6 Best Credit Cards For Newcomers In Canada (Feb 2023)

January 21, 2023
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There are quite a few good credit cards for newcomers in Canada, but some stand out above the rest for their low annual fees, low credit score requirements, and versatility. I constantly keep up with the latest options and policy changes and make my recommendations below based on my years of experience.

The Scotiabank Gold American Express Card is a good choice for travelers looking for a no-fee travel credit card. The Scotiabank American Express Card is the best option if you're looking to earn Scene+ points on most purchases at a rate of 3 points per $1 spent – qualifying categories include grocery stores and restaurants.

What Is A Credit Card For Newcomers?

As a newcomer in Canada, one of your priorities should be to build a credit score history. Canadian banks and financial institutions use these records to assess whether or not you are qualified to opt in for financial benefits and assistance.

Banks and financial institutions in Canada may have residency requirements, but for all those that don't, there are premium credit cards and secured credit cards that may be suitable for you. The primary way to open a Canadian credit report is to apply for a loan or credit card. When you get a credit card, a credit report is automatically created. For newcomers, setting up a credit score is crucial as it can take a long time to build it.   

The Best Credit Card For Newcomers In Canada

1. Scotiabank Gold American Express Card – Best For Online And Out-Of-The-Country Purchases For Newcomers

Pros

  • No foreign transaction fees for purchases outside the country.
  • Earn up to 5 Scene+ Rewards Program points from eligible purchases
  • Comprehensive insurance coverage for purchase and travel
  • $120 annual fee is waived in the first year of membership

Cons

  • Lacks New Mobile Device Insurance
  • American Express credit cards are not widely accepted
  • Pay an annual fee after the first year

2. Tangerine Money-Back Credit Card – Best For Newcomers 

Pros

  • No annual fee
  • Earn up to 2% cashback from various purchases
  • No capping for cashback and spending
  • Monthly cashback redemption

Cons

  • Low earning rate than credit cards with annual fees
  • Tangerine don’t have physical branches

3. Home Trust Secured Visa Card – Best For Building Credit History For Newcomers

Pros

  • No annual fee
  • Helps in improving or building credit scores or history 
  • Credit limit is personally set

Cons

  • No rewards or cashback programs
  • It may take time to get an approval

4. Home Trust Preferred Visa – Best For Foreign Exchange For Newcomers

Pros

  • No annual fee
  • No foreign transaction fee
  • Purchase Protection coverage

Cons

  • Low earning rate
  • Not available in Quebec
  • Each card has a daily transaction limit 

5. Neo Secured Card Best For Cashback For Newcomers

Pros

  • No annual fees and over limit fees
  • Unlimited cashback
  • Increase or decrease your credit limit
  • Earn up to 5% cashback from eligible purchases

Cons

  • No insurance coverages
  • Capping when earning cashback rewards

6. Scotiabank Momentum Visa Card – Best For Low-Income For Newcomers

Pros

  • Comprehensive purchase and travel insurance coverage
  • Earn up to 10% cashback in the first three months of membership
  • Waived annual fee in the first year of membership

Cons

  • Cashback can only be redeemed as a statement credit
  • Redeem cashback once a year only

Why Get A Credit Card For Newcomers In Canada?

An individual will need to get a credit card for newcomers in Canada if they don’t have a credit history. Banks and financial institutions use your credit score to determine if you are eligible for credit. Credit history takes a long time to establish, so you should start early.

Types Of Credit Cards For Newcomers In Canada

#1 Secured Credit Cards

The best way to build your credit score and history is to get and use secured credit cards. Most of these card types don’t offer – or provide very limited – benefits to cardholders. However, they're a solid option if you're looking to build your credit score. 

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#2 Cash Back Credit Cards

Cash back credit cards offer cash back on eligible purchases. Newcomers can choose this card type while they establish their credit score. These cards usually require a low credit score and have reasonable annual fees.

#3 Rewards Credit Cards

Rewards credit cards are another excellent choice for newcomers who want to earn rewards for their purchases. Usually, it allows cardholders to earn points and redeem them with rewards provided by the issuer. Like cashback credit cards, it most likely requires a low credit score. 

#4 No Annual Fee Credit Cards

No annual fee credit cards are advantageous if you are new in Canada. You must focus on paying your balance, statement, and other fees. It lessens the burden of expenses compared to credit cards with annual fees. 

How To Choose A Credit Card For Newcomers In Canada

Welcome Bonus

New cardholders are often rewarded with outstanding welcome bonuses. Newcomers can take advantage of this feature if they get introductory cashback or rewards from the issuer. Commonly, You can acquire these bonuses by reaching the minimum amount for purchase for months or the whole year. 

Annual Fee

It is enticing to choose credit cards without annual fees. These are good options for starters or newcomers. However, credit cards with annual fees have more benefits than those without fees. 

Earning Rate

Credit cards for newcomers typically don’t require or need low credit scores to qualify. In most cases, cards with lesser requirements also have a low earning rate for rewards points or cashback. Your earning rate is also a key factor depending on your ability to pay. 

Insurance Coverages

Most credit cards recommended for newcomers don’t have or offer fewer insurance coverages. If you can only decide on credit cards that carry comprehensive insurance, it will be better to protect your purchase and travel.  

Rewards Flexibility

The flexibility of rewards depends on the credit card you get. Some issuers only pay out cashback once a year, while others may provide it monthly. The redemption option is also essential because some credit card companies automatically apply the cashback as a statement credit. 

Exclusive Features

Exclusive features such as special access to programs are great. These include airport lounge access, discounts, complimentary benefits, and more. 

How To Redeem Your Credit Cards For Newcomers Rewards

The redemption of rewards depends on the rewards program of the credit card issuer. Most banks and financial institutions allow cardholders to use their earned points during checkout in physical and online stores. The redemptions are based on the rewards offered by the card issuer.

Rewards typically offered to cardholders are travel discounts, gift cards, and purchase discounts. To redeem these, each card issuer may require cardholders to log in to their online account registered to the rewards program. Another way is to redeem it using their mobile apps. 

Cash back may work differently from earning rewards points. You can earn a percentage of money from eligible purchases. However, it is less flexible and commonly applied by the card issuer as a statement credit. 

Furthermore, travel and airline credit card rewards points can be used when you book flights. The card issuer will also provide the participating airlines. Mainly, a particular airline offers an option on their online website to use the collected points from your credit card. 

Each reward option has a required amount of points to redeem. The more you purchase using the credit card, the higher your chance to increase your points earned. 

How To Apply For Credit Cards For Newcomers In Canada

Credit Score

Secured credit cards don’t require credit scores or history. Suppose you’re a newcomer but have already started building your credit score. A low credit score may begin at 300, but that will depend on the assessment of the bank and financial institution issuing your card.

Income

Secured credit cards may require a security deposit or a minimum annual income to apply. 

Credit Cards For Newcomers In Canada FAQs

Are credit cards for newcomers in Canada worth it?

Credit cards for newcomers in Canada are worth it. As a newcomer, you are most likely to start again in building your credit history, even if you have one from the country you originated. Unless you’re applying for American Express, you might have the option to use your previous credit history.

Like traditional credit cards, newcomers' credit cards carry rewards, cashback, benefits, bonuses, and more. Secured credit cards also offer lesser perks than those that are generally used. Since your only focus is to build a decent credit score, it’s an excellent card.

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