Choosing the right credit card is a crucial financial decision that can significantly impact your purchasing power and overall financial health. A wide array of credit cards are available, each offering unique benefits tailored to different needs and lifestyles.
Whether you're looking for cash back rewards, travel perks, low interest rates, or enhanced security features, the Canadian credit card market has something for everyone. This blog guides you through the top credit card options currently available in Canada, helping you make an informed choice that aligns with your financial goals and spending habits.
List of the Best Credits Cards in Canada
KOHO Premium Prepaid Visa
Interest Rate: N/A (Prepaid)
Rewards: 2% cash back on groceries, restaurants, and transportation, 0.5% on everything else.
Benefits: No foreign transaction fees, no interest charges, budgeting tools.
American Express Cobalt® Card
Earns points for every dollar spent on eligible purchases
Great for those who frequently spend on dining and travel
Scotiabank Gold American Express® Card
Offers points on groceries, dining, and entertainment
No foreign transaction fees
TD Aeroplan Visa Infinite® Card
Ideal for frequent Air Canada travelers
Earns Aeroplan points with purchases
RBC Avion Visa Infinite® Card
Great for flexible travel rewards
Offers comprehensive travel insurance
BMO CashBack® World Elite® Mastercard®
Earns cash back on all purchases
Includes travel and medical insurance
CIBC Aventura® Visa Infinite® Card
Great for earning travel rewards
Offers a comprehensive travel insurance package
Tangerine Money-Back Credit Card
Earns money back on everyday purchases
No annual fee and flexible reward categories
Rogers World Elite Mastercard®
Earns rewards on all purchases, especially useful for those who make purchases in foreign currencies
No annual fee
National Bank World Elite Mastercard®
Offers strong rewards for travel and dining
Includes travel insurance and mobile device insurance
MBNA Rewards World Elite® Mastercard®
Earns points on everyday purchases
Offers travel and merchandise rewards
Introduction to credit cards in Canada
Credit cards have become an essential financial tool for millions of Canadians, offering a convenient way to make purchases, manage cash flow, and earn rewards. The Canadian credit card market is diverse and competitive, featuring various options tailored to various consumer needs.
From cards that offer lucrative cash back and travel rewards to those providing low interest rates and comprehensive insurance coverage, there's a credit card to suit every lifestyle and financial situation.
What is a credit card?
A credit card is a financial tool issued by banks or financial institutions that allows cardholders to borrow up to a limit to make purchases, pay bills, or withdraw cash. Unlike a debit card, which draws directly from your bank account, a credit card offers a line of credit that you can use to make transactions. The borrowed amount, known as the balance, is repaid either in full by the end of a monthly billing cycle or over time with interest.
Credit cards have various features and benefits, including rewards programs, cash back, travel perks, and purchase protection. They also provide a convenient way to manage expenses, build credit history, and access emergency funds. However, responsible use is essential, as carrying a balance from month to month can lead to high-interest charges and potential debt accumulation.
Types of credit cards in Canada
In Canada, there is a diverse array of credit card options designed to meet different consumer needs and preferences. Here are the main types of credit cards available.
Rewards credit cards
Cash back credit cards
Cash back credit cards are highly popular among Canadians due to their straightforward and tangible benefits. These cards reward users with a percentage of their spending returned as cash. For instance, a card might offer 1-2% cash back on all purchases and higher percentages on specific categories like groceries, gas, or dining.
Cash back credit cards in Canada are an excellent choice for everyday expenses, allowing cardholders to save money on routine purchases. Some cash back cards also offer sign-up bonuses, additional promotional rates, and the flexibility to redeem cash back as a statement credit, direct deposit, or even gift cards.
Travel rewards credit cards
Travel rewards cards are tailored for those who frequently travel or aspire to travel more. For example, Air Miles credit cards allow cardholders to earn miles for every dollar spent, which they can redeem for flights, hotel stays, car rentals, and other travel-related expenses.
