Credit cards are a popular payment option with the average Canadian having at least two active credit cards (Pandurov, Reviewlution). There are hundreds of credit cards available for Canadians to apply for through private companies and financial institutions, making the choice overwhelming. However, understanding the basic types of credit cards and key features to look out for are the first steps to choosing the right one for your needs.
Analyzing the Different Types of Credit Cards
There are a few different types of credit cards, each of which hold different principles and are available for certain groups. The most common card is an unsecured credit card. Big name credit card companies, such as MasterCard and Discover, fall into the unsecured credit card category. The ease of applying and securing a credit line draw in many small businesses and individuals. However, there are other types of cards including a secured credit card, a card designed for students or small businesses, store credit cards and charge cards (Kiernan, WalletHub). Differentiating between each type of credit card can be a tedious process, which is why many individuals and small businesses employ the help of a qualified expert, like Faber Inc.
Considering Different Features
Choosing the right credit card is important not only because each application or inquiry affects your credit score, but also because each card comes with different benefits and features. You want to be sure you are choosing a credit card that provides the most benefit to you. For example, if you don’t frequently travel, you wouldn’t want to choose a card centered around accumulating travel points. Different features to weigh before making your decision include:
- Rewards Structure – This is one of the top features to consider as it is a differentiating factor amongst credit cards. Cash back, points, and miles are a few of the spending-based rewards that credit card companies offer. Be sure you read the fine print on which transactions qualify for rewards.
- Annual Fee – Many individuals and small businesses apply for a credit card based on the rewards or special features and neglect to look at the annual fee. Many cards offer no annual fee; however, some credit cards do have a high annual fee, making it an important feature to analyze.
- Annual Percentage Rate – When you get a credit card, the intention should be to pay it off in full every month to avoid interest. The stated interest rate on credit cards is usually upwards of 15% depending on your credit score. One missed payment could rack up significant interest, leading interest to be a critical factor to consider.
- Special Features – Some credit card companies offer users incentives when you apply for their card, such as a special statement credit when you spent a certain amount within the first few months. These special features can be an added benefit of choosing a particular card.
Understanding the basics and different benefits of credit cards is important before you begin applying. Luckily, you don’t have to take on this task alone. Faber Inc has been helping Canadians stay in tune with their debt through effective credit management. Before you start racking up high credit card bills, reach out to the experts at Faber Inc and be sure you are on the right track for financial success.
Kiernan, John. “Types of Credit Cards.” WalletHub, 20 April 2022, https://wallethub.com/edu/cc/types-of-credit-cards/25505. Accessed 3 May 2022.
Pandurov, Marija. “25 Incredible Credit Card Statistics in Canada in 2021.” Reviewlution, December 2021, https://reviewlution.ca/resources/credit-card-statistics-canada/. Accessed 3 May 2022.