The new year is a great opportunity to take stock of your financial situation. When it comes to credit cards, are you getting the best value out of your everyday spending? Every year, Ratehub.ca rounds up the best credit cards in Canada to help Canadians find the one best suited to their spending habits and lifestyle. If you’re due for a reevaluation but don’t know what’s out there, here are three types of credit cards to consider in 2018:
Rewards is a broad term, but charging purchases to this type of card earns you points that can be redeemed for travel (flights, hotels, vacation packages, car rentals), gift cards, or merchandise. You’ll also hear these cards referred to as travel rewards cards since travel generally offers the best redemption value for points, and because several cards offer perks such as airport lounge access and travel insurance. There are several decent no fee rewards cards out there, but most cards with premium benefits don’t come cheap – they have a higher minimum annual income requirement and charge an annual fee.
One of the overall best rewards credit cards for 2018 is the Scotiabank Gold American Express, which has a $99 annual fee gives you four Scotia Rewards points per dollar on gas, grocery, entertainment, and restaurant purchases (that’s 4% back), and one point per dollar on everything else. It’s also flexible: You can travel on any airline with no blackout dates, points can be used to cover taxes and fees, and you can pay for your trip up front and use points to pay off the cost up to 12 months later.
Cash-back credit cards are popular for their straightforward benefits: you’re refunded a small percentage of every dollar spent on the card, usually as a statement credit or a deposit in a designated bank account. Cards may offer a flat cash back rate on all purchases, or different percentages for particular spending categories (gas, groceries, drugstore, etc.). Fortunately, many of the best cash-back credit cards in Canada don’t charge annual fees.
One of the most popular no fee cash-back credit cards is the Tangerine Money-Back Credit Card, which gives you 2% cash back in two spending categories of your choice (10 to choose from), and 0.5% back on everything else. Cash back is refunded monthly (most cards refund annually) as a credit statement, but you can get a third category earning 2% if you choose to have your cash back deposited into a Tangerine savings account.
The cardinal rule of good credit habits is to pay off your credit card balance in full every month. But if there’s a chance you will carry a balance from month to month, you should have a card with the lowest possible rate to minimize the amount you’ll pay in interest charges. The typical reward credit card has an interest rate of 19.99% for purchases, but the best low interest credit cards charge just a slice of that.
For example, the American Express Essential Credit Card has the lowest fixed interest rate currently on the market for purchases at 8.99%. If you’re looking to pay down existing credit card debt, it also offers a 1.99% interest rate on balance transfers for the first six months, with no balance transfer fee charged on the transaction. Remember that even if you carry a balance, you should always make at least the minimum monthly payment by the due date listed on your statement.
Ratehub.ca empowers Canadians to search smarter and save money by comparing mortgage rates, credit cards, high-interest savings accounts, chequing accounts, and insurance.
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