Additionally, many travel rewards cards offer substantial sign-up bonuses, priority boarding, free checked bags, and access to airport lounges. They often include travel insurance benefits like trip cancellation, lost luggage reimbursement, and emergency medical coverage, making them a comprehensive option for travellers seeking rewards and protection.
Low-interest credit cards
Low-interest credit cards are designed for individuals who tend to carry a balance on their credit card from month to month. These cards offer a significantly lower annual percentage rate (APR) on purchases than standard credit cards, helping cardholders save on interest charges.
This feature makes them particularly beneficial for managing large expenses or unexpected costs without incurring substantial interest fees. Some low-interest cards also provide introductory periods with even lower or zero interest rates, offering a cost-effective way to manage debt.
In addition to lower interest rates, these cards may come with fewer fees and straightforward terms, making them a practical choice for budget-conscious consumers. While they may not offer extensive rewards programs, the savings on interest can outweigh the benefits of rewards for those who prioritize minimizing their debt.
Low-interest credit cards are ideal for individuals who seek a more manageable and predictable way to handle their finances, particularly when dealing with outstanding balances.
Balance transfer credit cards
Balance transfer credit cards are specifically designed to help cardholders consolidate and pay off existing credit card debt by transferring money from one credit card to another, typically with lower interest. These cards offer low or zero interest rates on balances transferred from other credit cards for a promotional period, ranging from six months to two years.
Users can focus on paying down the principal amount of their debt without the burden of high interest rates. Balance transfer cards are a powerful tool for those looking to reduce their overall debt more efficiently.
However, it’s essential to understand the terms and conditions associated with balance transfer cards. There is often a fee for balance transfers on credit cards, usually a percentage of the transferred amount, which can impact the overall savings.
Additionally, after the promotional period ends, the interest rate reverts to the card’s standard APR, which can be significantly higher. Therefore, these cards are best suited for individuals with a clear plan to pay off their transferred balance within the promotional timeframe to maximize the benefits.
No annual fee credit cards
No annual fee credit cards are an attractive option for consumers who want to avoid the extra cost associated with maintaining a credit card. These cards do not charge an annual fee, making them a cost-effective choice for those who prefer simplicity and low expenses. While they may not offer as many perks or rewards as premium cards, they still provide essential credit card functionalities and benefits such as fraud protection and purchase insurance.
These credit cards are particularly suitable for infrequent credit card users or individuals new to credit who want to establish their credit history without incurring additional costs. Many no-annual-fee cards still offer rewards programs, albeit at a lower rate, allowing users to earn points, miles, or cash back on their purchases. They provide a balanced mix of affordability and utility, making them a practical choice for budget-conscious consumers.
Secured credit cards
Secured credit cards are an excellent option for individuals with poor or no credit history looking to build or rebuild their credit scores. The deposit on a secured credit card typically becomes the card's credit limit.
For example, a $500 deposit would provide a $500 credit limit. This deposit reduces the risk for the issuer, making secured cards accessible to those who might not qualify for traditional credit cards. Responsible use of a secured credit card, such as making timely payments and keeping balances low, can help improve credit scores over time.
While secured cards may have higher fees and interest rates, they offer a valuable pathway to establish or rebuild creditworthiness. Many issuers report to major credit bureaus, ensuring that positive payment behaviour is reflected in the cardholder's credit report.
Some secured cards also offer a transition to an unsecured card after a period of responsible use, providing an opportunity for improved credit terms and benefits in the future.
Student credit cards
Student credit cards are specifically designed for college and university students, offering features and benefits that cater to their unique financial needs. These cards typically have lower credit limits to encourage responsible spending and reduce the risk of accumulating significant debt.
These cards often come with rewards programs tailored to common student expenses such as groceries, gas, and dining. Additionally, student cards may include educational resources to help young adults develop good credit habits and financial literacy.
For students, establishing a credit history early on can be immensely beneficial. A good credit score can help with future financial endeavours such as renting an apartment, securing loans, or even landing a job.
Student credit cards also offer basic benefits like fraud protection and purchase insurance, providing security for new cardholders. By using these cards responsibly, students can build a strong credit foundation while enjoying rewards and benefits that align with their lifestyle.
