Rounding it up
There are a variety of different types of credit cards available to non-residents and newcomers.
These cards include secured, prepaid, and store credit cards, as well as mainstream ones from large banks.
It may be smart to sign up for a card if you frequently travel to and from the country — you should first check whether there are any fees or requirements.
If it makes sense for your situation, take advantage of the benefits of a Canadian-based card and start building your credit history to help with your future in the Great North.
The number of people using credit cards for everyday purchases has gone up in Canada over the last decade. Rewards programs, cash back, and easier prerequisites have made credit cards incredibly popular as everyday tools to manage finances. But can you get one if you’re a non-resident in Canada?
Let’s say you’ve just arrived on Canadian soil. There’s a ton to do: paperwork, packing and unpacking, finding schools for children, getting a lay of the land, and so much more. Where’s the nearest grocery store? What about the bank? The local pharmacy? Hopefully, if you’ve made the big move, you’ve thought about how you’ll pay for things. You may not, however, have thought much past exchanging currencies and opening a bank account.
Alternatively, what if you just do a whole lot of travel to and from Canada? Whether you’re visiting family, going on a business trip, or visiting a vacation property, you may want to have a Canadian-based account and credit card.
There is good news on both fronts! Both non-residents and non-citizens can indeed get credit cards. Read on to understand what kinds of cards are available to you and why a Canadian-based credit card can be the way to go.
Where can I get a Canadian credit card? What kind should I get?
There are four major ways to get a credit or payment card as a non-resident in Canada. Each has its own pros and cons so consider them carefully before pulling the trigger.
1. Newcomer accounts
Large Canadian banks offer what are called newcomer accounts as part of “welcome to Canada” packages. These credit cards are paired with chequing and/or savings accounts (depending on the institution), which serve as a way to secure the card against default. These credit cards often come with benefits and features, including payment protection, rewards points, and more. They generally require a certain minimum balance in an associated chequing or savings account at the same financial institution.
Newcomer accounts are a great choice for consumers who are planning to stay in Canada long-term. These credit cards are used by both newcomers and established citizens. Beginning a banking relationship as soon as possible will help you achieve other financial goals; for example, your financial institution will report your payment history to credit bureaus, allowing you to build a credit history in Canada.
2. Prepaid credit cards
Prepaid cards are available at a whole host of different locations from grocery stores to gas stations. You’ll load an initial amount at the point-of-sale and then reload the card, either at store locations, through an online web portal, or via an app — KOHO’s prepaid credit card is a great example of this.
The main advantage of this option is that you will never be subject to interest rate charges, as you cannot spend more than what you’ve loaded. Many of these cards also offer a variety of different reward benefits, especially if you load larger amounts. With KOHO, you can earn 1% cash back on every purchase — without any fees or minimum balance requirements.
It’s important to note that while these cards can do everything regular credit cards can, they will not report to credit bureaus to help you establish credit.
3. Secured credit cards
If you’re looking to build credit as you spend, secured credit cards might be the right choice for you. The financial institution will ask you to make an initial cash deposit to serve as collateral against your lending. You’ll be charged interest on any balances you carry over from month to month. Depending on your financial institution and the type of account you have, you may be able to borrow more than your initial deposit.
As long as you’re responsible with your spending and timely with your payments, secured credit cards are a great way to build a credit history and begin a more permanent credit file in Canada.
4. Branded store cards
Store or business branded credit cards tend to be available to more people, but the places at which you can use them may be severely limited. These types of cards offer a great way to build credit history and tend to provide very good benefits to the stores with which they are associated. Different stores will have different requirements and terms so be sure to have a firm understanding of what you’re applying for.
Why should I get a Canadian credit card at all?
If you’re a non-resident, getting a Canadian credit card may seem like something you don’t need to worry about. There can, however, be some great benefits to having a Canadian credit card — even if you have no intention of immigrating to the country.
First, you can save money on fees. Foreign transaction fees can become very expensive, especially if you frequently travel to and from Canada. You can avoid this by having a Canada-based credit card.
Second, there may be a few benefits that are only open to Canadian card holders. These can include various rewards and cash back programs. However, you may need a Canadian-based chequing or savings account as well.
Finally, having a Canadian credit card leaves your options open. You may decide in the future to immigrate, in which case having a good foothold in the Canadian financial world can be a great help.
Is there any reason not to get a credit card?
There are two main reasons you may not want to get a Canadian credit card as a non-resident. First, many credit cards come along with annual fees. These can range anywhere from a few dollars to several hundred. If you’re going to get a card, ensure its worth the price you’ll pay each year to have it in the first place.
Second, in some instances, a Canadian-based credit card can change your residency status and make you subject to Canadian taxes. Credit cards are considered a secondary classification for the purposes of taxation so having one on its own won’t change anything. However, if you also own a vacation property, have a partner in Canada, or have any number of other items, having a card could change your tax situation.
Canadian credit cards are available to non-residents and newcomers alike. Even without a credit history in the country, you can sign up for a variety of different cards, including store cards, prepaid cards, and secured credit cards. You may also be able to sign up for a more mainstream credit card if you link it with a chequing account via a newcomer package. Be sure to look at all your options and assess which kind of credit card works for you.
Dan is a runner and writer living in the Washington, D.C. area, where he currently works for a financial services trade association as the Communications Director.