The availability of different credit cards in Canada is growing. Canadians have various options on how they make their purchases and earning back some money; however, it might bring some anxieties. Canadians can get faster cashback, luxurious travel miles, and low-interest rates. A credit card can help you find the financial freedom that suits your unique lifestyle.
Banks are now offering financial relief in form of a credit card and other methods such as loans. It’s advisable to research to make the best decision about your finances and what credit card plan is best for you.
What is a Credit Card?
A thin rectangular plastic slab issued by a financial institution that allows the cardholder to borrow funds to pay goods and services. The cardholder is supposed to pay back the borrowed money, plus the interest and any other additional agreed charges.
The credit issuer might also give a line of credit to the cardholder. This enables them to borrow money in the form of cash advances. The credit company sets a borrowing limit based on the individual’s credit score. Many businesses allow purchasing through credit cards, which is one of the popular payment methods for buying goods and services.
There are various types of cards provided by financial companies. Here are examples of credit cards available in the market:
Types of Credit Cards
• Reward card
This type of credit card rewards the cardholder when purchasing items such as store discounts and cashback. This credit card often has an annual fee with high-interest rates. The applicant is required to have a high credit score to get approved.
• Student Credit Card
These credit cards are specially made for college students who have low or no credit history. A first-time card applicant would quickly get approval for a student credit card than any other kind of credit card.
• Secured credit card
This kind of credit card is best for people with zero history or poor credit scores. The applicant is required to make a security deposit on the card. The amount of security deposit made will determine the credit limit on the secured credit card.
• Prepaid Cards
This kind of card requires the cardholder to load cash onto the card before using it. The money is withdrawn from the credit card balance when the card owner makes a purchase. When the balance turns to zero, the cardholder has to load money onto the card to continue making any purchase. These kinds of credit cards don’t have minimum payments because the balance is withdrawn from the deposits made.
The Best Credit Card
It would be best if the applicant checks their financial priorities before deciding on which credit card to choose. If they need to reduce their debt, then a low-interest or balance transfer card is the suitable type of cards to consider.
The annual fee should also be considered in the decision making; however, if you are getting a good value out of the extra benefits and earning more cashback rewards than the paid fee, then this shouldn’t be a big deal.