June 12, 2019
Getting a credit card can be an excellent way to improve personal finances and build credit. In many ways, the United States and Canada are quite similar. When it comes to credit cards, however, there are some important distinctions to learn about starting with basic credit cards. But consumers today have many new options such as the new Apple Card or Zero Card. The Apple card works directly with your Apple Wallet, and you can make payments using your phone and keep track of all of your spending while earning cashbacks. The Zero Card is the answer for those afraid of building up high balances since it works like a debit card and you won’t carry a balance from month to month. Zero Card has no fees, no chance of going over your limit, and no complicated rewards system.
Not all credit cards are created equal, and the best credit cards in the US are not necessarily the best credit cards in Canada. Learn how to spot the differences easily, so that you can interchange if you need to, whether you are visiting, moving, or otherwise need this information.
Canada offers many of the same advantages when it comes to credit cards. You can use your credit cards in the same ways in both countries – to pay for purchases, pay for gas, pay at restaurants, etc. And, in both countries, you have a monthly payment that is due on a certain day so that you do not incur late fees or other penalties. You will pay interest on any balances that are not paid in full each month, though most credit cards, in the US and Canada, will not charge any interest during the grace period, or the time between the day the charge is posted and the day your payment is due.
The best credit cards in Canada, just like in the US, will require a credit report before issuing a credit card in your name. You must prove that you are creditworthy before any bank extends credit to you. Interestingly, the same credit bureaus operate in both countries – Experian, Equifax, and TransUnion, but they are distinct entities for both countries, and you may actually have a different credit history in each country since they do not share information internationally.
There are some distinct differences between the best credit cards in Canada and the best American credit cards. One of the most common things noticed by consumers is the big difference when it comes to earning rewards. In the United States, many people seek the best deals when it comes to airline rewards, hotel deals, cashbacks, and other rewards. Many of these programs are extremely generous and lure customers in because of the great perks that they offer.
However, when it comes to credit cards in Canada, the perks and offers are far less enticing. While American credit cards may offer up to 5% cashback or reward perks, the best credit cards in Canada may top out at 2% rewards, whether in the form of cashback or other rewards. Additionally, it is quite rare to find a credit card in Canada that offers airline miles as rewards or hotel points.
Some people may think that they can outsmart this problem with earning perks and cashback, but before trying to get an American credit card to use in Canada so that you can earn the bigger rewards, you must make sure that there are no foreign transaction fees. Many credit cards have a foreign transaction fee that can range from 1–3%, and this will quickly eat away at any rewards or cashback that is offered.
Another common difference between Canadian and American credit cards is the presence or absence of annual fees. You can find many credit cards in the US that have no (or very low) annual fees. However, as soon as you cross that border to the north, you may have a hard time finding a credit card that offers a $0 annual fee. This often applies even to the cards that have no cashback or rewards programs.
There is also a fairly significant difference in interest rates between American and Canadian credit cards. In the US, you can often find promotional credit card interest rates that begin at 0% and perhaps rise to between 8–12% after the first year (or some other predetermined period). Only the best credit cards in Canada can match these interest rates, as the average interest rates are between 19–30%. If you do happen to find a credit card in Canada with a lower rate, it is pretty likely that it will carry an annual fee.
When it comes to choosing the right credit card for your needs, especially if you have any reason to have credit cards in multiple countries, you really need to know the fine print or the details of the credit card terms. Be sure that you are very clear about the annual fees, the interest rates, the foreign transaction fees, whether or not there is a grace period on purchases, how payments are calculated, and any other important details so that you don’t find yourself saddled with unexpected charges or costs. Also, remember to find out ahead of time about the perks and benefits, if any, related to the best credit cards in Canada.