Business credit cards
Business credit cards in Canada are tailored for business owners and entrepreneurs, providing tools and benefits to manage business expenses effectively. These cards often offer rewards on business-related purchases such as office supplies, travel, and advertising.
Business cards also come with higher credit limits than personal credit cards, accommodating larger business expenses. Business credit cards can simplify expense tracking and management, with detailed statements and spending reports that help in budgeting and accounting.
Moreover, many business credit cards offer additional benefits like employee cards, expense management tools, and travel insurance. They may also provide sign-up bonuses and promotional offers that can be particularly advantageous for new businesses looking to maximize their cash flow and savings.
By leveraging the rewards and benefits of a business credit card, business owners can optimize their spending, manage expenses more efficiently, and potentially improve their business credit profile.
Premium credit cards
Premium credit cards cater to individuals seeking luxury and exclusivity, offering a wide range of high-end benefits and services. These cards typically come with substantial annual fees but provide extensive perks such as luxury travel benefits, concierge services, access to exclusive events, and higher reward rates.
Cardholders may enjoy complimentary airport lounge access, travel insurance, and exclusive offers on dining and entertainment. Premium cards are designed for those who frequently travel or spend significantly in categories like dining and entertainment.
In addition to luxury benefits, premium credit cards often come with higher credit limits and comprehensive insurance coverage, providing peace of mind and financial flexibility. The enhanced rewards programs on these cards can offer significant value, especially for frequent travellers who can benefit from accelerated points or miles accumulation and redeem them for luxury travel experiences. While the annual fee on these cards can be high, the benefits and rewards often justify the cost for those who can fully utilize the card's features.
Top credit card features and benefits
Credit cards come with a variety of features and benefits that cater to different needs and preferences. Here are some of the top features and benefits to look for when choosing a credit card.
Rewards programs
Many credit cards offer cash back rewards, where a percentage of each purchase is returned to the cardholder. This can be a fixed rate across all purchases or higher rates for specific categories like groceries, gas, or dining. Cash back rewards provide immediate, tangible benefits and can be redeemed as statement credits, direct deposits, or gift cards.
Travel rewards cards earn points or miles for every dollar spent, which can be redeemed for flights, hotel stays, car rentals, and other travel-related expenses. These cards often come with sign-up bonuses, travel insurance, and perks like priority boarding, free checked bags, and airport lounge access. They are ideal for frequent travellers looking to maximize their travel budget.
Low interest rates
Some credit cards offer low or 0% introductory APRs on purchases and balance transfers for a specific period. This can help cardholders save on interest charges when making large purchases or consolidating existing debt. It’s essential to pay off the balance before the promotional period ends to avoid high interest rates.
For those who may carry a balance, cards with low ongoing interest rates can significantly reduce the cost of borrowing. These cards are useful for managing larger expenses over time without incurring substantial interest fees.
No annual fees
Credit cards with no annual fees are cost-effective for budget-conscious consumers. They provide essential credit card functionalities without the extra cost. While they may not offer as many perks as premium cards, they still include benefits like fraud protection and purchase insurance. Some no-annual fee cards also offer rewards programs, allowing cardholders to earn points, miles, or cash back without additional costs.
Balance transfer options
Cards with balance transfer offers allow cardholders to transfer existing debt from high-interest cards to one with a low or 0% introductory APR. It can be a strategic way to pay down debt more quickly by reducing interest costs. It’s important to understand any balance transfer fees and the duration of the promotional period to maximize savings.
Security features
Most credit cards come with robust fraud protection features, including zero liability policies for unauthorized charges, real-time fraud monitoring, and alerts. These features provide peace of mind and protect cardholders from financial losses due to fraud.
Advanced security features like chip and PIN technology help prevent unauthorized transactions and provide an additional layer of protection against fraud.
Additional perks and benefits
Travel insurance
Many travel rewards cards offer comprehensive travel insurance, covering trip cancellations, lost luggage, emergency medical expenses, and travel accident insurance. This benefit can save cardholders significant costs and provide valuable protection while travelling.
