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Credit/Debt

If you are confused by the huge variety of credit cards available an online tool offered by the government may help. The Financial Consumer Agency of Canada's website at www.fcac-acfc.gc.ca offers an interactive tool called 'Credit Cards and You' that can help you find the best card for your needs.

Let's take the example of a student who wants to get their first credit card. By following a very simple menu on this tool, the student is able to list all the student credit cards available in Canada including all their terms. The student can choose what type of card she is looking for and a list will be provided. If she asked to see a list of student specific credit cards with no annual fees, twenty two options will appear. But there are differences between those twenty two cards. Let's look at four of the cards from some of our biggest banks and compare terms.

It's amazing how different the cards can be.

For example, the CIBC Classic Visa card for students and the TD Green Visa student card both had minimum credit limit of $500, while the Royal Bank Visa Classic student card and the Scotiabank Scene Visa card for students had a minimum credit limit of $1000. The CIBC card actually required a minimum income of $1,200 in order to qualify for the card.

Interest rates were in the 18.5% - 19.75% range. If she carries a balance for any length of time, that 1.25% in interest can make a difference. Payment terms were also different. The CIBC card requires $10 or 2.1% which ever is greater. Similarly the TD card wants the higher of $10 or 2%. Meanwhile, the RBC card wants $10 plus fees plus interest or outstanding balance, which ever is less and the Scotiabank card requires a minimum 3% payment.

Rewards and benefits were different as well. The Scotiabank cards is a reward card so my daughter would earn points towards entertainment rewards, which is great for a teenager, but that was the extent of the benefits. The CIBC and TD cards offered travel accident insurance and travel medical insurance, while the CIBC card also offered travel interruption or cancellation insurance. All of the cards, except Scotiabank's reward card offered purchase protection and extended warranty coverage.

Shopping for a credit card can be very confusing. While the FCAC tool helps you sort through the credit jungle you still have to know exactly what you want and be prepared to do your homework so you get the right card for the right purpose.

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