The Best Credit Cards in Canada for 2021

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The Motley Fool Canada’s best credit cards for 2021:

Credit card Best for Rating
Tangerine Money-Back Credit Card Best: No fee cashback card
StarStarStarStarStar
Scotiabank Gold American Express Card Best: Rewards card
StarStarStarStarStar
American Express Cobalt ® Card Best: Travel rewards card
StarStarStarStarStar
SimplyCash ™ Preferred Card from American Express Best: Cashback card
StarStarStarStarStar
Scotia Momentum Visa Infinite Card Best: Cashback on regular grocery spend
StarStarStarStarStar
Home Trust No Fee Secured Visa Best: Credit building card
StarStarStarStarStar
PC Financial World Elite Mastercard Best: Rewards for regular President’s Choice shoppers
StarStarStarStarEmpty Star


Tangerine Money-Back Credit Card

Best: No fee cashback card

Our Rating:

StarStarStarStarStar

5.0 stars

Open Account

On Tangerine’s secure website.

Top Perks
  • 6 months 1.95% interest on balance transfers made in the first 30 days (1% fee applies, 19.95% interest after 6 months)
  • Get a 3rd 2% rewards category if transferring rewards into a Tangerine savings account
  • Purchase coverage for the first 90 days

Open Account

On Tangerine’s secure website.

Rewards
  • 2% Money-Back Rewards in two categories of choice
  • 0.5% Money-Back Rewards on everything else
Welcome bonus

Earn an extra 15% back (up to $150) when you apply for a Tangerine Money-Back Credit Card by December 31, 2021 and spend up to $1,000 in everyday purchases within your first two months.*

Learn more

Click here to learn more about the Tangerine Money-Back Credit Card

Annual fee:

$0

Eligibility:

Credit rating: Fair
Minimum income: $12,000


Scotiabank Gold American Express Card

Best: Rewards card

Our Rating:

StarStarStarStarStar

5.0 stars

Open Account

On Scotiabank’s secure website.

Top Perks
  • No foreign transaction fees
  • 0% for 6 months on balance transfers (1% balance transfer fee)
  • Multiple useful insurances including trip cancellation, flight delay, and rental car
Rewards
  • 5x Scene+ points on eligible dining, grocery, and entertainment
  • 3x Scene+ points on eligible gas, transit, and streaming services
  • 1x Scene+ points on everything else
Welcome bonus

Up to 40,000 Scene+ points (worth up to $400 towards travel). No annual fee for the first year.

Learn more

Click here to learn more about the Scotiabank Gold American Express Card

Annual fee:

$120

Eligibility:

Credit rating: Good
Minimum income: $12,000


American Express Cobalt ® Card

Best: Travel rewards card

Our Rating:

StarStarStarStarStar

5.0 stars

Open Account

On American Express’s secure website.

Top Perks
  • Earn accelerated rewards (2x) on eligible travel purchases (including flights)
  • No annual fee for supplementary cards
  • Up to $100 USD hotel credit to use on amenities like dining, spa or other leisure facilities when charged to the room


Rewards
  • 5x Membership Rewards® on eligible food and drink
  • 3x Membership Rewards® on eligible streaming subscriptions
  • 2x Membership Rewards® on eligible travel and transit
  • 1x Membership Rewards® on everything else
Welcome bonus

Up to 50,000 Membership Rewards® points in the first year (20,000 points when you spend $3,000 on the card in the first 3 months of card membership and 2,500 points per month for each month that you spend $500 on the card during the first year)

Learn more

Annual fee:

$155.88 ($12.99 monthly)

Eligibility:

Credit rating: Fair

Updated: 08/20/2021. This post was not sponsored. The views and opinions expressed in this review are purely those of the author.


SimplyCash ™ Preferred Card from American Express

Best: Cashback card

Our Rating:

StarStarStarStarStar

5.0 stars

Open Account

On American Express’s secure website.

Top Perks
  • No annual fee for supplementary cards
  • Valueable insurances including baggage delay, flight delay, and car rental
  • Entertainment and dining perks with American Express® Experiences


Rewards

2% cash back on all spending (after your Welcome Rate ends)

Welcome bonus

Earn 10% cash back for the first 4 months (up to $400 cashback).

Learn more

Annual fee:

$99

Eligibility:

Credit rating: Good

Updated: 09/16/2021. This post was not sponsored. The views and opinions expressed in this review are purely those of the author.


Scotia Momentum Visa Infinite Card

Best: Cashback on regular grocery spend

Our Rating:

StarStarStarStarStar

5.0 stars

Open Account

On Scotiabank’s secure website.

Top Perks
  • Save up to 25% off base rates at participating AVIS and Budget locations in Canada and the U.S.
  • Mobile device insurance
  • Valuable insurance including flight delay, lost baggage, and rental car

Open Account

On Scotiabank’s secure website.

