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3. Low-interest credit cards: Low-interest credit cards are the best options for those who tend to carry a balance. Usually void of any perks or extras, they come with below-average interest rates so you will pay less in interest while you pay off your debt. The rates will still be relatively high compared to the interest rate on a mortgage or a line of credit.
The best low-interest credit cards in Canada
Picking the right type of rewards credit card
As mentioned, if you can pay off your balance in full every month, you’ll likely want to apply for a rewards card. But which is the best type for you?
Cash back
Cash back cards offer money back on your purchases. You will often find higher rewards rates for certain spending categories (on groceries or gas, for example) with these cards, but also a base rewards rate applied to all other purchases. Cash back cards tend to be straightforward, and because the reward is cash, it’s simple to redeem—cash is usually applied directly to your bill, once per year or on demand.
Travel
Travel rewards cards let you earn points or miles that can be applied towards travel-related purchases. They frequently include valuable perks like more comprehensive travel insurance or airport lounge access.
Step 3: Look at what multiple banks offer
Now comes the fun part: Choosing the card you want to apply for. Remember, you can have a credit card and bank accounts from completely different financial institutions, at the same time. Don’t limit your options to the bank you’re currently using. Instead, compare credit cards from different providers to find the one that delivers the most value for you. For example, the Tangerine Money-Back Credit Card and the TD Cash Back Visa Infinite are both cash back credit cards, but they come with different earn rates on bonus categories, annual fees, welcome offers and eligibility requirements.
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Tangerine Money-Back Credit Card
- Annual fee: $0
- Earn rates: 2% in up to 3 categories of your choice (including groceries, gas and dining) and 0.5% cash back on everything else
- Welcome bonus: You can earn an extra 10% back on up to $1,000 in everyday purchases within the first 2 months. Must apply by January 31, 2024.
- Annual income requirement: Personal or household income of $12,000
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TD Cash Back Visa Infinite Card
- Annual fee: $139 (rebated for the first year.)
- Earn rate: 3% cash back on gas, grocery and recurring bill payments; 1% on all other purchases
- Welcome offer: You can earn up to $500 in value, including 10% in Cash Back Dollars in the first 3 months on Bonus Eligible Purchases up to a total spend of $3,500. Conditions apply. Account must be approved by March 4, 2024.
- Annual income requirement: Personal income of $60,000 or household income of $100,000
Step 4: Consider your spending personality
The right card for you will depend on what you want from your credit card and how you use it. Let’s call this your spending personality.
Brand new applicants, or those with bad credit, are not shut out of the credit card game. If this is you, look into a secured credit card. In addition to the interest rate, also compare the sizes of deposit required and whether they have an annual fee.
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