Which Card is Right for You?

With b’zillions of credit cards out there to choose from, how do you decide the card that’s right for you. Well, it boils down to what you’re trying to achieve.

Are you carrying a balance and trying to pay off debt? A low-interest credit card can help. Look for one that offers low interest on balance transfers. Then put the card away so you don’t use it for purchases. Make sure you know exactly how long the low interest rate will last, and make a plan to have the balance paid off by then since introductory rates have a way of shooting up after the first 6 or 12 months. Read the fine print on the application and on your credit card agreement.

Are you trying to establish or re-establish a credit history? If you’re new to the country, or you’ve been through bankruptcy, you’ll want to get your hands on some credit so you can establish a credit record. Get yourself a secured credit card. You have to put some money on deposit with the credit card company to get the card. Usually if you want to have a $500 credit limit, you have to put up $1000 as security. Almost anyone who is able to put of the required cash as collateral can qualify for one of these, so it is a great option for anyone who wants to build or re-build a good credit history.

Do you pay your balance off in full every month? There are loads of options open to you. From cash-back credit cards to cards that give you points for groceries or travel, the credit card world is your oyster.

Do you charge lotsnlotsa stuff? For people who rack up expenses that are then reimbursed, a cash-back card can be a very smart move. Some cash-back cards offer an annual cash rebate that equals a percentage of the previous year’s purchases. Some offer cash back along with other rewards as well like airline miles, gas rewards, investment products, and even charitable donations. Most come with an annual fee so before you jump on the bandwagon, make sure you’ll charge enough to warrant the fee if there is one.

Don’t charge enough to warrant the fee on a cash-back card? Reward cards give you points instead of dollars. The thing to watch for with most cash-back and reward cards is the interest rate being charged. Most of these cards have pretty hefty interest rates, so if you’re carrying any balance at all the interest costs will gobble up any benefit you would derive from the points.

Do a lot of travelling? Airline cards can help you rack up free travel to compensate for all that time you have to spend away from the hubster and kidlies. Many come with an annual fee. Virtually all have a whopping interest rate. These cards only work if you do not carry a balance.

Do you run your own business? In all likelihood you’ll have to sign personally for your credit card. The upside is that if you buy a lot of stuff using the card and earn points on that stuff, you’ll rack up points (or cash back) in no time flat. Again, watch for fees. It’s amazing how the price goes up on credit cards/bank accounts when they attach the word “business” to the account. And be aware that if the card is touted to act like a line of credit, you’ll likely lose the grace period, so interest will start accruing on your purchases the minute you make them.

Are you a student? While some credit card companies say they offer “student” cards, these are often just their regular cards repackaged.

The credit card world if vast. Choose wisely and use your credit card smartly, and you can put those suckers to work for you instead of the other way around.

42 Responses to “Which Card is Right for You?”

  1. My husband used to work for a construction company and the owner would build bridges using his personal credit card to accumulate travel points. Every year, he and his family went somewhere very exotic and posh.

    I had a card with cash back then switched to reward points because I actually made more “money” that way. I usually redeem my points for gift certificates for my car. I read a story of one woman, much like my husband’s previous boss, who ran a business off her personal credit card. She redeemed all her points for Toyota gift certificates, which only come in $25 denominations. She brought a box of them in to the dealership one day and bought a car.

  2. I pay off my credit cards every month and never carry a balance. The Costco Amex gives me cash back, and I use that to pay for the annual costco membership. I use the no fee airmiles card for all my other expenses and get gift cards to give to family for birthdays and christmas, and to treat us to our favourite restaurant a couple of times a year at no cost. I tend not to save up the miles for travel – I think it would take too long so getting the gift cards throughout the year satisfies at some level my immediate gratification weakness!

    They are no fee cards but as a result have higher interest rates. So I am absolutely resolute about never carrying a balance.

  3. avatar Rebecca W Says:
    October 27, 2010 at 7:46 am

    I have a PC mastercard that I have so far bought half my wedding flowers and my makeup with PC points. It is limited to PC stores, but I do like their products, so it is ok for me! It is really easy to rack up the PC points with the M/C

    I do want to get an airmiles card though and rack up those points!

  4. I have a very basic rewards visa from RBC that I have NEVER redeemed points on in forever. at least now, i can buy something large with it, but the deal’s not great.

    I have been intrigued by the Captial One Aspire World Mastercard because I really think the only points I would ever use would be on travel… anyone have this card and have any thoughts on it?

    Also, my friend uses a Shoppers Drug Mart Mastercard and has redeemed points on it many times over. You can couple it with your Optimum card for even more points, and she swears it’s the best thing ever.