Rewards

4% at grocery stores, recurring bill payments, and subscription purchases
2% on gas and daily transit
1% on everything else

Welcome bonus

Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases). No annual fee in the first year, including on supplementary cards. (worth up to $350)

Annual fee:

$120

Eligibility:

Credit rating: Very good
Minimum income: $60,000 (individual), $100,000 (household) or $250,000 assets under management


Home Trust No Fee Secured Visa

Best: Credit building card

Our Rating:

StarStarStarStarStar

5.0 stars


Top Perks
  • Can help you build or rebuild your credit rating
  • Insures eligible items against theft or damage for 90 days
  • Use online and in stores like any other credit card


Rewards

None

Welcome bonus

None

Annual fee:

$0

Eligibility:

Must pay a security deposit from a Canadian account in your name


PC Financial World Elite Mastercard

Best: Rewards for regular President’s Choice shoppers

Our Rating:

StarStarStarStarEmpty Star

4.5 stars


Top Perks
  • No annual fee
  • Car rental and travel emergency medical insurance
  • Identity theft assistance service


Rewards
  • 30 PC Optimum points per $1 at President’s Choice grocery stores (like Loblaws, No Frills, and valu-mart)
  • 45 PC Optimum points per $1 at Shoppers Drug Mart
  • 30 PC Optimum points per $1 at Esso, Mobil, and PC Travel
  • 10 PC Optimum points per $1 everywhere else
Welcome bonus

Up to 100,000 points (a $100 value)

Read our full PC Financial World Elite Mastercard review

Annual fee:

$0

Eligibility:

Credit rating: Very good
Minimum income: $80,000 (individual), $150,000 (household)

 
 


What are the types of credit cards?

Rewards cards

Rewards cards are credit cards that help you earn rewards on eligible purchases. The amount of rewards you get depends on the card, and it may depend on the item that you purchase, too.

Points-based rewards credit cards are those that provide you points when you make purchases. You can then exchange those points for a variety of things from goods and services to gift cards or even a statement credit. There are also cash back rewards, which provide cash or cash-like rewards, and we cover those separately below.

Though Canada has numerous points-based rewards cards. Some of the best offer a generalized points system that rewards you for all of your spend or on a tiered basis for different types of spend. However there are some more specialized types of points cards that provide higher rewards for shopping at certain places or spending on certain things. The largest two categories here are travel cards and store credit cards.

Travel credit cards

For every purchase you make with a travel card, you get travel miles, which you can redeem for certain travel purchases. “Miles” can be confusing, however, as the miles you earn don’t correspond to the distance you can travel. Rather, your miles are more like points, with each point representing a certain dollar value.

For instance, you may have a travel card that gives you one mile for every dollar you spend. That mile, in turn, may equal roughly $.01. In this case, you’d have to earn 20,000 miles (or spend $20,000) to purchase a $200 flight.

Purchases that could be covered by travel miles generally include airfare, car rentals, hotel or other accommodation, cruises, and vacation rentals. As you’re looking at travel rewards, look for travel perks, too. Some cards will come with travel insurance, airport lounge access, or no foreign transaction fees.

Store credit cards

If you’re a shopper of habit, a store credit card may be right for you. These cards are issued by specific stores, such as Loblaws or Canadian Tire, and they help you get discounts, free stuff, and loyalty points. Of course, store credit cards are only useful if you shop at one store or its chains more frequently than others, as the rewards are usually only applicable at that store.

Cash back credit cards

As the name suggests, cash back cards allow you to earn money back for every purchase you make with your card. How much you get back depends on your card’s earn rate, which is typically expressed as a percentage. Depending on the card, you may earn more for certain purchases, such as groceries, office supplies, or even certain brand name items.

For example, let’s say you have a cash back card with a 2% earn rate on all purchases, and a 3% earn rate on groceries. For every $100 you spend, you’ll get $2 back, and for every $100 you spend on groceries, you’ll get $3 back.

Typically, the money that you get back can either be deposited as cash, applied to your statement balance, redeemed for a gift card, or sent to you as a check. Keep in mind, certain purchases won’t earn cash back, such as balance transfers, cash advances, gift card purchases, and lottery tickets.

Secured credit cards

Secured credit cards require you to pay a security deposit to open an account, usually one that’s equal to your credit line. The idea is that if you don’t make a payment, your credit card company can use your deposit toward the unpaid balance.

Credit card companies typically design these cards to help people with low or bad credit scores rebuild their credit. The security deposit helps the company hedge any risks in lending you money, and if you pay your balances frequently enough, you may be able to graduate to another card, one with more favorable rewards.

