On this page, we’ve provided a list of the very best Canadian credit cards.

You’ll also find details about the factors we consider when determining the best credit cards in Canada. This will help you understand why we’ve selected certain cards and how you can compare options.

Keep in mind that the same credit card that is optimal for one person may not be ideal for another. 

To choose the best credit card for your needs, you’ll want to consider aspects specific to you. The most important things to consider when choosing a credit card include: Lifestyle, credit card habits 

Determining the Best Canadian Credit Cards 

With three credit card networks (i.e. Visa, Mastercard and American Express) and numerous credit card issuers in Canada, it can be a daunting task deciding which credit card is best for you. 

To help narrow down your options, consider these factors:

  1. Interest rates
  2. Annual fees
  3. Rewards 
  4. Annual income requirements
  5. Insurance
  6. Credit limits
  7. Lifestyle
  8. Credit card habits 

We’ve focused on these features to help bring you a list of the best credit cards in Canada.

1. Interest rates

It’s no secret that having a low interest rate is an enticing credit card feature. However, interest rates are not something every credit card user has to worry about. 

There are two instances in which you’ll be required to pay interest to your credit card issuer:

  1. You have an unpaid balance on your credit card
  2. You use your credit card to withdraw a cash advance

If you don’t plan on using cash advances or carrying a balance on your credit card, then interest rates won’t affect you. 

On the other hand, if you anticipate holding a balance or withdrawing cash from your card then interest rates will be crucial. In this case, you’ll want a credit card with the lowest interest rate possible. 

It’s important to note that credit cards may list up to two interest rates. 

  1. Interest rate on purchases - this is the interest rate that you will pay if you carry an unpaid balance on your credit card (i.e. you do not pay off your monthly balance in full).
  2. Interest rate on cash advances - this is the rate you’ll pay if you withdraw cash using your credit card.

The interest rate for cash advances will usually be higher. Interest on a cash advance begins accumulating immediately and is charged until the entire amount is paid off. For regular purchases charged to your card, you have 21 days to pay the amount off before interest is charged.

In some cases, credit card issuers will offer reduced interest rates for the first several months. This can be a helpful benefit in the beginning. However, it’s important to be aware of these offers and to plan for the rate increase. You don’t want to be stuck carrying a large balance with a high interest rate!

To avoid any unexpected interest, be sure to read a card’s terms and conditions carefully. Especially when a special offer is promoted.

Before selecting a credit card, think about how you plan on using it and whether you need to compare interest rates.

2. Annual fees

Some Canadian credit cards charge an annual fee.

Credit card fees can range anywhere from $50 to $150. Often credit cards that have an annual fee will offer one or a combination of the following.

  • Lower interest rates
  • More rewards
  • Extra benefits

For some, these perks are enticing and warrant the annual fee. Whether this fee is worth it to you will depend on your needs and how you intend to use your credit card.

Bonus Tip: Keep an eye out for offers that waive this fee.

Many financial institutions will waive credit card fees if you carry a minimum amount in a chequing account at the same institution. If you can commit to maintaining this minimum balance, you’ll get all the perks that come with an annual fee credit card but without the cost!

3. Rewards and Benefits

Added rewards and cash back benefits are common among the best credit cards in Canada. However, the number of points you receive per dollar and the percent of cash back you earn will vary.

If you want a credit card that offers rewards or cash back, be sure to look at cards that provide:

  • Highest points earned per purchase
  • Greatest cash back percentage 

You’ll also want to take into account the purchase categories that will earn you points or cash back.

For instance, cash back credit cards offer different cash back percentages depending on what you purchase. 

Some common cash back categories and percentages include:

  • Groceries - 2% to 3%
  • Gas and Transit - 2%
  • Everything else - 1%

Choose a credit card that offers the most points or cash back on the purchase types that you most commonly make.

At some point, you’ll want to redeem these points or cash. Make sure that the card you choose:

  • Offers reward options you like
  • Provides an easy way to use the cash back you’ve earned

When redeeming points, some common reward options include:

  • Travel
  • Merchandise
  • Charity 
  • Gift Cards

Choosing a credit card with a strong rewards system or cash back incentives can add up to some pretty great savings if you find the card that’s right for you.

4. Annual Income Requirements

Some Canadian credit cards are exclusive to customers who make a minimum annual income. 

Credit cards that require a minimum income often come with better rewards and benefits. 

Here are some of the most common minimum annual incomes, or annual household incomes, required:

  • $50,000 annual income
  • $80,000 annual income
  • $120,000 annual household income
  • $150,000 annual household income

But why do some credit cards require a minimum income? 

There are two reasons: 

  1. Interest charges
  2. Transaction processing fees

The way credit card companies make money is simple - from interest charges and transaction fees.

The idea behind requiring a minimum income is this - the more money you make, the more you spend. If you charge more to your credit card, the issuer will make more in interest fees. 

As for transaction processing fees, credit card companies make a profit each time you make a purchase. By offering exclusive credit cards with more attractive benefits to high-income customers, credit card companies can expect to make more from transaction fees. This is because people with more money will make more purchases.

If you meet the minimum requirement for an exclusive credit card it can be a great option and offer many exceptional benefits.

5. Insurance 

Many Canadian credit cards offer the added bonus of insurance. Cards that offer insurance will commonly provide one or more of the following:

  • Purchase protection insurance
  • Extended warranties
  • Rental car insurance
  • Travel insurance

Purchase protection insurance provides replacement, reimbursement and repair on items that have been:

  • Lost
  • Damaged
  • Stolen 

To receive this protection, you must purchase the item on your credit card. As well, the damage or loss must occur within 90 days of the purchase.