  5. I use a CIBC Aerogold Infinite Visa. I became a card member in 1999 and in 2007 when I got married, we put everything on the card (paying it in full of course, always) so we racked up tons of points. A month after the wedding, we booked 2 economy tickets to Australia so we could visit my best friend. We are 20,000 points away from accumulated enough points to go to Australia again (this time in business class).
    Every year we need to rent a car to travel up north for the holidays so the annual fee takes care of the rental car insurance that we don’t require anymore.
    If you travel internationally, a credit card that can give you real travel points is the one for you. I can’t stress this enough. Going to Oz will cost at least $1,700 plus taxes so this card is a saviour for me.

  6. I have an Amex (which I have had for almost ten years now) and use that together with my Airmiles card to get points I cash in for anything from flights to gift cards to stuff for a house. In the past two years, I have flown to Boston, bought an e-reader, a new purse and gone on a shopping spree, all thanks in part to my points.
    I recently got a Shoppers Optimum Mastercard since Amex isn’t accepted everywhere. I have cashed my points in for perfume, make-up and all the essentials for a vacation!
    I never carry a balance and pay off my cards in full every month. One of the perks is using the points on myself!

  7. CIBC Aerogold card works for our family. The main reason is we always pay it off in full on schedule. Yes there is an annual fee – but we benefit from it greatly. We’ve had return trips to: Europe, Calgary (for a family of 4), Los Angeles, Halifax + 4 star hotels in Vancouver.

    QUESTION: Our children are both in University – can anyone recommend a good STUDENT Visa card for the kids to apply for?

    Thank you all.

  8. I have a BMO airmiles card (no fee). I go through spurts where everything goes on the card and then gets paid off right away….and spurts where I am cash only and rarely use it. I have a Shoppers Optimum card that I use on sales to boost up the points to get free product.

  9. I have a no-fee, cash back rewards Visa, which is only used for personal purchaes (which as of late are few and far between). Jordan (my finance) has a secured Visa, and has to wait a full two years before they will release the security. He was lucky and had to put up $500 for a $500 limit. But that $500 is going stright to the house fund once the cash is released in a few months.

    Finally, we have a joint Master Card that has a fee and an Air Miles reward program. We love this card! We’ve racked up miles so fast our heads our spinning (some travel for work and wedding deposits). So far it’s been reletivly easy to keep it paid off, but three months in to have a joint card – and we’re still learning how to manage it.

  10. I actually disagree with this post alot.

    What card will work for you is the one that offers you the most percentage back, (no fee/w fee) and that you will use.

    Just because you like travelling, doesn’t mean that you wouldn’t be better off with a PC (or Sobeys) Mastercard. Points = Money.

    If you have a grocery point card, but want to travel, don’t buy anything extra with points (ie cavier, pate, mousse) that you wouldn’t buy normally, and put the equivalent cash value into an account that you are saving for travelling. Or a way to build your emergency fund if you don’t have it up to where you want it to be yet.

  11. – MBNA MC Smart Cash Card. No annual fee. 3% cash back on groceries…and everything else I can buy at a grocery store, like a PS3 slim from the electronics department. I have two of them, one for me and one for my parents.
    – VISA. No annual fee. 5% cash back on gas…and everything else I buy at a gas station, like TELUS phone cards.
    – Capital One MC. No annual fee. 1% cash back on everything.

    Since I pay the balances in full every billing cycle, it’s like getting paid to spend money.

  12. Just a quick note to beware of any credit card which seems “too good”- I used to have a Charles Schwab Visa which was a flat 2% cash back on everything, plus no foreign exchange fees while traveling – the card was pulled in about two years, so now I have another opened Visa card which I don’t use.

  13. I have used a lot of cards in my time. I am down to 3, 1 of which I never use. The reason I got the 3rd card because I was offered free banking if I applied and got this card. The bank officer even said I did not have to use it. I am saving approximately $120 a year and the card is tucked away at home. The interest is high on it and as I don’t always pay off my balance each month. (I am working on it)

    Some of the cards are terrible if you keep a balance. High rates and high penalities if you are late on a payment or go over your maximum limit even if the maximum is exceeded due to the interest added on. It is a vicious cycle. I agree with reading the fine print. It can save you a lot of headache down the road.

  14. I have a platinum royal bank avion visa. The fee is waived as it comes with my banking package. I travel a lot for work and charge expenses then get reimbursed. I never carry a balance. With this visa, you can go the travel rewards route or royal rewards. In the past, I’ve used the rewards for a payment on my credit line – this time around it’s going to my mortgage.

