Forbes Advisor Canada. https://www.forbes.com/advisor/ca/credit-cards/reviews/cibc-dividend-visa-infinite/

SimplyCash® Card from American Express| American Express Canada. (n.d.). https://www.americanexpress.com/ca/en/credit-cards/simply-cash/?CPID=100322879

The SimplyCash® Card from American Express Review | Greedyrates.ca. (2023, January 17). GreedyRates. https://www.greedyrates.ca/blog/simplycash-americanexpress-cashback/

Scotia Momentum Visa Infinite Card. (n.d.). Creditcardgenius. Retrieved January 25, 2023, from https://creditcardgenius.ca/credit-cards/scotiabank-momentum-visa-infinite

Jackson, L. (2023, January 12). PC Financial World Elite Mastercard review 2022. MoneySense. https://www.moneysense.ca/spend/credit-cards/pc-financial-world-elite-mastercard-review/ Just a moment. . . (n.d.). https://www.cardrates.com/advice/credit-card-ownership-by-age-income-gender-and-race/