Best Credit Card for Newcomers to Canada for 2020

Newcomers to Canada may be starting fresh with little to no credit history. Finding the right credit card can help make the transition into a new home more comfortable and establish a financial footing.

As time goes on, cardholders may start to access more significant credit limits and improve their credit rating, a simple stepping stone toward larger financial goals like getting a mortgage or financing a car. Building a good credit score can help consumers get approved more easily and access more favourable interest rates.

We compared credit cards from banks with newcomer to Canada programs as well as cards requiring little to no credit history using our Best of Finance methodology. We ranked the cards that provided the highest first-year value.

These are the best credit cards for newcomers to Canada for 2020.

1. BMO^®* CashBack Mastercard^®*

Newcomers to Canada can start on the right foot with the BMO^® CashBack^® Mastercard^®*. This card has high approval rates, and it offers great rewards. Plus, for a limited time, cardholders can earn 5% cash back for the first three months. Conditions apply. After, earn 3% cash back on the first $500 in groceries each month, 1% back on the first $500 in recurring bill payments monthly, and 0.5% unlimited cash back on everything else you buy.

According to our Best of Finance methodology, the average Canadian will earn $383 back in the first year.

Credit score requirement for approval:

Typically, this credit card requires a good credit score. However, for newcomers (or those with a thin credit profile), applications are evaluated on a case-by-case basis.

Good: You’ve had a credit card, or loan for at least six years. You’ve had good credit for the last seven years (no bankruptcies or no defaults on credit as a result of failing to pay debts back to creditors). You haven’t opened a new credit card account, loan, or line of credit in the last nine months. You’ve made the minimum payments on my existing credit cards for the past three months.

Annual fee:

$0

Limited time offer/bonus:

• New cardmembers can get 5% cash back for the first three months. You will earn the regular 3% cash back rate on grocery purchases, up to $500 per billing cycle, with a bonus rate of an additional 2% back on your first $500 spend over the first three months. You will also receive the regular earn rate of 1% cash back on recurring bill payments up to $500 per billing cycle, with a bonus rate of an additional 4% cash back on your first $500 spend over the first three months. For all other purchases, you will receive the regular earn rate of 0.5% cash back, with a bonus of an additional 4.5% back on your first $1,500 spend over the first three months.

Offer expiry date: October 31, 2021

Rewards:

• Get 3% cash back on grocery purchases, up to $500 in total purchases per month.
• Get 1% cash back on recurring bill payments, up to $500 spent per billing cycle.
• Get 0.5% unlimited cash back on all other purchases.

Earning potential:

How does this card stack up to other rewards credit cards? We crunched the numbers using our Best of Finance methodology to see how much an average Canadian could earn over a 12-month period.

Rewards earned over a 12-month period = $383
Annual fee = $0
Total earned over the first year (rewards minus annual fee) = $383

You can redeem your points for:

• Deposit your cash back into your BMO chequing or savings account.
• Deposit your cash back into your BMO InvestorLine account.
• Apply your cash back as a statement credit.

Insurance:

• Purchase protection
• Extended warranty
• Zero Liability

Other perks:

• Get up to 25% off rental cars at participating National Car Rental and Alamo Rent A Car locations.
• Receive 15% off admission to Cirque du Soleil shows touring Canada and 20% resident shows in Las Vegas.

2. Scotia Momentum^® No-Fee VISA* Card

The Scotia Momentum^® No-Fee Visa* Card is excellent for newcomers to Canada because no credit history is needed to apply. Earn 1% cash back on eligible gas, grocery, and drugstore purchases as well as recurring bill payments set up on the account. Get 0.5% back on all other purchases.

According to our Best of Finance methodology, the average Canadian will see $192 back in the first year.

Credit score requirement for approval:

Good: You’ve had a credit card, or loan for at least six years. You’ve had good credit for the last seven years (no bankruptcies or no defaults on credit as a result of failing to pay debts back to creditors). You haven’t opened a new credit card account, loan, or line of credit in the last nine months. You’ve made the minimum payments on my existing credit cards for the past three months.

Annual fee:

$0

Limited time offer/bonus:

• Take advantage of the 7.99% promotional interest rate on purchases for the first six months.

Offer expiry date: February 28, 2021

Rewards:

• Earn 1% cash back on groceries, gas and drugstore purchases as well as recurring bill payments set up on the account.
• Earn 0.5% cash back on everything else you buy.

Earning potential:

How does this card stack up to other rewards credit cards? We crunched the numbers using our Best of Finance methodology to see how much an average Canadian could earn over a 12-month period.

Rewards earned over a 12-month period = $192
Annual fee = $0
Total earned over the first year (rewards minus annual fee) = $192

You can redeem your points for:

• Cash back can be deposited into a Scotiabank chequing or savings account in December of each year.
• Cash back can be applied as a statement credit in December of each year.

Insurance:

• Feel reassured (optional protection)

Other perks:

• Save on rental cars at participating AVIS and Budget locations across the U.S. and Canada.

3. Home Trust Secured Visa* Card

The Home Trust Secured Visa* is a flexible and convenient way to build credit. Cardholders choose their credit limit based on their deposit and improve their credit rating with each billing period. Buy online, set up bill payments, and pay for purchases everywhere that Visa is accepted.

Credit score requirement for approval:

No credit: You currently do not have a credit card or a loan in your name. You need to improve your credit due to a recent bankruptcy or default on a loan.

Annual fee:

$59

Limited time offer/bonus:

• No welcome offer

Rewards:

This card doesn’t feature cash back or rewards; however, it offers a low-interest rate and an opportunity to build or rebuild credit.

Insurance:

• Purchase security

Rates, product information, and rewards estimates are subject to change at any time and do not constitute financial advice. Information in this article is accurate as of the date of this posting, November 5, 2020. This article was first published on August 19, 2020.

This post has been updated.

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