Purchase protection
Some credit cards include purchase protection, covering new purchases against damage or theft for a certain period. This benefit ensures that cardholders can shop with confidence, knowing their purchases are protected.
Extended warranty
The extended warranty coverage offered by some credit cards extends the manufacturer’s warranty on eligible purchases, providing additional peace of mind and protection against defects or malfunctions.
Concierge services
Premium credit cards often come with concierge services, providing personalized assistance for travel bookings, event reservations, and other lifestyle needs. This service can add significant value and convenience for busy individuals who require assistance with planning and reservations.
Exclusive access
High-end credit cards may offer exclusive access to events, luxury experiences, and special offers. This can include priority seating at concerts, VIP access to sports events, and special discounts on luxury goods and services. These perks are designed to enhance the cardholder’s lifestyle and provide unique experiences.
Pros and cons of credit cards
Credit cards offer a range of advantages and disadvantages. Understanding both can help you make informed decisions about their use.
Pros
Convenience and ease of use
Credit cards are widely accepted and provide a convenient way to make purchases online and in-store. They allow you to buy now and pay later, providing flexibility in managing your cash flow.
Rewards and benefits
Many credit cards offer rewards programs that give you cash back, points, or miles for your purchases. Travel rewards cards provide benefits such as free flights, hotel stays, travel insurance, and airport lounge access.
Building credit history
Responsible use of credit cards, such as making on-time payments and maintaining low balances, can help with building credit in Canada. A good credit history is essential for securing loans, mortgages, and even renting apartments.
Security and protection
Credit cards offer robust fraud protection, including zero liability for unauthorized charges. Some cards offer purchase protection, covering items against theft or damage for a certain period after purchase. Credit cards can extend the manufacturer’s warranty on purchases, providing additional protection.
Additional perks
High-end cards may offer personalized assistance for travel bookings, event reservations, and other services. Premium cards often provide access to exclusive events, special offers, and luxury experiences.
Cons
High interest rates
Carrying a balance from month to month can result in high-interest charges, making purchases significantly more expensive over time. It’s easy to accumulate debt if you’re not careful about paying off your balance regularly.
Fees
Some credit cards charge an annual fee, which can be costly and reduce the overall value of the rewards and benefits. Missing payments can result in late fees and penalty interest rates, which can quickly add up.
Impact on credit score
High credit card balances can negatively impact your credit score, even if you make timely payments. Late or missed payments can significantly damage your credit score and remain on your credit report for several years.
Risk of overspending
The convenience of credit cards can lead to impulsive buying and overspending, resulting in financial strain. Making only minimum payments can extend debt repayment over many years and increase the amount of interest paid.
Complex terms and conditions
Credit card agreements can be complex, with detailed terms and conditions that are sometimes difficult to understand. Some credit cards have hidden fees for foreign transactions, balance transfers, or cash advances.
Credit card fees
Credit card fees can vary significantly depending on the type of card and how it is used. Being aware of these fees is crucial for managing your credit card effectively and avoiding unnecessary costs.
Annual fees
The annual fee is a yearly fee charged by the credit card issuer for using the card. The fee can range from $0 to several hundred for premium or rewards credit cards. The credit card company can charge the annual fee as a lump sum or periodically as part of your monthly billing period.
Evaluate if the benefits and rewards of the credit card justify the annual fee. Some cards offer higher rewards or perks that can offset the cost.
Interest charges
The interest rate is applied to outstanding credit card debt. There are different types of interest charges:
Purchase APR: Interest rate on regular purchases.
Balance Transfer APR: The interest rate on balances transferred from other cards.
Cash Advance APR: Higher interest rate for cash advances.
Penalty APR: Increased interest rate applied after a missed payment.
Paying your credit card debt in full monthly can help avoid interest charges. Look for cards with low APR if you expect to carry a balance.
Late payment fees
Late payment fees apply if you fail to make the minimum payment by the due date for your monthly billing period. This fee typically ranges from $25 to $40 per missed payment. You can set up automatic payments or reminders to avoid late payments and additional fees.
