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Having a credit not only makes things very convenient when you shop – especially online – it’s also a great way to build and improve your credit. By using your credit card responsibly, you can effectively build a decent credit score that will take you a lot further when it comes time to getting approved for a loan with good terms and a low-interest rate.

Credit cards are also great for collecting points that can be used towards the purchase of goods and services. If you’re going to spend the money anyway, why not collect points at the same time! Every credit card will come with its own rewards system, so the one you choose will be based on what you typically spend your money on most.

Check out our top lessons for credit card users, click here.

If you’re looking to apply for a credit card, you’d be well advised to do a little research to see what’s out there and assess your specific needs and financial situation before you submit an application. The question is, how do you go about choosing the right credit card for your particular situation?

How to Pick The Perfect Credit Card For You

Interest Rate

Obviously, the interest rate that you will be charged is a crucial factor to consider, as this will determine how much you will be spending on your outstanding balance every month. The higher the rate, the more interest you will have to pay, which can really add up if you tend to rack up your credit card bill every month. As such, try to find a card that will offer you the lowest rate possible.

Do you know what to do when you don’t recognize a charge on your credit card statement?

Annual Fee

Many credit cards come with an annual fee that will have to be paid, and some are more expensive than others. Before you choose a card, be sure to inquire about what the annual fee is on the card so you won’t be unpleasantly surprised when you get a bill each year. As a side note, there are many widely available credit cards that do not have annual fees, if you’re looking to simply charge your gas and groceries or pay for a few monthly bills, this is the type of card you should be looking for.

Cash Advance Interest Rate

If you wish to make any cash advances with your credit card, you’ll be charged interest, but not necessarily the same rate as what your typical balances would be charged. Be sure to find out what this rate is before you apply for a credit card.

Foreign Transaction Fees

If you travel a lot and buy things in other currencies, you will want to find out what the credit card issuer will charge you for such purchases.


How widely is the credit card accepted at retailers everywhere? You will want to verify where it is accepted and where it isn’t before you apply.

Choose a Credit Card Based on Your Lifestyle Needs

Choosing a credit card that you can afford to use is obviously an important step in the process. You will definitely want to know what all the fees and interest rates that are associated with the credit card that you choose. But aside from the financial aspect of the credit card, you will also want to make sure the card is best suited to your particular lifestyle and needs.

Rewards and Points – As mentioned above, many credit cards come with their own reward systems, and no two are exactly alike. Consider what you tend to spend a lot of money on, and choose a card that will offer points for every dollar spent to be used towards these types of expenditures.

For instance, do you tend to travel a lot? Then consider a credit card that offers points toward plane tickets with your preferred airline or hotel stays abroad. Do you like to use your points toward your grocery bills? If so, then a credit card that offers points to be used at supermarkets might be a good option. Just be sure to pick a card that has a reward system that suits your needs.

Perks – Not to be confused with rewards, perks involve special treatment for cardholders, such as getting discounts on specific products or services or getting exclusive access to concert tickets before they’re made public, for instance. Choose a card that offers perks that you typically like to take advantage of.

Does paying off your credit card improve your credit score? Find out here.

Credit Card Debt Can Be Easy to Accumulate

Credit cards definitely offer a lot of benefits and perks that can actually help you save money if you’re smart with your transactions. But you need to be extremely diligent with your spending in order to make your credit card work for you.

It’s easy to whip your credit card out whenever you need to pay for something and because you don’t actually see the cash flowing out of your bank account, you might be more prone to spending more than you probably would if you were using cash.

Because of this, it can be really easy to rack up your credit card balance if you’re not careful. Credit cards make it almost too easy to spend money, which you might regret when the bill finally comes in at the end of the billing period.

Before you decide to take out a credit card, be honest with yourself about how you will manage your card. If you’re disciplined and responsible with your money and finances, then a credit card can be a great addition to your wallet. But if you’re not very responsible with your finances, a credit card can actually be a dangerous thing to have at your disposal.

If you accumulate too much debt, you could find yourself having trouble paying it down. Credit card interest tends to be pretty high relative to other types of loans, and the higher the balance, the harder it will be to pay off your credit card debt.

A general rule of thumb when it comes to spending with a credit card is not to spend any more than 30% of your credit limit. By keeping your expenditures under this number, you’ll not only find it easier to pay off your balance every month, but you’ll also be doing your credit score a favour too.

A Word About Minimum Payments

When you get your credit card statements, you’ll notice two balances: the full statement balance, and the minimum payment required. The minimum payment option is there to allow you to pay a much smaller amount while still being considered to have paid your bill on time. While this is definitely helpful when it comes to avoiding late payments (especially if money is tight in a particular month), it won’t do much to help you pay down your entire balance.

If you continue to make only minimum payments every month while still spending, you’ll only be growing your outstanding balance that will continue to be charged interest. While making minimum payments once in a while might be fine, it’s important not to make a habit of it. If you don’t have the money in your bank account to support an expenditure, then perhaps you might need to avoid spending that money in the first place.

Final Thoughts

There is definitely a lot to consider when choosing a credit card, and the most important factor will inevitably depend on your lifestyle and finances. Take the time needed to think about what you want in a credit card before you make your final decision and be sure to use it wisely once it’s in your hands. If you’re unsure of where to start, Loans Canada has a wide variety of credit cards available that may suit your needs.

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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