How credit cards work
A credit card is a versatile financial tool that allows the holder to pay for goods and services in stores, online, by mail and over the phone. As the name suggests, it operates on credit and has a maximum credit limit to which the user may spend. Making timely credit card payments improve the holder’s credit score and allows them access to additional credit in the future.
Difference between credit and debit cards
A debit card uses the funds already available in the user’s chequing account. No interest is paid when purchasing with a debit card, and it does not impact the user’s credit history.
Alternatively, a credit card lets you spend and borrow up to a certain limit from a financial institution. This amount is repaid with interest and affects the user’s credit history.
What are credit card payments?
Credit card users receive credit card statements at the end of each month, detailing how many transactions were made and how much is owed towards repaying it. Users can pay the entire balance, a partial amount or a minimum payment. Missing payments will often result in increased interest charges.
Credit card users are also subject to additional fees, including Annual fees, Interest charges, Balance transfer fees and Foreign transaction fees.
Credit card offers for newcomers in Canada.
Here are some offerings from Canada’s most recognizable financial institutions.
Scotiabank
| Scotiabank Passport Visa Infinite Card | Scotia Momentum No-fee visa card | Scotiabank Scene+ Visa card | Scotiabank Scene+ Visa card for students |
| The card requires a minimum annual income of $60,000 or a minimum household income of $100,000, or manage assets with a minimum value of $250,000 | The card is ideal for everyday purchases and helps build a credit history as long as minimum monthly payments are paid. | The card allows users to earn Scene+ points that can be redeemed for special rewards. It is ideal for everyday use and also helps build a credit history. | The card is meant for students enrolled in post-secondary schools in Canada. |
| Annual fee of $150 per year | No Annual fee | No Annual fee | No Annual fee |
| Minimum credit limit $5,000 | Minimum credit limit of $500 | Minimum credit limit of $500 | Minimum credit limit of $500 |
| Interest rates
20.99% on purchases 22.99% on cash advances |
Interest rates
19.99% on purchases 22.99% on cash advances |
Interest rates
19.99% on purchases 22.99% on cash advances |
Interest rates
19.99% on purchases 22.99% on cash advances |
RBC
| RBC Cashback Mastercard | RBC ION Visa |
| The Cash Back Mastercard is a popular option among newcomers and students in Canada.
It has benefits that include zero annual fees and no limit cash backs (2% cash back on grocery store purchases and 1% on everyday purchases) |
The RBC ION Visa is another option for newcomers and students in Canada.
It allows users to earn Avion points on every dollar spent on groceries, gas, streaming etc., which can be redeemed for special rewards. |
| It has no annual fees. | No annual fees |
BMO
| BMO Cashback Mastercard | BMO Air Miles Mastercard |
| This credit card for newcomers offers 5% cash back during the first 3 months and a 0.99% interest rate on balance transfers for 9 months. | The card is ideal for newcomers who travel often. Users are rewarded AIR MILES for purchases at any participating store and services. |
| No annual fee | No annual fee |
| Interest rates
20.99% for purchases 22.99% for cash advances |
Interest rates
20.99% for purchases 22.99% for cash advances |
CIBC
| CIBC Dividend Visa Card | CIBC Aventura Gold Visa Card | CIBC Aventura Visa Card |
| Newcomers get a welcome offer of 5% cashback on their first 4 purchases up to $2,000.
After, they get 2% cash back on groceries and 1% on everyday purchases |
The credit card gives newcomers two years of annual fee rebates. | The credit card is tailored for travellers and provides up to $120 in travel value. |
| No Annual fee | The first two years rebated.
$139 Annual fee after |
No Annual fee |
| Interest rate
20.99% for purchases 22.99% for cash advances |
Interest rate
20.99% for purchases 22.99% for cash advances |
Interest rate
20.99% for purchases 22.99% for cash advances |
Credit cards and newcomers
Credit cards are effective tools for newcomers looking to build a credit history in Canada. It helps your mobility as a newcomer in Canada and is crucial for major undertakings like a home or automobile. Sign-up bonuses and perks like travel insurance, lounge access, etc., will make life easier, and the ability to borrow flexibly can bail you out of tight financial situations and emergencies.