Balance transfer fees
Credit card providers charge a fee for transferring a balance from one credit card to another. It's typically 3-5% of the transferred amount. You can calculate if the interest savings from the balance transfer outweigh the transfer fee.
Cash advance fees
This is a fee for withdrawing cash from an ATM or bank using your credit card. The cash advances typically have a flat fee or a percentage fee of the amount advanced, often 3-5%. Cash advances also typically have high APRs and no grace period, making them expensive.
Foreign transaction fees
Foreign transaction fees are for foreign currency purchases or purchases made through a foreign bank. The fee is typically 2-3% of the transaction amount. For international travel, consider credit cards with no foreign transaction fees to save money. Having a credit card with no foreign transaction charges means you pay only the exchange rate.
Over-limit fees
Over-limit fees are charged if your spending exceeds your credit limit. The fee varies, but typically falls within $25 to $35. You can opt out of over-limit protection to avoid these fees, or monitor your spending closely to ensure you stay within your limit.
Returned payment fees
Returned payment fees apply when payments are returned because of insufficient funds or other issues. Ensure you have sufficient funds in your account before making payments to avoid this fee.
Card replacement fees
This fee applies when you replace a lost or stolen card. The cost varies as some issuers charge a fee while others offer free replacements. Check your credit card's policy on replacement fees in case you need a new card.
Inactivity fees
Credit card companies sometimes charge a fee if you don't use your credit card for a specified period. Although uncommon, they can be around $10 to $20 per month of inactivity. Regularly use your credit card for small purchases to avoid inactivity fees.
Credit card providers
KOHO
KOHO is a fintech company that offers a prepaid Mastercard card combined with a spending and savings account. It provides many of the benefits of a traditional credit card without the risk of accruing debt since it operates on a prepaid basis. KOHO is particularly popular among millennials and those looking for a modern approach to personal finance.
Popular cards:
KOHO Prepaid Mastercard: Offers cash back on every purchase and additional savings features such as automated roundups and savings goals. It includes no hidden fees and provides real-time insights into spending habits.
KOHO Premium: An upgraded version that offers higher cash back rates, no foreign transaction fees, and additional perks like financial coaching.
TD Canada Trust
TD Canada Trust offers a variety of credit cards catering to different lifestyles, including cash back, travel rewards, and low-interest cards. They are known for their comprehensive benefits and robust customer service.
Popular cards:
TD Cash Back Visa Infinite: Offers competitive cash back rates on groceries, gas, and recurring bill payments.
TD Aeroplan Visa Infinite: Focuses on travel rewards, allowing cardholders to earn Aeroplan miles for flights and other travel-related expenses.
Royal Bank of Canada (RBC)
RBC is one of Canada’s largest banks, providing a wide range of credit cards with various rewards programs and benefits. Their cards often come with strong travel and insurance features.
Popular cards:
RBC Cash Back Mastercard: Provides straightforward cash back on everyday purchases.
RBC Avion Visa Infinite: Known for its flexible travel rewards program, allowing points redemption for flights on any airline without blackout dates.
Scotiabank
Scotiabank offers credit cards with robust rewards programs, including cash back, travel points, and partnerships with major airlines. Their Scene+ program is particularly popular for entertainment and travel rewards.
Popular cards:
Scotia Momentum Visa Infinite: Offers high cash back rates on groceries, gas, and recurring bill payments.
Scotiabank Gold American Express: Known for its excellent travel rewards and no foreign transaction fees.
Bank of Montreal (BMO)
BMO provides a range of credit cards, from low-interest options to premium travel rewards cards. They often feature introductory offers and strong rewards programs.
Popular cards:
BMO CashBack World Elite Mastercard: Offers high cash back rates and additional travel and insurance benefits.
BMO Air Miles World Elite Mastercard: Allows cardholders to earn Air Miles for various travel and retail rewards.
