Published March 25, 2024 • 5 Min Read
Wondering what the best credit card in Canada is? It really comes down to what’s the best credit card for you. Choosing the right credit card means finding one that meets your lifestyle and spending habits and gives you benefits that matter to you.
Credit cards are a very popular way to pay for purchases in Canada. Today, there are about 94.8 million credit cards in circulation1 and the average Canadian has 2 or more cards2. With so many cards out there, you may wonder what’s the best credit card for you.
Choosing a credit card isn’t always easy, but here are 5 tips to consider when choosing a credit card.
1. Your lifestyle and life stage
Are you a student? A frequent traveller? Are you living on a tight budget? Or maybe you’re starting a family and have lots of expenses coming up?
Your lifestyle and life stage can have a meaningful impact on your choice of credit card. For instance:
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There are specific cards for students that offer student-specific perks or reduced annual fees.
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With a travel rewards card, you will earn points that you can use toward flights, hotel stays and more. It’s a smart choice if you love to travel.
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If you’re on a budget, a cash back card will give you money back to your credit card or bank account. If you entertain or dine out a lot, some cards reward you for restaurant, food delivery and grocery purchases.
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Some cards offer extra bonus points if you spend a certain amount within a set timeframe. These cards could be perfect if you’re entering an expensive stage of life, such as buying a home or starting a family.
2.Your spending habits
Some people use their credit card for everyday items — from a $2 coffee to their $100+ grocery bill. Others prefer to use their credit cards to pay for larger items only. Many cards offer extra rewards for certain types of purchases. So, it’s worth seeing how your spending habits match up.
3. The benefits that are important to you
Credit cards come with a wide range of benefits. Some come with travel rewards, which could include points for travel, access to airport lounges or deals on hotels. Others, as explained earlier, come with cash back. Furthermore, for some folks, insurance may be appealing as it may include coverage for trip cancellation, travel medical and purchase security insurance.
Looking for a credit card?
Use our Credit Card Selector Tool to find the best credit card for you.
4. Your credit habits
The smartest way to use a credit card is to use it for purchases and then pay off the balance in full every month. Some people are very disciplined and can manage their card this way. For others, bringing their credit card balance to zero every month can be a challenge.
If you regularly pay off your credit card by the due date, you don’t need to worry much about the interest rate. If, however, you carry a balance month over month, a low-interest-rate credit card may be a good choice for you. A lower-interest-rate card could save you a lot on interest costs compared to other card types. At the same time, it’s worth knowing that low-interest-rate cards generally don’t come with perks or points – so there is a trade-off to consider.
As you assess your credit habits against the cards that interest you, note that you can generally choose a lower credit limit than is assigned to you. If you aren’t comfortable with a given credit limit, you can request a lower limit for your card.
5. Your income
To help you narrow down the list of potential cards, it’s worth starting with the cards you may be eligible for. For example, some credit cards require you to meet a minimum income level.
Before you start browsing through cards, check to see if there’s a minimum income level you need to have, so you’re only applying for cards that make sense for you.
As you review your options, think about what you want out of a credit card and what benefits matter to you. Part of this assessment will be deciding if you’re willing to pay an annual fee for your card. Generally, the better the perks, the higher the fee.
To help you find a credit card that suits you best, try the RBC Credit Card Selector Tool. All you need to do is answer a few simple questions. It’s an easy way to see the options that fit your needs best.
Sources:
1 Yuns, Stephen, Olorundaré, Ajoké “Canadian Payment Methods and Trends: Rebound and Grow Report 2022.” Payments Canada. (2022)
2 The Canadian Banking Association reported a total of 76 million Visa and Mastercards were in circulation across the country in 2021, which, when factoring Canadians above the age of 18, adds up to about 2.4 credit cards per person. Source: https://www.ratehub.ca/blog/how-many-credit-cards-should-i-have-canada/#
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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