  15. If you are in Canada the Financial Consumers Agency of Canada has a godd card selector tool:
    http://www.fcac-acfc.gc.ca/eng/consumers/ITools/CreditCards/default.asp

  16. We use the BMO Gold MasterCard, and put everything on it (and pay it off completely – no interest in the two years we’ve had it). We earn approximately 400 airmiles in a normal month (plus what we get from other retailers offering airmiles), and it takes 700 (+$150 for taxes, etc) airmiles to fly round trip from Calgary to Vancouver. It’s come in handy, especially when we’ve had to book only a few weeks out and flights are running $500 – $600.

  17. TD Travel Visa is the best travel card out there….you can book your travel your way…even the taxes… and then redeem the points as cash on your card…I have even used it while using the airmiles…I booked my flight to Toronto with airmiles…charged the tax portion on my TD Travel Visa and then redeemed the points to pay for the tax…that way the airmiles trip really didn’t cost me anything…also you have 90 days from the time of purchasing the travel on the card to redeem the points for it…that way you can still earn more points before redeeming…I run the house on that card paying it in full each month so no interest cost and of course with using the travel points it more than makes up for the annual fee…awesome card!

  18. Re: Travel Cards–Yep, I looked into that because so many people are using them now and swore by them and I travel lots. I found out that on the basic TD one I’d have to spend $9,000 for a $90 credit. But once you factor in the annual $19 fee, you’re only earning $71. $9,000 for $71? And at 20% interest? No thanks! I’ll stick with my current 9% interest rate. I can save more per annum by dropping a toonie in a jar once a week.

    That said, people should use the free Aeroplan and Air Miles cards and use their respective online shops for any purchase through e-Bay, Amazon, Sears, Expedia, etc. Those two cards cost you nothing and you can get REAL free travel out of the deal.

  19. I guess I’m the cheapo in the group as I only use PC MC’s points for free groceries. The thought of paying 19% or whatever interest sends shivers up my spine, so I never come close to going overboard and it’s always paid off.

    @ Lisa: How much is the annual fee for the Infine Visa card?

  20. @ Edward…the TD Classic earns you 2 points for every dollar you charge…therefore 5000.00 charged equals 10000.00 points which equals 50.00 in travel $$…the other two travel cards earn 3 points for every dollar but with a higher annual fee…if you only use the card once in awhile or if you carry a balance then it is not worth it (the interest rate is 19.75%)…but as I pay the balance in full every month it makes NO difference what the interest rate is and with running the house expenses on it the 120.00 annual fee is more than paid for…I am still waaaay ahead in earning travel $$$…that’s why this is all about what card it best for YOU..:)….cheers:)

  21. @Doreen – I imagine it depends on how much freedom with credit cards you want your kids to have. I had (no fee) RBC student account, which was basically just their classic II card that gives you 2 reward points per dollar. simple, but kinda pointless, except that RBC was my bank.

    Scotiabank does SCENE accounts which are no fee and let you combine points with your SCENE rewards card AND debit card for free movies, downloads on itunes, and other places. This is nice because it’s 2500 points or something for a movie ticket so you can get a LOT of them, and i know that my bf (who still uses SCENE) took me on many dates with those points!

    Finally, if you trust your kids not to get in over their heads, what about PC (for the free groceries) or Shoppers (for the free everything shoppers sells)? You need those things in school, so having the points for them is good.

    I’m sure you know this, but just in case: no student needs to pay bank or credit card fees, even for rewards cards. if the bank tries this, ask ‘what is WRONG with you?’ and run.

  22. Regarding the people using their personal card for business purposes, I thought the card benefits such as air miles or cash back would then be taxable benefits. Does anyone know?

  23. not too long ago i started debating the whole credit card issue. i got used to getting rewards points from a student credit card, so wanted to stay with them so i could keep my points. i also wanted to upgrade, because if i wanted to rent a car it didn’t carry the insurance.

    because i am single, travel alot, and rent cars for a few weekends out of the year, i decided on a more heavily insured card, which gave me more flexibility when it comes to travel (not all flight companies offer hotels when your flight is delayed or cancelled) and decided to pay the hefty yearly fee because i ended up saving more than that because I no longer have to add rental insurance to cars each time. that’s the trick for the fee-based cards i think. because i fly i debated getting a travel rewards card, but in the time i could save points for the simple trip of going home, the amount i would pay in fees would cover that flight anyway.

    so if you have the option to get a rewards card with a fee, make sure the fee is less than the savings you’ll have in its use.

