Things to know before getting your first credit card | Blog

Everything to consider before applying to help get you approved

Are you looking to get your first credit card? If you answered yes, there’s a good chance you have some questions that need answering before you get your feet wet. This article has all the info that you’ll need to navigate the process, from start, to finish.

Perhaps you’re a student and just starting out on your own, or even a new arrival to Canada. Maybe you don’t have any credit history in Canada yet, and aren’t sure how to go about the process of applying for, or choosing the right credit card. Well, don’t worry about any of that because we can point you in the right direction.

We’re here to help you sail the credit seas and ensure you arrive safely into port with your brand new card. So you take the helm, and we’ll raise the sails, as we head out on this new journey together.

Researching and choosing the card you want

Before discussing the application process, it’s important that we provide some helpful tips on credit card selection. There are so many different brands and card types out there today that it can be confusing for anyone to sort out (especially if you’re new to the game). Let’s break it down a little so that you can begin to make sense of it all.

As we touched on above, there are many different credit cards to choose from, and most of them have their own unique features. That’s why you’ll want to avoid applying for the very first credit card offer that you come across, even if it seems like an amazing deal.

To get started, try running a quick internet search with some of the following categories:

Rewards programs: take a close look at rewards before you apply if you are interested in a rewards credit card. Some cards offer a flat fee, while others offer rewards based on spending categories. Review sign-up bonuses as well as their terms and conditions. (We’ll go into more detail on this below.)
Income requirements: make sure when you are comparing credit cards that you meet the income requirements for the card you want. There are cards available for a range of incomes, and you want to make sure you have a good chance of approval before you apply, to avoid unnecessary credit checks. This information is usually in the fine print on the credit card company’s website.
Card benefits: check out the perks that you want with your new credit card. Look for benefits relating to cashback, rewards, travel points, insurance, security, etc. This will help you determine how much value they really have.
Annual fees: you’ll probably want to compare how much each credit card costs, and what types of benefits they offer to compensate you for the annual fee. Keep in mind that not all credit cards have annual fees and you might want one that doesn’t charge you at all (especially for your first credit card).
Interest rates: this won’t apply to you if you plan to pay your balance off in full each month. If that’s not the case, you may want to apply for a credit card with the lowest annual percentage rate (APR) available, as this can outweigh many of the other features that are out there.
Acceptance: it’s important to make sure you know where your credit card is going to be accepted. If you want to travel internationally, you would want to check if you’ll be able to use it when you’re abroad. Some cards are even store-specific, which may have more benefits but less flexibility. In general, you’ll be safe by going with Mastercard or Visa.

Rewards cards are such a large portion of the credit card market today that it can be baffling for a newcomer. Let’s go into a little more detail about credit card rewards just in case you’re not familiar with this topic.

Your credit card options explained

Credit card rewards programs typically offer you some kind of benefit in the form of cashback, points, or travel rewards. Remember, if you don’t pay off your balance each month, rewards programs may not be the best bet for you, as the interest charges could outstrip any benefits that are offered.

Here’s a breakdown of the 3 main types of rewards cards that you’ll see:

Cashback: this will usually be shown as a percentage. For instance, if you have a card that offers 2% cashback, you’ll get $2 cashback for every $100 you spend. This may be in the form of a bank deposit, store credit, gift card, or other payment.
Points: depending on the card you get, there will be a set amount of points given on each purchase. You can then use the points towards purchases, such as gift cards, flights, and more.
Travel: these are often a part of travel credit card programs. You get a set number of travel points per amount spent, and they can be used to book flights, or sometimes hotels and tours, depending on the type of card.

If the rewards are tiered, then your rates will often depend on specific spending categories, such as 3% at grocery stores, 2% on gas, or 1% on all purchases you make.

Here’s a summary of the 4 most common non-reward credit card options:

Low-fee cards: low-fee cards give you some benefits, such as cashback or points, but you don’t pay the higher premiums of premier cards. You get less rewards in return, but sometimes you have to spend more on your card each month to make premier cards worth the large annual fees. Low-fee credit cards are a good way to get some rewards but keep your annual fees down.
Low-interest cards: if you’re holding a balance on your credit card each month, you would likely benefit from a low-interest card. Low-interest credit cards typically have a fee and don’t offer rewards. Your reward is paying less interest on the balance owing.
No-fee cards: with few exceptions, no-fee credit cards rarely offer perks and rewards. However, this is one of the most basic cards and can be a great place to start. Even better is if you can find a rewards or cashback no-fee credit card.
Student cards: a student credit card is a card provided specifically for young people attending post-secondary schooling. The credit limits on these cards are usually between $500 and $1,000, which is relatively low compared to standard credit card limits, but they are a good place to start and don’t have fees.

