The growing number of temporary residents in Canada, such as foreign workers, immigrants, and international students, need essential financial tools more than ever. Among such tools, credit cards are critical in ensuring seamless economic transition and enabling individuals to build an enviable credit reputation at their new Canadian home.
This detailed guide discusses the evolving credit card market explicitly designed for temporary residents of Canada, revealing the top 10 best options for 2024. Understanding the credit card system in Canada is challenging due to its complex nature, especially for those new to Canadian banking. Our analysis will reveal the eligibility criteria and special features of each recommended credit card and shed light on issues related to the responsible use of a credit card in Canada.
1. RBC Cash Back Mastercard
RBC Cash Back Mastercard is a product the Royal Bank of Canada (RBC) offers for international students who arrived in Canada within the last 12 months and temporary resident workers who came at most four years ago. This unsecured credit card helps people establish a Canadian Credit history. To those who do not meet the requirements for an unsecured card, RBC also offers alternatives where a security deposit can be provided.
2. BMO CashBack Mastercard
For foreign workers with valid work permits who came to Canada within the last five years, BMO provides its BMO CashBack Mastercard. Approval may involve a deposit or collateral equal to the value of a credit card. This card offers cashback rewards, so it’s a popular option for those seeking the best benefits.
3. CIBC Aventura Gold Visa Card
Canadian Imperial Bank of Commerce offers the CIBC Aventura Gold Visa Card, which is aimed at temporary residents in Canada with a valid work permit. This credit card gives Aventura points that can be used to redeem travel rewards, which is ideal for people who like roaming around their new habitat.
4. HSBC +Rewards Mastercard
HSBC welcomes newcomers with the HSBC +Rewards Mastercard who have been residents for less than five years and hold a valid work permit. This card has a rewards program that incentivizes people to maximize their daily expenditures.
5. National Bank my credit Mastercard
National Bank offers the only mycredit Mastercard to be acquired as part of their Newcomer Banking Package for years two and three. The second one is for those 17 and above, enabling them to develop a credit history in Canada.
6. Scotiabank Value Visa Card
The Value Visa Card offered by Scotiabank is designed for international students or foreign workers; a letter from the employer in Canada stating annual income should be attached. This card provides a 0% introductory interest rate on balance transfers over the first six months, making it appealing to those who want to reduce their debts.
7. TD Cash Back Visa Card
For those who are temporary residents of Canada for five years or less, TD Bank offers the TD Cash Back Visa Card. It involves needing a Temporary Permit to prove status and offers cashback rewards, which gives newcomers financial freedom.
8. Tangerine Money-Back Credit Card
The Tangerine Money-Back Credit Card distinguishes itself with its innovative approach, providing 2% cash back in up to three categories selected by the cardholder. This card is viable for short-term residents who want reward programs tailored to their spending behavior.
9. KOHO Prepaid Mastercard
For those who prefer a prepaid option, KOHO offers the Prepaid Mastercard for temporary residents. This card has to be loaded with money before use and thus control the funds without affecting the credit score.
10. Refresh Financial Secured Card
The Refresh Financial Secured Card is a good option for those people who want to create or restore credit. This card has a security deposit, which is also used as collateral. Consistent, on-time payments can add to the cardholder’s credit history.
Building Credit Using Credit Cards in Canada
Setting up a strong credit history could be a vital step for people dwelling in Canada, whether they are permanent residents or brief citizens such as remote specialists, workers, or worldwide students. A strong credit profile opens entryways to financial openings, such as securing advances, getting favorable intrigued rates, and indeed renting a domestic. One effective means of building credit in Canada is through the capable use of credit cards.
Here’s how you’ll be able to use credit cards to build credit in Canada:
1. Timely Payments: Paying your credit card bills on time is one of the foremost persuasive variables influencing your credit score. Consistent, on-time payments demonstrate financial duty and contribute to a positive credit history.
2. Credit Utilization: Credit utilization, or the proportion of your credit card adjust to your credit limit, could be a significant figure in credit scoring. Keeping your credit utilization low—typically underneath 30%—shows that you can oversee your credit mindfully.
3. Diverse Credit Mix: Lenders appreciate a differing credit blend, which incorporates both spinning credit (e.g., credit cards) and installment credit (e.g., loans). Having a credit card, alongside other sorts of credit, contributes positively to your credit profile.
4. Credit History Length: The length of your credit history matters. Starting to construct your credit early and keeping up a longer credit history can upgrade your creditworthiness. In this manner, using a credit card mindfully from the start of your remain in Canada can be advantageous in the long run.
Pros of Credit Cards for Residents
1. Credit Building: To begin with, setting up a Canadian credit history, which plays a critical part in future financial activities, an individual would get a cash card.
2. Flexible Installments: Credit cards offer the comfort of financial utilization because they permit clients to spend cash and pay them back in installments over time.
3. Expanded Borrowing Power: Having a Canadian credit card makes it easier to get advances or contracts.
4. Encourages Bill Installments: It is less demanding to set up versatile phone contracts or utility services when having a Canadian-based credit card.
Cons of Credit Cards for Residents
1. Limited Availability: Credit cards may not be accessible to transitory residents from each bank, and the choice may be limited.
2. Tighter Income Prerequisites: Nevertheless, brief residents may be subject to stricter pay prerequisites since they need a credit score, which may be a gauge of their financial soundness.
3. Affect of Credit History: The credit score may moreover be affected by the credit card application and refusal. Transitory residents ought to work out caution when dealing with credit checks.
A temporary resident in Canada should consider several things, such as their money-related situation and individual needs, sometimes recently selecting a credit card—the ten recorded credit cards cover a range of requirements, including prepaid, secured, and unsecured cards.