  24. I miss my crazy points credit card from the job I had a couple of years ago. Built up hundreds of thousands of Aeroplan points buying stuff for work that they would pay off each month. Every time I had to book a $4000 plane ticket for one of the board of directors to fly in, I’d giggle about all of my impending points. Didn’t use any for travel though — cost too much in taxes & fees that weren’t covered and I could get better travel deals watching out for travel websites. Got TONS of great gift cards and a Dyson vacuum.

    Now I don’t use a card enough worth spending any kind of annual fee for. Oh well! I still get Airmiles from Metro & Pharma Plus and I don’t have to apply for another card that I won’t use.

  25. I have to weigh in on the secured credit card which was suggested. Surprising not everyone does NOT qualify. After we were discharged from bankrupcy we applied for a secured card and the bank would not allow it. Even though at the time we were making well into the 6 figures (had we moved to AB from the maritimes sooner bankruptcy never would have occured..ahh hindsight). Capital One had given us one while still in bankrupcy and so fortunately we were able to start rebuilding credit immediately. However the TD absolutely refused to give us a secure card or any other secured loan. We will never bank there again. Evenutally we got a card from ATB Financial and to get a $1000 limit we had to give $1500 in security and after 2 yrs we will get that secured money back. We wanted a $10k loan to purchase a truck, (we had the cash) simply to rebuild, offered the bank 15K in cash collatral to lock into a GIC and the TD still refused. Yep customer service at its best. How do you lose when you are earing interest on the loan plus have $15K locked and the truck as collatoral to boot? The ATB was quite pleased to take us on as clients and have been wonderful.

  26. Kenda, was TD part of your bankruptcy???…if so, then that would explain why they would not be willing to extend credit to you again…

    Also, under standard lending guidelines you need to be discharged for 2 years before applying for secured credit…7 years for unsecured…

    I have always found the fact that Cap One will give out credit cards while folks are still in bankruptcy…doesn’t the bankruptcy agreement state that you will not apply for more credit while under bankruptcy??????????

  27. oops…that should say “I’ve always found the fact that Cap One would give out credit cards while folks are still in bankruptcy kind of strange”….

  28. avatar tigerlily Says:
    October 27, 2010 at 4:57 pm

    I have over the years accumulated a few points (not credit, that’s another story) cards: HBC, Aeroplan, a couple of others. Does anyone have experience with Points.com for managing all of these points programs (and maybe combining them for flights, etc)? I was thinking of signing up for Points.com that but am hesitant…is it worth the hassle?

  29. avatar tigerlily Says:
    October 27, 2010 at 5:07 pm

    I agree with @Sparky. I don’t think that TD was out of line in denying credit to someone who has declared bankruptcy recently.

  30. If you plan on using the card a lot overseas, be sure to check what the foreign transaction fees are, I picked a card with a very low fee to cut down on that expense.

  31. avatar Argentine Says:
    October 27, 2010 at 6:27 pm

    @Jessie Says: October 27, 2010 at 9:28 am
    Said” Jordan (my finance)” a typo?

    😉

  32. I do not use my credit cards enough to rack up much in the way of points… my Sears card I cashed out the points earned plus Petro points, 2 years ago to buy a combo game table for the family for Christmas, and it was worth it… Sears often has 10x the points if you buy… so it was relatively painless building the points up, same with Petro Points and Shoppers Points…Shoppers points I cashed in to buy a Wii fit.
    I have a Visa card, but it’s a student card (although I haven’t been a student in decades, lol!)… its low limit and no annual fee suit me fine. Scotiabank won’t offer us Scene points or whatnot, because our “old” account offers us too many free services, and we’d have to give it up and switch accounts to get the scene points. The Scotia employees say too that it’s not worth the switch, and they’re fighting too to get Scene points available for that account.
    I’m a little leary of the PC credit card and buying everyday items on it to rack up points… I think it would get us into trouble, so I don’t think it would be worth it for us.
    I have to say that I’m SO mad at Sears these days (3 phone calls and 4 emails, and they still won’t straighten my account until AFTER I pick up my next order, and only after I call or email them AGAIN right after it’s picked up), that I’m tempted to just cancel my card and never deal with them again…

  33. @tigerlily — I joined Points.com YEARS ago when it first started and I found it was pretty good then, but now it seems like a waste (not like it costs anything). Any of the good exchanges you have to list what you’re looking for and what you have and people “trade” the points to you. I could only find one instance of exchanging your own points and the level was insane (80,000 HBC points which is enough for $10 gc for around a few dollars worth of Aeroplan points). I decided to keep my HBC points and just get a GC since I rarely buy anything there.

    It might be worth it for you, but it doesn’t exchange Air Miles and I really don’t think that the exchange rates are that good. It’s free to join and they don’t send too many spam emails, so it might be worth joining anyways.