For example, you buy a new flat-screen television and accidentally drop it while trying to install it. 

If you purchased the tv with your credit card, you can contact your credit card company within 90 days of the purchase and they will repair, replace or reimburse you for the damaged television. 

Extended warranties that are already offered by manufacturers are often doubled by credit card companies with an extended warranty.

This means, if you buy a new refrigerator and it has a manufacturer’s warranty of 1 year, your credit card insurance will double that warranty. Your refrigerator will have an extended warranty for 2 years thanks to this insurance benefit. 

Please note: Extended warranties cover manufacturer flaws and failures. This type of warranty does not cover damaged, lost or stolen property.

Car rental insurance helps to cover the costs associated with collisions and damage to rental cars. Most commonly, travel credit cards will advertise this as an added benefit. 

Travel insurance is another type of insurance that some Canadian credit cards offer. Credit card travel insurance may include any or all of the following:

  • Travel medical insurance
  • Travel accident insurance
  • Travel interruption or cancellation insurance
  • Lost baggage

Look for a Canadian credit card that offers insurance on purchases and travel to help ease your mind when it comes to larger purchases. However, always remember to read the terms and conditions. Like any type of insurance, credit card insurance will often come with exclusions and restrictions.

6. Credit Limits 

What is a credit limit?

A credit limit is the maximum balance you can have on your credit card at any given time. 

Some credit cards offer a standard credit limit. However, in most cases, credit limits are based on the person and their financial history. 

Credit limits may take into consideration any or all of the following factors: 

  • Credit score
  • Extent of credit history
  • Income 
  • Debt
  • Other acquired forms of credit (e.g. loans, lines of credit, etc.)

When determining the best Canadian credit cards for you, consider the credit limit offered by each card. 

A credit card that offers a small credit limit, for example, less than $2,000, may not provide you with enough buying power. For instance, if you plan to use your credit card for travel, this limit will not suffice. 

On the other hand, a credit card with a high limit, for example, greater than $30,000, might provide too much credit for your needs. If you start making large purchases with this card and are unable to pay off the debt, interest rates may become unmanageable. 

When selecting a card, keep in mind the 75% rule. If you consistently hold a balance on your credit card that is 75% or more of your total credit limit, this can negatively affect your credit score. 

Therefore, choose a card that will offer you enough credit to avoid this scenario but not too much to get you into financial trouble.

7. Lifestyle

Many of the best Canadian credit cards are suited to particular lifestyles. Providing credit cards that cater to a specific type of person helps financial institutions reach various consumer groups. These types of credit cards can also be very beneficial to the cardholder.

Some common lifestyle-based credit cards in Canada include:

  • Student credit cards
  • Frequent traveller credit cards

Students credit cards often offer low interest rates and no annual fees. These factors help relieve some of the financial stress caused by costly post-secondary education. 

Most financial institutions in Canada, including the big five banks, offer student credit card options.

If you love to travel, a credit card that provides travel-related rewards and benefits may be right for you. Canadian credit cards that cater to travellers typically offer the following:

  • Extra travel insurance 
  • Special access at airports
  • Hotel bonuses or exclusive offers
  • Discounted car rentals

There are many travel credit cards available, so take the time to compare several cards before choosing one.

8. Credit Card Habits 

Keeping all of the above factors in mind, consider your credit card habits to determine the best credit card for you. 

Credit card habits may include the following: 

  • You pay off your balance each month 
  • You carry a balance on your credit card
  • You use your credit card for large purchases only
  • You use your credit card for everyday purchases

Recognizing your habits will help you determine which factors are most important when comparing credit cards.

Do you need a low interest rate because you often carry a high balance? Or do you pay off your card each month and therefore will benefit from a card that has a higher interest rate but better rewards? 

When considering your credit card habits, also take into consideration what you use your credit card to pay for. 

Are you mainly using your card to pay for gas and groceries? If so, a cash back credit card that offers a high percentage of cash back on these types of purchases might be your best option.

At the end of the day, the best credit card for you should be affordable, reliable, and provide you with the benefits you find most useful.

FAQs

Which credit card is best for me?

The credit card that is best for you depends on several factors. When choosing a credit card, consider some of the main differentiating factors, including interest rates and annual fees. Also, consider what you will get from a credit card. Benefits may include bonuses for students or perks for avid travellers. Take the time to compare Canadian credit cards and choose the card that best suits your lifestyle and needs.

What is the best credit card in Canada?

There are many Canadian credit cards with appealing benefits, rewards and interest rates. Compare numerous credit cards to ensure the one you choose is best for you. Take into consideration the factors we examine when choosing the best credit cards. This includes interest rates, annual fees, rewards, minimum income requirements, credit limits, etc. To help you with your research, come of the best Canadian credit cards are listed above.

What should I consider when choosing a Canadian credit card?

Aside from the usual credit card considerations (interest rates, annual fees, rewards, minimum income requirements, credit limits, etc.), be sure to consider your lifestyle and credit card habits when choosing a Canadian credit card. For example, students and avid travellers can find credit cards suited to their lifestyle that will provide them with targeted benefits.

How to decide which Canadian credit card to get when it is my first credit card?

Before choosing your first credit card, be sure to do your research. Compare several credit cards before you commit to one. Ensure you have a steady income and that you will be able to pay off your credit card balance when it comes due. Consider interest rates, annual fees, rewards, etc. Look for a credit card that fits your lifestyle and spending habits. Always remember to read the fine print and make a wise and informed decision when choosing your first credit card.

Emma Tremblay

Emma is responsible for all content on Creditcards360.ca. She has a college degree in economics and a keen interest in personal finance. Get in touch with her by email.

Last updated 2021-02-08