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Credit Card Comparison Canada
4 Oct 2019

A Credit Card Comparison Canada to Help You Choose the Best Card for Yourself

Credit cards are a great alternative to cash or whenever you need to grow your credit history. Therefore, a credit card comparison Canada will help you pick the right one for you.

When looking for a credit card, flexibility and reliability of the card are just some of the things to consider. The process can be overwhelming since you need a card that supports your spending habits. What’s more, is that these cards have varied features that make them perfect for different scenarios. Availability of various options can be quite tasking as you are not sure what to look for when selecting a credit card. This article will look at some of the key features necessary when selecting a credit card. Credit card comparison Canada is a great way to review card options available to you as well as shed light into some of the limitations of using these credit cards. This piece will further look into some of the credit cards available to you here in Canada as well as the features that make them stand out from the rest.

Key features of a credit card to evaluate when looking for a credit card

All credit cards perform the same function despite having been provided by different providers. What makes them different are the features offered. Here is a look into the main features of a credit card everyone needs to check out for before deciding to subscribe to one.

Interest rates

The interest rate of a credit card is the most crucial feature to look out for when getting a credit card. It is the rate that determines the cost of taking one hence the need to minimize the cost and if possible, eliminate it entirely. The credit card rate is expressed as Annual Percentage Rate (APR). These rates are disclosed when you are applying for the cards. For most credit cards, a grace period is availed to you. You will not be charged anything at the period and to get the most out of a credit card, you need to pay your credit balance in full. After the period, the interest rate onsets according to the agreed terms. Interest rates are calculated as finance charges which are calculated in a variety of ways depending on the conditions of the credit card. A credit card comparison Canada will reveal that most issuers will base the finance charge on several factors. These include the balance at the beginning or end of the billing cycle and the average daily credit balance. The charges may or may not include new purchases made on the cards. You should understand that it is of paramount to complete the balance payment within the grace period. Once the rate onsets, it will take you a very long time to finish since factors like compound interests are in play.

Penalties

Every credit card comes with penalties based on the agreed terms and condition; the difference in the rate depends on each credit card. The penalty rate is also known as the default rate or delinquency rate. This is the rate charged to anyone who exceeds the credit limit, fails to pay by 90 days or having the credit card payment returned by the borrower’s bank. They are the highest interest rates charged by lenders and may range around 29.99% but can be higher or lower depending on the lender. While using credit cards may seem like a great idea, if you do not understand how these rates work, you can find yourself in deep trouble.

How default rate works

Once a borrower has failed to pay the loan for two consecutive occasions, the lenders charge a penalty fee depending on their stipulated terms as per the agreement. If the borrower persists on not paying, the borrower’s account becomes delinquent, and the lender reports the defaulter to the credit reporting agencies. The agencies then record the delinquent payment as a black mark on the borrower’s credit rating. If the borrower does not make any further payments, the lender continues to report to the credit reporting agencies until the loan is written off and declared as a default. The timeframe in which a loan is written off depends on the kind of loan and the law governing the province. Default stays on one’s records which can be damaging as it prevents a borrower from getting approval on credit in the near future. Even after full payment of the loan, the default stays on one’s records for six years, which can be very detrimental.

Rewards

Credit cards are not all bad, primarily when used appropriately. Reward in credit cards come in different forms; however, the reward is received after spending a certain amount by purchasing using the card. Some credit cards are reward specific; for example, there are those that will only reward you in travel miles. Rewards, however, generally fall under three categories: points, miles, or cash rewards. Different categories work better for different people. For instance, a frequent traveler will find a miles reward card more useful than a regular shopper. The same way a frequent shopper may find a cash or points reward cards more valuable to him/her than to a frequent traveler. When choosing a credit card, consider your situation so as to choose a reward that best serves you.

Credit card comparison Canada

As already seen, every credit card issuer will offer varies terms, but the features of the credit cards will always be similar. Now that you understand the key features to look out for when getting a credit card, here is a comparison of some of the best credit cards in Canada.

Reward cards

The American Express Cobalt and Scotiabank Gold American Express have been found to be the best reward cards on everyday and travel spending. You get 5 points per dollar spent on grocery spending 2 and 3 points per dollar respectively on gas and transit buys, and finally 1 point on every other spending.

Low-interest credit cards

American Express Essential Credit Card is the best low-interest credit card available. The card is free to use and has an annual interest rate of 8.99% on cash advances and purchases. Users of this card typically pay an interest rate of 1,99% in the first six months on balance transfers. After the six months’ elapse, the rate increases to 8.99%.

The MBNA True Line Gold MasterCard is another low-interest credit card with almost identical rates. The card offers an 8.99% interest rate on purchases, an annual fee of $39 per year, and zero percent rate on balance transfer for the first six months. The balance transfer, however, attracts a 3% fee of the amount being transferred. After the first six months have elapsed, the interest rate increases to 8.99%. This card also offers 24/7 protection against fraudulent charges.

Credit card comparison Canada gives you an insight into some of the options you have when getting one. However, before picking one, look at your priorities and let them aid in getting the right one to suit the situation; not forgetting the fee, rewards, and penalties.