Credit Card Tips for Newcomers to Canada
To build a strong financial foundation in Canada, you need to know about credit – how to start building a credit history and how to use credit properly.
Having a good credit rating can help you in all sorts of ways. If you’re applying for a mortgage to buy a home or a loan to buy a car, for example, your lender is likely to offer you a wider range of borrowing options if you have a good credit history.
That could mean big savings for you because you could pay lower interest rates and have greater repayment flexibility than someone with no or poor credit history. These lending/borrowing options could include lines of credit, more flexible mortgage options and lower-rate credit cards.
Getting a Canadian credit card is one of the best ways to start building a Canadian credit history and get settled in Canada.
Why is a good credit history important?
In Canada when you pay your debts on time, you build a good credit history. Canada’s central credit bureaus’ use your credit history to give you a credit score (also called a credit rating). Lenders look at this credit score when they're deciding if they should lend you money.
Having a Canadian credit card and making regular payments is the easiest way to establish a credit history and build a good credit score. A credit card gives you more borrowing options and access to savings on loans and credit. It provides other benefits as well:
- It’s a convenient way to shop and pay for services.
- It’s often needed for certain purchases, such as setting up a contract for a mobile phone, renting a car or shopping online.
- Purchases made in Canada using a Canadian credit card are not subject to exchange rate costs.
- You can make everyday purchases without carrying large amounts of cash.
- You can often use your credit card as a form of identification.
That’s not all. If you have a credit card that accumulates rewards, using your card for purchases means your rewards will add up, turning shopping into free merchandise and travel. There are also built-in insurance options, such as purchase protection, that are included with a lot of credit cards – so if you break or lose something you’ve just bought, you’re protected.
Tips for using your credit card wisely
- Pay on time, all the time. Make your payment on or before the payment due date on your credit card statement. Late payments may affect your credit rating, and there may be fees or penalties.
- Use it only for items you know you can afford. Keep purchases within budget so you can pay off your bill every month.
- Pay more than the minimum. You have the option of making only a minimum payment on your credit card balance each month. However, you will be charged interest until the entire balance is paid off.
- Avoid cash advances unless it’s an emergency. If you do use your credit card for a cash advance remember that interest on cash advances is charged right away.
- Review your monthly card statement for accuracy. Keep your receipts and check them against your statement.
- Limit the number of credit cards you use. That way it’s easier to monitor your spending and keep track of the money you owe.
- Memorize and protect your PIN (personal identification number) at all times. Never share your PIN with anyone.
- Report a lost or stolen card immediately. Call your bank and let them know, so you are protected from any unauthorized use of your card.
Getting your first credit card is easy with RBC Royal Bank®
- A credit history is not required1 – you can apply as soon as you arrive in Canada.
- Credit limits may grow as your income grows2.
- No annual fee3 cards are available for both Visa‡ and Mastercard‡.
- Whether you’re interested in cash back, travel and merchandise rewards, discounts or a low interest rate, we can offer you a credit card to complement your lifestyle.
To apply for an RBC Royal Bank credit card, visit any RBC® branch and bring:
- Your passport and
- Landing papers or permanent resident card