Looking for a new credit card but confused by all of the options available and what their terms really mean? Maybe you want a credit card so you can shop without having to use cash for purchases. Or, maybe you’ve heard about travel rewards cards that let you use points for flights and hotels. No matter your reasons for needing a card, finding the right one is a must. Let’s explore how to open a new credit card and what all the terms mean. And, we’ve included a few travel rewards cards (so you can plan your next trip!).
How to Open a New Credit Card
A credit card is a form a debt you must pay back. When you open a credit card, you’ll apply on the bank’s website. They will ask for your social security number, date of birth, address and salary details.
Some banks will give you an approval within seconds and some will respond by mail. They’ll tell you if you are approved and the credit limit.
Learn the Credit Card Terminology
Credit cards can include benefits like cash back or travel rewards. But, there are other terms you should know about.
Credit card terms:
The annual fee: The fee the bank charges annually for having your card.
The APR or interest rate: The annual percentage rate (APR) is the percentage that the bank charges for purchases. A typical APR might be 19.99 percent.
The credit limit: This is your credit amount. Credit limits range from $500 on up to $10,000 or higher. Lower limits are for people with new or no credit. Higher limits are for people with excellent credit.
Secured vs. unsecured credit: Secured or prepaid credit cards require deposits. You open a line of credit and pre-load it with money. Secured cards typically don’t include rewards memberships. Unsecured is when you take out a credit card through a bank and they loan money to you.
Travel and cash back rewards: Some credit cards offer 1 percent to 10 percent cash back (or higher) with card purchases. You make purchases and receive money back through a rewards program. You can take the money as a credit, check or towards travel for hotels or airfare. Let’s look at an example.
Let’s say your credit card offers 50,000 points if you spend $5,000 in the first 3-months of using the card. You book a vacation for $5,000 with the card. The points convert to cash rewards and you now have a credit for $500 to use as cash or towards hotels or airfare.
Know Your Limit and APR
When you open a new card:
Only spend what you can afford to pay back.
Pay your balance in full each month. You won’t have to pay interest if your balance is zero.
Check the APR to make sure it’s not a varying rate. Some banks charge varying rates that can be as high as 26 percent or higher. And, if you carry a high credit card balance it can take longer to pay your balance off if you only pay the minimum each month.
Shop Around for the Right Card
Want a credit card that gives you something back? From travel rewards to cash back rewards, for the best credit cards Canada, try:
President’s Choice Financial World Mastercard: No annual fee, 19.97 percent APR, 2 percent cash back. You earn 35 PC optimum points for every $1 spent at Shoppers Drug Mart.
CIBC Aventura Visa Infinite: $120 annual fee, 19.99 percent APR, 4 percent rewards.
American Express Air Miles Card: No annual fee, 19.99 percent APR, 500 bonus miles when you spend $500 in the first 3-months of having the card.
Looking for the Best Credit Card?
Using a credit card is very convenient. And, when your card includes travel rewards, you can get money back. Consistently pay your card each month to build and maintain good credit. For help with credit cards or if you have questions, contact Rates Supermarket.
Let Rates Supermarket help you compare the best rewards credit cards Canada has to offer. With competitive rates and huge cash back incentives, start planning that future vacation now. Find the best rewards credit card today!