Balance transfer credit cards

Balance transfer cards allow you to move outstanding debt from one credit card to another, typically to benefit from the lower APR on a new card. These cards often come with a zero or low introductory APR, which can last anywhere from a few months to a year or longer, making them advantageous for those trying to get out of credit card debt. If you pay off your balance before the introductory period ends, you could save a great deal in interest.

Is no annual fee always best?

Not necessarily. Contrary to what you might think, credit cards with annual fees may help you earn money, not lose it. These cards typically have lucrative rewards programs, sign-up bonuses, and built-in perks that make them well worth the costs.

How do you know when a card is worth the annual fee? Simple. Weigh the added rewards against the extra costs. For example, if a credit card has an annual fee of $95, you want to be sure your rewards exceed at least $95. So, for a card with a 5% reward rate, you’d have to spend at least $1,900 to break even ($1,900 x 5% = $95).

What credit score do you need?

In Canada, a good credit score is generally anything above 700.

Keep in mind, your credit score is a three-digit number that lenders use to assess how well you manage your debts. Credit scores in Canada range from 300 to 900, with 300 being poor and 900 meaning your credit is golden.

If your credit score is above 700, you’ll likely qualify for most premium and platinum credit cards, though with a score of 750 or higher, you’ll get more lucrative offers and lower interest rates. Anything lower than 700 starts to get more complicated. A score that’s between 660 and 699 will put you in the “average” category, meaning you may pay a higher APR than most cardholders. If your score is lower than 660, you’ll most likely have to take out a secured card, which requires you to put up an initial deposit before you can use the card.

How do credit card rewards work?

Credit card rewards typically work in three big ways: you can earn cash back, credit card points, or travel miles.

  • Cash back: when your card has a cash back system, you’ll typically get a percentage back for every purchase you make. A 1% cash back rate, for instance, means you’ll get $1 for every $100 that you spend.
  • Credit card points: instead of a cash back percentage, your credit card company may give you points for every purchase you make, and those points can be converted to goods, services (like travel), or cash-like rewards like gift cards or statement credits. Dollar-values can be calculated for these points, though that value can vary considerably based on what you exchange the points for.
  • Travel miles: travel miles work similarly to credit card points. You rack up miles for every purchase you make. The difference between the two systems is travel points usually can only be applied toward travel purchase, whereas credit card points aren’t as restrictive.

Most rewards programs allow you to redeem cash back or credit card points as cash, cheques, gift cards, or even as a statement credit. Travel miles are usually only applicable toward travel related purchases, such as airfare and rental cars, though some credit card companies may allow you to apply your miles to your balance.

What credit card fees should you look out for?

Credit card fees can come back to haunt you, but so long as you know which fees arise from which transactions, you can avoid paying them. Here are some common fees to look out for.

Annual percentage rate (APR)

Every credit card has an annual percentage rate (APR), which is charged to unpaid balances. As long as you pay your balance in full each month, you won’t pay APR.

Cash-advance fees

Using your credit card to withdraw money from an ATM may seem convenient, but it’ll cost you. Every credit card has a cash advance fee, which is either a flat fee or a percentage of what you withdraw.

Additionally, if you don’t pay back what you withdraw before your billing cycle ends, you’ll pay a cash-advance APR. Keep in mind, in Canada, certain “cash-like” purchases may be treated as cash-advances, such as buying travellers cheques, lottery tickets, casino chips, or wiring money.

Foreign transaction fees

Many credit cards will charge you for making purchases outside of Canada. Sometimes, this fee is a flat rate. Other times, it’s a percentage of your purchase. Still other times you can waive the fee completely, if your card allows foreign transaction fees (many travel cards do).

Late payment fees

If you don’t pay your minimum balance before your billing cycle ends, you’ll pay a late payment fee. This fee is often the most costly, but also the most avoidable. Just pay your minimum before the due date, and you’ll dodge this hefty fee.

Overlimit fee

If you exceed the limits on your credit card, you’ll pay an overlimit fee for each additional purchase, typically $25 to $30 for each additional transaction.

What credit card terms should you know?

Credit limit

Your credit limit is the most you can spend without paying penalties. Your credit card company will determine your credit limit based on your credit score and the length of your credit history. As long as you keep making payments and use credit responsibly, your limits will grow over time.

Interest-free grace period

During a grace period, you don’t pay interest on any purchases you make. Though grace periods vary by card, they typically last through your entire billing cycle. As long as you pay your balance in full before the billing cycle ends, your grace period extends into the next billing cycle. But, if you don’t pay your balance in full, your grace period ends, and you’ll pay APR on new purchases. Not only that but you’ll also pay APR on any past purchases that you still haven’t paid off.

Minimum payments

Your minimum payment is the absolute minimum you have to pay in order to avoid paying late fees and remain in good standing with your credit card company. While you definitely want to pay at least your minimum, paying your entire balance is always better, as you’ll avoid paying APR, too.


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