Getting Your First Canadian Credit Card

by John_S on November 30, 2010

Getting your first Canadian credit card is a crucial aspect of establishing credit history. Since a credit card is an important tool for building credibility or credit worthiness in the future, it is wise to choose the best deals. An equally important matter involved in credit card use is the understanding of how credit works. Here are some tips and valuable information that is of help when you go for credit card shopping.

Understand the Terms and Conditions Set by the Company

Credit card companies offer the chance to open an account and get a sense of the convenience involved in using the thin plastic as means to pay for purchases. However, this convenience comes with consequence and that is paying for certain fees, interests, and other charges. You should understand that purchases made with a credit card actually mean adding debt, and debt equals to paying interests.

Credit card interest rates are determined by the APR or annual percentage rate. If a company offers a credit card at an APR of 12 percent, then the monthly interest rate is set at 1 percent (APR divided by 12). Annual fees may also apply for some credit cards, especially if they offer good terms and conditions. However, the annual fee can be waived by the company provided that some requirements are met. Ask your crediting institution about the possible options and save some hard-earned money.

When you are late on your payments or purchases exceed the credit limit, additional fees may apply. Late payment and overcharge fees can be the source of financial trouble in the future; so, make timely payments and don’t overspend.

Shopping for the Best Credit Card Offers

Credit cards are everywhere around you, but you should get the best deal. Compare credit card offers before you decide on applying for one. Look at interest rates and policies, and check for annual fees and other charges that may apply. Beware of teaser rates because these are only temporary. Since the teaser rate may be zero, it might make you overspend. When the teaser rate expires, you may find out that high interest rates apply. Therefore, it is best to avoid schemes that lead to more debt and lower your credit score.

There is a variety of credit card offers for Canadians with limited or no credit history: the Guaranteed Secured MasterCard® offered by Capital One (19.8 percent APR and annual fee of $59), and the Low Rate Guaranteed Secured MasterCard®, with APR of 14.9 percent and annual fee of $69, are among the offers advertised on the credit card market. Check with your local bank and shop around at various e-commerce websites.

Applying for a Credit Card

This process is quite simple and requires only filling in an application and submitting the required documents: proof of income and residence, social security number, identification forms, certificate of birth, etc. After your application has been submitted and you get approved, you may begin using the card to build credit history.

If this is your first credit card, the best way to establish a good credit score is to pay on time. Never make purchases you cannot pay before the grace period ends. Don’t forget that you need a good credit history in order to obtain other loans in the future.

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