Choosing a credit card

5 things to consider when choosing a credit card

1. Your options

Before you start shopping for a card, understand the different choices you have.

2. How you’ll use the card

If you plan to pay off what you owe in full each month, a lower introductory interest rateInterest rate A fee you pay to borrow money. Or, a fee you get to lend it. Often shown as an annual percentage rate, like 5%. Examples: If you get a loan, you pay interest. If you buy a GIC, the bank pays you interest. It uses your money until you need it back.+ read full definition may not be of use to you. If you rarely travel, you may not want a card that rewards you with air miles. If you’ll use rewards points to buy essentials like gas and groceries, you might save money over time.

3. The costs

Know the interest rate you’ll pay on any unpaid balance after the grace period. Also find out about any fees you’ll pay for the card and when they apply. The most common types of fees include annual fees, late fees and over-the-limit fees. You may also be charged fees for having additional cards and for cash advances.

4. The grace period

The grace period is the time you have to pay off the balance you owe each month before you will have to pay interest. In most cases, the grace period starts on the billing date and ends a certain number of days after.

Under Canadian rules, if you pay off your balance in full each month, your card company must give you a grace period of at least 21 days on all new card purchases. You’ll lose your grace period if you don’t pay off your balance each month. To regain your grace period, you must pay off everything you owe on your card by the next due date.

5. Extra features

Many cards offer extra features like insurance. To be eligible, you must use your credit card to pay for your travel or merchandise. Other conditions might also apply. Check with your credit card issuerIssuer An organization that offers securities for sale to investors. Examples: corporations, investment trusts and government bodies.+ read full definition for more information.

​Feature ​What it usually covers
​Travel accident insurance ​Accidental death and dismemberment coverage when you, your spouse or any dependent children travel on a plane, train, bus or ship.
​Trip interruption or cancellation insurance ​Trip cancellation or interruption coverage if you can’t travel due to illness, injury or a death in your immediate family.
​Travel medical insurance ​Coverage of certain medical costs when you travel outside the province where you live.
​Rental vehicle insurance ​Damage or theft coverage on a rental vehicle, up to a certain dollar value.
​Flight delay insurance ​Coverage of some hotel, motel or restaurant expenses, up to a certain dollar amount, when your flight is delayed or you’re denied boarding, and no alternate transportation is available.
​Baggage insurance ​Coverage of loss or damage to your baggage while you’re in transit, up to specific limits.
​Purchase protection ​Repair or replacement coverage for merchandise, up to a certain limit, if the merchandise is accidentally damaged or stolen.
​Extended warranty ​The same coverage as your original manufacturer’s warranty once the original warranty expires.

Use the Financial Consumer Agency of Canada’s credit card selector tool to help you find the card that’s right for you.

Caution

Most credit cards charge a different rate for purchases, balance transfers and cash advances. Consider the interest rate before you enter into a transactionTransaction The process where one person or party buys goods or services from another for money. Examples include taking money out of an account, buying something with a credit card or taking out a loan.+ read full definition.

Key point

Choose a card that fits the way you plan to use it. It might be worth paying an annual feeAnnual fee A fee that is charged on an annual basis. One common occurrence of an annual fee is the fee charged by credit cards.+ read full definition for a card that offers you the right rewards.

Take action

Check out these 10 things you need to know before you sign up for a credit card.

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