Canadian Imperial Bank of Commerce (CIBC)
CIBC offers a diverse selection of credit cards, including those tailored for students, business owners, and frequent travelers. They provide competitive rewards and benefits across their card portfolio.
Popular cards:
CIBC Dividend Visa Infinite: Known for its generous cash back on gas, groceries, and other everyday purchases.
CIBC Aventura Visa Infinite: Offers flexible travel rewards and comprehensive travel insurance coverage.
American Express
American Express is renowned for its premium customer service and exclusive benefits. They offer a range of cards from no-fee options to high-end travel and rewards cards.
Popular cards:
American Express Cobalt Card: Offers high rewards on dining, travel, and transit, making it popular among millennials and urban dwellers.
American Express Platinum Card: Known for its luxury travel perks, including access to airport lounges, concierge services, and extensive insurance coverage.
Capital One
Capital One provides a variety of credit cards, including those for people with average credit, secured cards for credit building, and rewards cards with competitive benefits.
Popular cards:
Capital One Aspire Travel World Elite Mastercard: Offers strong travel rewards and benefits, including travel insurance and concierge services.
Capital One Guaranteed Mastercard: A secured card designed to help build or rebuild credit.
How to find the best credit cards in Canada
Finding the best credit card in Canada involves several strategic steps tailored to your financial needs and spending habits.
Assess your financial situation
First, assess your financial situation by checking your credit score. This score not only determines your eligibility for various cards but also influences the types of rewards and interest rates you can access. Understanding your credit score helps in choosing cards that match your financial profile and potential benefits.
Determine your priorities
Determine your priorities between rewards and interest rates. If you regularly pay off your balance, a rewards card offering cash back, points, or travel miles might be advantageous. If you anticipate carrying a balance, focusing on cards with lower interest rates or introductory 0% APR offers on purchases and balance transfers could save you money in interest charges.
Compare different credit cards
Comparing different types of cards is crucial. Cash back cards are ideal if you prefer earning money back on everyday purchases, while travel rewards cards are beneficial for frequent travelers seeking perks like travel insurance and no foreign transaction fees. Additionally, low-interest or balance transfer cards can help consolidate debt or manage larger purchases with lower interest costs.
Research providers and issuers
Researching providers and issuers broadens your options and helps you make informed choices. Major banks such as TD Canada Trust, RBC, Scotiabank, BMO, and CIBC offer diverse card selections with competitive rewards and benefits. Fintech companies like KOHO provide innovative features tailored to modern financial needs, while credit unions may offer community-focused benefits and competitive rates.
Compare card features and benefits
Comparing card features and benefits is essential for making an informed decision. Pay attention to APRs on purchases, balance transfers, and cash advances. Evaluate fees including annual fees, late payment fees, and foreign transaction fees to ensure they align with your spending habits and financial goals. Consider additional perks such as travel insurance, purchase protection, and access to exclusive events, which can enhance the overall value of the card.
Read reviews and recommendations
Reading reviews and recommendations from reputable sources can provide insights into user experiences with specific credit cards. Online reviews, forums, and recommendations from friends or financial advisors can offer valuable perspectives on customer service, ease of use, and overall satisfaction with the card.
Check eligibility and apply
Check your eligibility and apply for the selected card. Utilize pre-qualification tools offered by issuers to gauge your chances of approval without impacting your credit score. Complete the application process accurately, providing the necessary information about your income, employment, and financial history.
Tips for using credit cards responsibly
Using credit cards responsibly is essential to maintain financial health and avoid unnecessary debt.
Credit a budget
Establish a monthly budget that outlines your income and expenses. Include credit card payments as part of your budget to ensure you can afford to pay off your balance in full each month. This practice helps prevent overspending and accumulating debt.
Make timely payments in full
Always strive to pay your credit card balance in full by the due date each month. This approach avoids interest charges on purchases and helps build a positive credit history. Set up automatic payments or reminders to ensure you never miss a payment.
Monitor your spending regularly
Track your credit card transactions regularly through online banking or mobile apps. Monitoring your spending helps you stay within your budget and credit limit, identify any unauthorized charges promptly, and manage your overall financial health effectively. Going over your credit limit can cause your credit card to be declined.
