by Prepare For Canada | Oct 15, 2024

Financial stability is very important for anyone who has recently arrived in Canada. Even if you have a strong financial standing in your home country, you will need to establish yourself in Canada as well. Applying for a credit card is one of the first and most effective steps to build your credit and give yourself a buffer. 

Credit cards are convenient, they give you another payment option and they are important to establish your credit history. Paying off your credit card balance each month will help you build your credit score and help you qualify for larger loans and financial products in the future. This is important especially if you want to get a car loan or qualify for a mortgage. 

Applying for a credit card can seem overwhelming, especially if you are a newcomer to the country. You may not be familiar with the application process, the information you need, and if you will qualify. Here we will provide you with the information you need to apply for your first credit card in Canada. 

You will need the following information to apply for a credit card:

• Full legal name

• Date of birth

• Home address (in Canada)

• Phone number

• Email

• Employment status

• Annual income

Before you start applying for credit cards, note that applying will have an impact on your credit score. So, do not just start applying for a variety of cards to see which one accepts your application. You first need to assess your financial situation to better understand the type of card that will benefit you most. 

Ask yourself:

• What do you need the credit card for? (i.e. to pay bills, establish credit, use as an emergency fund)

• How do you plan to use it?

• Do you want to add a partner or family member on the card?

There are many different types of credit cards. They offer unique benefits. Depending on your situation and financial needs, these card features may make sense for you:

• Credit builders: If you have recently immigrated to Canada, lenders will consider you a credit builder. You can apply for cards that are specifically designed to help you build credit. If you have no credit or low credit you can apply for a secured credit card to start building up your finances. 

• Cash back: Get cash back on the purchases you make to help lower your monthly bill. Cash back percentages vary based on the card and lender. 

• Low interest: If you expect to carry a balance on your card from time to time, a low interest rate is a great option to minimize borrowing costs.

• Travel rewards: If you plan to travel back to your home country regularly, you can accumulate travel points that can help you save on travel costs. 

• Points cards: Earn points you can use to cash in at participating retailers. For example, AIR MILES and PC points.

• Annual fees: Cards can start at $0 fees and range up to $100 per year or more. Many offer you the first year free.

• Late payment fees: Some cards charge a fee if you miss a payment or pay after the due date.  Late payments can also increase your interest rate. So make sure to pay on or before the due date.

• Foreign transaction fees: I you plan to use your credit card when you travel, be aware of the associated fees. 

• Income requirements: Your annual income will affect the cards you qualify for and your credit limit.

• Additional benefits offered: Many cards offer additional perks such as payment protection, travel insurance, roadside assistance, and an extended warranty. Look into all the benefits that you can use. 

• Ease of use: Getting a credit card from your current banking institution will make it easy to access your card online and connect it to your bank account. 

Once you have completed your research, now you can go ahead and fill out your credit card application. The most effective way to do this is online through the lender’s website. You can also apply over the phone and through the mail. 

If you applied online or over the phone, your application can be processed and approved in just a few minutes. Sometimes you will need to provide additional information to get approved. Once approved, you can expect to get your credit card in the mail in about five business days. 

You have a lot more options to consider than you think. Applying for the right credit card that matches your needs can help you solidify your financial situation.

For more information about your financial first steps in Canada, visit our banking in Canada resource page. Get the essential information you need to manage your finances in Canada!