How to choose the right credit card for your lifestyle

Being smart with money isn’t just about following a by-the-numbers strategy of cutting back spending and setting budgets. It’s also about the small yet impactful ways you can fine-tune your personal finances, maximize your dollars, and ensure more of your money is spent on what brings you joy (while less is wasted on the things that don’t).

In fact, when it comes to squeezing more value out of your everyday purchases and learning how to spend better, how you pay can be just as important as what you pay. Case in point: using the right credit card can have a profound impact on your bottom line.

By using a credit card that fits with your lifestyle and buying habits, you can get a better sense of control over your money; whether that means earning more savings or reducing your anxieties about interest payments or your credit history. Below, we break down how to find the best credit card for you.

Credit score

In your journey to find the right card, your first step should be to have an honest reflection of where you stand financially. That starts with checking your credit score.

A credit score is a three-digit figure that, in a broad sense, measures how good you are with money and paying back debts. Your credit score plays a huge part in whether or not you’ll qualify for a particular credit card. So, it’s a smart move to get your score checked beforehand as it’ll give you a better sense of which cards you’re eligible to receive as well as your creditworthiness and how lenders such as banks view you.

Card type

There are a number of card types out there on the market, and picking the right one for you depends on your money goals, habits, and priorities.

Are you straight out of school and looking to establish your credit history? A no fee credit card with a low credit limit may be your best fit. If you have a solid credit score and regularly pay off your balance, you may want to consider earning rewards through either a cash back credit card or travel credit card. The former will be the most useful to you if you’re looking to earn straight-forward savings on your everyday spending, while the latter may add the most value to your lifestyle if you enjoy travelling and would like the ability to redeem rewards for free flights or hotel stays.

On the other hand, if you suspect that you will carry a credit card balance on the regular or have a credit score in the bad to poor range, you may want to forgo rewards and instead opt for a low interest credit card or secured credit card; and stick to debit for the majority of your purchases.

It’s critical you do your research about the different card types out there to ensure you find one that fits with your lifestyle and brings you closer to achieving your personal financial goals.

How you spend your money

If you regularly pay off your balance and are looking to earn rewards, you’ll want to use a card that offers the highest amount of rewards (whether it’s cash back or points) on the types of purchases you make the most often.

For example, if you spend big on eating out or ordering in, you’ll want to consider a credit card that offers bonus rewards on every dollar you spend at restaurants. Conversely, if you don’t own a car, there’s little long-term benefit in using a credit card that is tailored for drivers with bonus rewards on gas purchases.

Every credit card is unique, with each offering bonus rewards on a different range of purchases. So, you’ll want to compare your options and find a card that aligns with your particular spending habits. Otherwise, you could end up being mismatched with a card that isn’t right for you.

Where you spend your money

Where you shop can play an important role in which credit card company you should look at: MasterCard, Visa or American Express. While the majority of retailers and restaurants accept all three, that may not be the case for discount stores, grocers, or mom-and-pop shops. So, consider where you shop and which credit card companies they accept as a form of payment.

A number of credit cards out there also offer bonus rewards when you shop at particular big box retailers or major retail chains, which is something you’ll want to keep in mind if you earn points as part of a particular loyalty program.

Getting familiar with side perks

It’s important not to lose sight of the other ways credit cards can deliver value. Some cards, for example, come with free roadside assistance memberships that’ll cover you in case your car breaks down. Other cards provide travel insurance that will insure you in case you face a medical emergency while you’re out of the province. Depending on your lifestyle, some card’s side perks may be more valuable to you than others, so make sure to look beyond just rewards and fees.

Annual fees

When shopping around for the best credit cards in Canada, it’ll quickly become apparent that many are accompanied by annual fees. You’ll need to reflect on your spending habits and lifestyle to decide whether paying an annual fee makes sense for your particular situation or whether you should limit your choices to no fee cards.

So how do you decide?

If credit is your go-to payment option, you regularly pay off your balance and enjoy perks like travel insurance, then an annual fee card can make financial sense. However, if you’re new to credit cards or don’t suspect you’ll use your card frequently enough to offset what you would pay in annual fees, then you may want to opt for a card that doesn’t cost anything to carry. There’s no hard and fast rule, so try running the numbers to see if you’ll earn enough in rewards on a card to justify paying its fee.

Continue to reflect and compare

Your spending habits evolve over time, as do your financial priorities. With that in mind, it’s important to continuously reflect on which credit card you use and whether it aligns with your current needs while also keeping a look out for alternative cards that may be a better fit for your current lifestyle. empowers Canadians to search smarter and save money by comparing mortgage rates, credit cards, high-interest savings accounts, chequing accounts, and insurance.

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