Choosing the Right Credit Card as a Newcomer in Canada

Published: December 12, 2023

Credit cards offer a convenient way to manage your spending and build your credit history.

If you're new to Canada, one of the first financial choices you may make is selecting a credit card.

Credit cards offer a convenient way to manage your spending and build your credit history. However, with so many options available, it's essential to understand the basics and choose the right card for your needs.

In this article, you'll learn about the fundamentals of credit cards and explore the different types of credit cards to help you make an informed decision.

We will cover:

  1. What is a Credit Card
  1. Types of Credit Cards
    a. Cash-Back Cards
    b. Travel Rewards Cards
    c. No-Fee Cards
    d. Business Credit Cards
    e. Low-Interest Credit Cards
  1. How to Choose the Best Credit Card for You

Learn more about TD's New to Canada Banking Package

1. What is a Credit Card?

A credit card is a financial tool that allows you to borrow money to make purchases, up to a predetermined credit limit. Unlike a debit card, which deducts funds directly from your bank account, a credit card enables you to make purchases on credit and pay the balance later by a due date or with interest if paid after the due date.

When you use a credit card responsibly, it can help you build a positive credit history, which is useful for various financial activities like renting an apartment or getting a loan. However, it's important to use credit cards wisely to avoid accumulating debt and paying high interest charges.

2. Types of Credit Cards

Now that we've covered the basics, let's dive into the various types of credit cards available in Canada.

a) Cash Back Credit Cards

Cash back credit cards are popular for their simplicity and immediate cash-back dollar rewards. You can earn cash back dollars when you use your credit card to:

  • Pay monthly bills: Your recurring bill payments may earn you a higher cash back dollar rate. So, it’s a smart idea to use your cash back credit card to set-up recurring bill payments, (e.g., insurance, phone, and utility bills) and earn more cashback dollars each month.
  • Make purchases: With a cash back credit card, you earn a percentage of the amount you spend as cash back rewards. This percentage can vary depending on the card.

Another benefit of a cash back card is that you can often use those cash back dollars to lower your balance. The cash back dollars you’ll earn can help you pay down your credit bill faster. Just ask your bank associate.

Ready to bank? Learn more about TD's New to Canada Banking Package today.

Benefits of a TD Cash Back Credit Card:

At TD, we offer cash back credit cards that provide attractive cash back rates, various fee options, enticing bonuses, and more. Here are the details:

  • Higher rate on special categories: Some TD cash back cards offer higher cash back rates for specific spending categories, like groceries or gas etc.
  • Fee or no-fee credit cards: TD offers both fee and no-fee cash back credit cards, allowing you to choose a card that suits your budget and preferences.
  • Special bonuses: Enjoy a sign-up bonus or the opportunity to earn higher cash-back dollars for a limited time period.
  • Pay down your balance with cash back: With TD, we make it easy to use your cash back rewards to pay down your credit card balance, helping you manage your debt more efficiently.[1]

b) Travel Rewards Credit Cards

If you love to travel, a travel rewards credit card might be your best bet. Travel rewards credit cards are designed to provide valuable travel-related benefits and rewards. They are an ideal choice for those looking to explore their new country or visit friends and family abroad.

TD offers various travel rewards credit cards that may allow you to:

  • Make travel affordable: Instead of cash back, these cards allow you to accumulate points with each purchase redeemable for flights, hotels, and rental cars.
  • Redemption flexibility: You have the flexibility to choose how you want to redeem the points you've earned, whether on everyday perks or for travel.
  • Shop with confidence: Your TD travel credit card allows you to make purchases safely and securely without the need for cash while travelling.

 Understanding TD Reward Points:

TD Reward Points are a type of credit card reward earned on select TD Credit Cards, and can be redeemed for travel, merchandise, gift cards, statement credits and more.

C) No-Fee Credit Cards

If you're new to credit cards or prefer a simple financial approach, you may wish to consider a no annual fee credit card. These credit cards do not require cardholders to pay an annual fee for the privilege of using the card.