  34. avatar Elizabeth Says:
    October 27, 2010 at 8:34 pm

    I debated a good bit about getting another credit card, but Target, don’t think you have them in Canada, a discount department and food store, is now offering 5% off all the time at the store with their no fee store card. They take it right off at time of purchase, like a coupon. Since I shop there all the time anyway, it will save me a good bit over the 1% back mastercard I have and usually use. Since I haven’t had to carry a balance on anything yet, it’s all good I guess, but I still read all the fine print and considered it carefully as I am new at this kind of decision.

  35. I would like to comment on a card for students – I would advise that you caution ANY student against a card with MBNA. This company will often go to universities and colleges and offer things like a free university tshirt for filling out their credit card application (this is how I got sucked in.)

    The will start your limit of low ($1000-1500) but then it raises rapidly (although I understand they cannot simply raise you limit anymore you have to request it.) They also start the interest rate at 18 or 19% that too raises over time to 24-26% When I got my bill stating they were raising interest rates because of the “hard times” I was shocked! I was 22 years old with a $8000 limit (not that I had spent that much but it was very easy to get carried away) and a 24% interest rate. When I called to have it lowered they said they couldn’t help me. I talked to several different people but they still didn’t do anything.

    Students are often strapped for cash so MBNA looks like a saviour when they come along offering credit. Getting this card was one of the worst mistakes ever. Tell your student NOT to get sucked in. The free t-shirt is simply not worth it.

  36. The free t-shirt or blanket simply baffles me. We have season’s passes to the Jays and they’re every couple of gates offering a free sports bag or Jays’ blanket for signing up. We’ve seen free t-shirts for hockey credit cards at the Sportscard Show and wonder how many people figure out what that “free” shirt will cost them. We went to the Women’s Show last year (coming up next weekend!!) and BMO was handing out these weird small bag things so because the whole show is essentially freebies, my mom went to take one from the guy holding one and he told her that she had to sign up for the card to get a free bag. So my mom said “you mean that thing that looks like it cost a quarter? I don’t think so!” I still don’t believe that anyone would sign up for a card for such a cheap promotional item.

    It seems as though banks shouldn’t be able to offer something to lure people to use their product. Could you imagine if cigarette companies offered “freebies” with their cigarettes? I realize that the comparison is slight but both are very dangerous to consumers. I guess beer cases come with free stuff all the time so it’s not so unusual.

  37. No, my previous credit with TD was spotless. Matter of a fact, up until the day we signed the papers I made sure that all bills were paid on time and for the min balance no matter how hard it was, I hoped right up until the last minute a job would be found and we would not have to go that route. Like I said, had we headed west just a few months sooner none of this would have happened. And yes,we were allowed to have a prepaid card for awhile and then to a secured card. My point is simply this, if a loan or credit card is secured for 50 – 100% more than the loan, where is the risk? And the other point was that not everyone can get a secured card.

  38. I have a CIBC aeroplan platinum. The annual fee (120) is more than paid for by the waived car rental insurance and the lack of charges for international transactions. I spent 5 years mostly overseas and the lack of fees means I saved huge dollars and have taken an overseas trip every year on points. Australia, Greece, Australia again, and have enough for a business class trip to Europe this summer.

    That being said I don’t ever carry a balance and the interest rate is such that if you did – it wouldn’t be worth it. For me the card is brilliant.

  39. My hubby and I each have a MBNA Alaskan Airlines Mastercard. We live in British Columbia. This card is great- there is a fee, but it’s not bad- and not only can you get free (with points) or discounted flights, you get a $99 companion ticket each year. So, we watch for sales around the sunny south and to Hawaii, buy 1 ticket at the published fare (reg. or sale) and then the second seat for $99. We do this twice a year to use up both tickets – his and mine. We usually go at Spring Break and in the summer as those are best for us to travel and there is no black-out period. We can fly from here to Seattle and then out from there. Very easy and has proven to be very economical. In July, we flew to Vegas that way and then used points to pay for our daughter’s ticket. No problem getting seats together either.

  40. @ KG – even if your credit was spotless with TD, if you had debts with them when you declared bankruptcy they would take the hit on those losses and would understandably be cautious about lending to you again, even with security.

    I do think the reference to secured cards makes it sound ‘too easy’. Many cheque cashing stores will give you a secured card no questions asked. Their business is based on making these riskier lending practices at higher rates of interest.

    No bank is under obligation to offer a secured card. Despite having security there are administrative costs and processes associated with having to identify (situations where secured debtors are getting into trouble), process and eventually close out secured cards. I work for a bankruptcy trustee and have seen situations where even secured debt is rolled into the bankruptcy.

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