Understand your credit card terms and fees
Read and understand the terms and conditions of your credit card agreement, including interest rates, fees (e.g., annual fees, late payment fees, foreign transaction fees), and any promotional offers. Knowing these details helps you avoid unexpected charges and make informed financial decisions.
Use credit wisely
Avoid maxing out your credit limit, as this can negatively impact your credit score and increase your debt burden. Aim to keep your credit utilization ratio below 30% to maintain a healthy credit profile.
Be mindful of cash advances
Avoid using your credit card for cash advances whenever possible. Cash advances typically have higher interest rates and fees than regular purchases and accrue interest immediately without a grace period.
Take advantage of rewards and benefits
If your credit card offers rewards or benefits such as cash back, points, or travel perks, maximize these benefits by using your card for everyday purchases and paying off the balance in full each month. Be mindful of any caps or restrictions on rewards earnings.
Plan for major purchases
For significant expenses, plan and consider whether using a credit card is the best option. Evaluate the interest rates, fees, and repayment terms to determine the most cost-effective way to finance your purchase.
Review your credit report regularly
Check your credit report at least once a year to monitor your credit history and ensure there are no errors or fraudulent activities. Reporting inaccuracies promptly helps maintain the accuracy of your credit profile.
Seek help if needed
If you're facing challenges managing your credit card debt, reach out to your credit card issuer or a reputable credit counseling service for assistance. They can guide budgeting, debt repayment strategies, and financial planning.
Credit scores and credit cards
A credit score is a numerical representation of your creditworthiness, calculated based on your credit history. In Canada, the primary credit bureaus are Equifax, Experian, and TransUnion, which score you on a scale from 300 to 900. Check your credit score to understand your creditworthiness and financial profile to help you determine the credit products you qualify for.
Components of a credit score
Here are the factors that affect credit scores in Canada:
Payment history (35%): Timely payment of bills and debts.
Credit utilization (30%): The ratio of your current debt to your credit limit. Pending transactions on credit cards can impact your credit utilization.
Length of credit history (15%): The duration of your credit accounts.
New credit (10%): Frequency of new credit inquiries and accounts.
Credit mix (10%): A variety of credit types managed, such as credit cards and loans.
Impact of credit scores on credit cards
The average credit score is around 680 for Canadians. A higher score improves your creditworthiness and qualifies you for better credit cards, interest rates, and terms.
High credit scores (750 to 900)
High credit scores qualify you for the best credit card offers, including premium rewards cards, low interest rates, and high credit limits.
Moderate credit scores (650 to 749)
With a moderate score, you can still access a variety of good credit cards, though they may come with higher interest rates and fewer premium benefits.
Low credit scores (300 to 649)
Low credit scores limit your options to basic credit cards, often with higher interest rates and lower credit limits. There are credit cards for people with bad credit if your score falls within this range. Secured credit cards are a common option to rebuild credit.
Apply for a KOHO prepaid card and build credit today!
The KOHO virtual credit card allows you to pay without needing a physical card while earning cash back on every dollar spent. Instantly unlock your virtual card through the app and enjoy peace of mind with top-notch security protection against fraud and cyber threats. This virtual credit card is especially useful when travelling or shopping online. You can monitor your credit profile with a free credit score report and ensure you're on the right track when building your credit with KOHO.
Worried about needing extra funds in emergencies? Sign up for Cover, our overdraft protection coverage, which provides up to $250 in zero-interest cash advances for unexpected expenses that disrupt your budget. With KOHO, building credit is easy, helping you qualify for a range of credit products.
In addition to credit solutions, KOHO offers various plans for spending and saving to support your goals. Our high-interest savings account, for instance, allows you to earn more interest than traditional accounts on every dollar deposited.
For businesses seeking enterprise solutions to fund operations and enhance financial management, KOHO for Businesses offers a comprehensive range of services designed to meet your needs. Whether for personal or businesses use, KOHO provides innovative financial tools to help you achieve your goals.