How to choose the right credit card as a newcomer to Canada

Finding a good credit card can be a great way to work towards building credit history in Canada. Using your credit card responsibly helps you demonstrate creditworthiness and develop a good credit score, which can help make it easier to rent a home, get an auto loan or secure a mortgage, as well as access other types of credit. 

However, with so many different types of credit cards on the market, it can be hard to make sense of your options and figure out what’s best for you. We’re here to help. Read on to learn about the types of credit cards available to newcomers, what to consider as you select the best credit card for you, and how to apply for a card in-branch.   

What are newcomer credit cards? 

At a high level, a credit card for a newcomer is intended to help establish credit history within Canada. While many credit cards in Canada require a moderate or lengthy credit history, newcomer credit cards are available to applicants with a limited or no credit history within Canada. They’re available for a range of newcomers, including permanent residents, foreign workers and international students. 

Newcomer Credit Cards may be available to you in both unsecured and secured options. Unsecured credit cards allow you to make purchases up to the credit limit on the card with no upfront deposit. 

Secured credit cards function similarly to unsecured cards, in that they allow you to make purchases up to the credit limit on the card. However, secured cards require an upfront deposit, often equal to the credit limit on the card. Whether the card is secured or not depends on your credit card issuer’s individual policy for newcomers and may further depend on your status in Canada. 

What types of cards are available?

You may have access to a range of newcomer credit cards: 

• Rewards cards, which allow you to earn points that can be redeemed for merchandise. 

• Travel cards, which allow you to earn points that you can redeem on travel-related expenses, such as flights and hotel bookings. 

• Cash-back rewards cards, which give you a certain amount of cash back on your credit card purchases.

• Low interest rate cards, which offer a lower interest rate to allow you to save money on interest. 

How to choose the best credit card for you 

When you’re selecting a card, the first thing to consider is your financial goals and how you plan to use the card. Each card has its own benefits and considerations, so you’ll need to reflect on which one fits your needs and budget. 

As you evaluate cards, take into account: 

1. Card fees 

Credit cards can come with a variety of fees. These might include an annual fee for holding the card, cash advance fees, foreign exchange fees, balance transfer fees, late payment fees and over-limit fees. If you want to access credit at a minimal cost, look for a credit card with no annual fee. 

2. Interest rates 

Learn how much interest you’ll pay on purchases and cash advances. If you intend to carry a balance on your card from month to month, you may prioritize a card with a lower rate to save money on interest.  

3. Type of rewards 

Select a card with rewards that match your goals. A card where you earn points may help you redeem for gift cards, merchandise, or travel to visit family back home, while a cash-back card can provide some wiggle room in your budget for essentials. 

How to apply for a credit card as a newcomer to Canada 

Here’s how to find the ideal card in three steps: 

1. Shop around for cards online 

Browse the offerings across several credit card issuers — and between cards from the same issuer. Make a short list of cards that meet your financial needs and goals.  

2. Assemble the required documents 

Credit card issuers will require proof of identity to review your credit card application. The documents needed may vary by lender but may include:  

•  Proof of status in Canada (e.g. permanent resident card, study permit)  

•  Proof of address (e.g. utility bill, lease)  

•  Financial documents (e.g. pay stubs, bank statements)   

3. Apply in-branch 

Once you’ve gathered your documents, visit your local branch to start the application process. Once you’re approved, your card — along with the information you need to activate it — will be mailed to your home.   

•  Just got your card? Learn how to [use your credit card to build your credit history].   

Lay the foundation for stronger credit with the right card 

Getting a credit card helps you start building your credit history in Canada — and finding the right card for you can lay the foundation for you to achieve your personal and financial goals.

RBC is here to help, with banking accounts and rewards credit cards designed with the needs of newcomers in mind. Use our Credit Card Selector to find a card that meets your needs. 

Share This Article