How old do you have to be to get a credit card?

You have to be the age of majority for a credit card in Canada which is either 18 or 19-years-old depending on what province you live in.

Provinces or territories where the legal age to get a credit card is 18-years-old:

Alberta
Manitoba
Ontario
Prince Edward Island
Quebec
Saskatchewan

Provinces or territories where the legal age to get a credit card is 19-years-old:

British Columbia
New Brunswick
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Yukon

Should you get a standard or secured credit card?

Before we dive into this section, we want to clear something up. When it comes to standard (unsecured) versus secured credit cards, one isn’t necessarily better than the other. Your personal financial needs and values are what will ultimately dictate which is best for your unique situation.

If you want more in-depth information on the topic we discuss below, we suggest first reading our article on the different types of credit cards.

Secured credit card fundamentals

Secured credit cards are often popular with those who have no credit score, or have poor credit and wish to build it up. They are also used by some people who are simply anxious about credit. New immigrants, students, or people recovering from bankruptcy may also find secured credit cards beneficial.

Here are some of the basics:

You will need to put down a security deposit.
The credit limit is determined by the amount you put down.
You can get one with no credit or poor credit.
It will help build your credit score.
The issuer reports your payments to the major credit bureaus.
They can have relatively less rewards and higher interest rates.

Standard credit card fundamentals

Standard or unsecured credit cards (commonly known as credit cards) are the most common choice for consumers across the board. They offer an array of benefits, including rewards programs, cashback, and insurances. You’ll want to pay your balance on time if you plan to capitalize on everything standard cards have to offer.

No security deposit has to be put down.
The rewards are typically better than with secured cards.
They often come with lower annual fees or none at all.
If you have poor credit, standard cards will have tough terms.
Use your standard card wisely or risk damaging your credit.

How to apply for a credit card: step-by-step instructions

The basics of credit card applications are pretty straightforward, but there are a few things you’ll have to remember. These days, the best way to apply is usually online, but you can also do it in person, or over the phone.

If you plan to do your application online then here are the steps you will need to take:

Go to the website of the credit card issuer and read over the features and terms of the card that you have decided on.
Click on the “Join Now” or “Apply” button and start the application process.
Next, fill out the application form, which will need your name, address, phone number, email address, SIN, date of birth, income, employment status, and housing situation (they may ask for additional information).
Read the legal conditions of the card, including any fine print in regards to interest rates and fees.
Submit the application!

You should receive a response right away. The issuer will either let you know you are declined, approved, or that your application is pending. They will likely send you a follow-up email, but you can usually call customer service if you require further clarification. Some credit card providers (such as Neo) allow you to apply, get approved, and start using your credit card immediately.

Final thoughts: steer clear of these credit card application mistakes

That’s (almost) all folks! If you paid close attention to the information we have provided, then you should be in very good shape when applying for your first credit card. To finish off, we’re going to give you a short list of things to watch out for.

Steer clear of these credit card pitfalls because they could trip up your application.

Applying for too many cards at once: every time you apply for a credit card, it is noted on your credit score, so applying for too many at once doesn't look good to lenders. It may even make you appear unreliable.
Not applying for the right card: the countless options available for you when choosing a card can create some confusion. Don’t be pressured by ads to apply for a credit card that does not fit your income as you may be rejected.
Ignoring the terms and conditions: it’s important to carefully read the terms and conditions mentioned in the fine print on the website of the credit card issuer. Pay attention to annual fees, late charges, interest rates, etc.
Leaving information out of the application: a common reason for applications getting rejected is that the applicant leaves out information. Make sure you take the time to provide all of the details that are requested and you’ll be fine.

The experience of applying for your first credit card should be an exciting and positive one. If you approach this in a sensible and well-thought out manner, and follow the advice we’ve given above, you’ll be building credit in no time. So do some research, pick a card, get your documents, get approved, and experience your first purchase with your very own credit card.

Legal: This article provides information and is not intended to provide any personalized tax, investment, financial, or legal advice. You are encouraged to seek professional advice before making financial decisions.

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