Here's why a TD No-Fee Credit Card is a Good Choice:

  • Perks and flexibility: Many TD no annual fee credit cards offer reward points and travel benefits with the same flexibility in redeeming points as fee-based cards.
  • Travel benefits: Even without an annual fee, you can still enjoy travel benefits, such as discounts on rental cars.
  • Purchase security: TD’s no annual fee cards often include purchase protection, ensuring your purchases are safe wherever you shop.
  • No expiry: TD Reward Points earned on no annual fee cards don't expire as long as your account is open and in good standing, giving you more time to use them.

A popular choice with newcomers:

If you're new to Canada and beginning to build your credit history, this card serves as a suitable entry point. For those who don't intend to use a credit card frequently, it offers the convenience of having one without the associated costs.

d) Business Credit Cards

Business credit cards are specialized financial tools designed for entrepreneurs and small business owners, offering features like automatic bill payments, fraud alerts, and rewards tailored to business expenses. Here are some benefits:

  • Automatic bill pay: With TD, it’s easy to manage your business finances by setting up automatic bill payments with your business credit card.
  • Add-on cardholders: Easily manage business expenses by providing additional cards to employees with customized spending limits.
  • Fraud alerts: Receive real-time alerts for suspicious transactions, helping you protect your business.
  • Earn enhanced rewards : TD Business Credit Cards often offer enhanced rewards for business-related spending.

 e) Low-Interest Rate Credit Cards

Low-interest rate credit cards offer a lower annual percentage rate (APR) on outstanding balances, making them cost-effective for cardholders who may carry a balance from month to month.

Choosing the Best Card for You

Now that you have a better understanding of the different types of credit cards available, how do you choose the best one for your needs? Consider the following factors:

  • Reward types: Determine whether cash back, travel rewards, or other types of rewards align with your lifestyle and spending habits.
  • Reward categories: Some cards offer bonus rewards in specific spending categories. Consider which one is most important to your lifestyle.
  • Annual fee: Decide whether you're comfortable paying an annual fee for additional benefits or prefer a no-fee card.
  • Income requirements: Ensure that you meet the income requirements for the card you're interested in.

By carefully evaluating these factors and understanding your financial goals, you can select a credit card that suits your needs as a new Canadian. Remember to use your credit card responsibly to build a positive credit history and enjoy the rewards that come with it.

Learn more about TD's New to Canada Banking Package

Why Choose TD?

150 years helping Canadians:

TD has a proud history of delivering financial solutions to Canadians for more than 150 years. TD also brings a century of experience helping newcomers navigate the unique challenges of the Canadian banking system.

With over a thousand branches, a reputation for excellence in financial services, and the ability to also serve you in more than 60 different languages, TD has become one of the largest and most trusted banks in Canada, now serving 16 million Canadians.

TD offers online support and resources of interest to newcomers on topics such as banking. basics, moving to Canada, credit score essentials, and more. TD is open longer hours for your convenience. TD has thousands of ATMs across Canada to help you take care of your everyday banking quickly and easily.

Ready to Bank?

Learn more about TD’s New to Canada Banking Package today.         

Book an appointment to talk with a TD Personal Banking Associate about the TD New to Canada Banking Package. You can book online right away, or visit the TD website to learn more.

Legal Disclaimer: Information provided by TD Bank Group and other sources in this article is believed to be accurate and reliable when placed on this site, but we cannot guarantee it is accurate or complete or current at all times. Information in this article is for informational purposes only and is not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard. This information is not to be construed as a solicitation to buy. Products and services of the TD Bank Group are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement. The information in this article is subject to change without notice. ® The TD logo and other trademarks are the property of The Toronto-Dominion Bank or its subsidiaries.

[1] When you redeem Cash Back Dollars as a credit to the Account, we do not consider this as part of your minimum payment. You will still need to pay the full minimum payment on or before the Payment Due Date detailed on your statement and in accordance with the Cardholder Agreement. Please see your Cardholder Agreement to learn more about making payments to the Account

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