Apply for a Credit Card in Canada
What You Should Know
- Credit card applications can be made online, in person, or over the phone.
- You must submit your personal and critical financial details while applying for a credit card.
- When you apply for a credit card, the card issuer does a credit check on you to ensure you are creditworthy, resulting in a temporary dip in your credit score.
- It is necessary for credit card issuers to disclose important information about the credit card, such as the interest rates and minimum payment, in the application form.
Getting a credit card is the first step toward building a credit history and a good credit score for most Canadians. Building a reliable credit profile goes a long way in creating a sound financial future, as it can help you get approved for different kinds of loans and negotiate better mortgage rates and terms. Applying for a credit card, even for some of the best credit cards, is simple, allowing anyone to apply; however, a thorough understanding of the requirements can ensure your application gets approved.
Most credit cards available to Canadians have a minimum income and credit score requirement. You can diminish the risk of application rejection by ascertaining that you meet the criteria. You must also review all the critical information about the credit card before applying, such as the annual interest rates, the annual fee, and the minimum payment criteria. You should always pay your credit card bills on time and in full to ensure your credit account remains in good standing and your credit score stays healthy.
Ways to Apply for a Credit Card
There are three main ways to apply for a credit card. Depending on the financial institution, you may get some or all of the options to apply.
- Online: This is the easiest and the most convenient way of applying for a credit card. All credit cards available in the market have an online application process. All you need to do is find the credit card application page, review the information, input your details, and apply. Ensure you are on a secure network when applying online, as you will submit some of your critical personal and financial details. You can easily compare multiple credit cards online before you apply for one. Many credit card providers offer comparison tools to compare their credit cards, making your selection easier.
- Over the phone: Another way of applying from the comfort of your home is over the phone. Banks usually offer this option, where a representative helps you with your application. This is a great way to apply if you are not confident about applying independently.
- In-person: If the financial institution has a physical address near you, you can visit them and complete the application in person. This may be a good option for first-time applicants as they can clear all their doubts and understand all the available options.
Did You Know?
Apart from the regular perks and rewards, many credit cards offer a welcome bonus to cardholders in their first year. A welcome bonus can include extra cashback for the first few months, additional transaction reward points, annual fee rebates, and more. When shopping for a credit card, you should look out for the welcome bonus offers, deals, and offer expiry dates. If you are applying online, you will find the offers on the credit card page, and if you are applying over the phone or in person, you can ask the bank representative for ongoing offers.
Requirements for a Credit Card Application
When applying for a credit card, you must submit some information about yourself. The information includes basic personal details and particulars regarding your current financial situation, including your employment and debt. The general credit card application requirements are as follows:
- Full legal name
- Date of birth (You must have reached the age of maturity in your province of residence)
- Contact information, including current address, telephone number, and e-mail address
- Social Insurance Number (SIN)
- Employment information
- Gross income and its sources
- Details of your current debt, such as monthly mortgage payments, car loan payments, student loan payments, etc.
- Details of other credit cards that you own
Along with providing the information, you also need to give consent to the credit card issuer to run a credit check on you.
Is SIN Number Required for Credit Card Applications?
While it's not against the law for credit card companies to ask for your SIN number to run a credit check on you, you are not obligated to provide it. Credit card issuers ask for your SIN number to ensure they run a credit check on the right records, which is especially helpful if you have a common name.
Service Canada recommended leaving the SIN number field blank on your application. If an institution requests your SIN number for a credit check, you may provide a copy of your credit report (without the SIN number) to them.
Credit Card Approval Criteria
By ensuring that you meet the requirements for credit card approval, you can reduce your chances of your application being rejected. The most common requirements are listed below.
- Minimum Income Requirement
Your income is one of the key factors in determining how much credit you can afford to pay off. Most credit cards in the market have some minimum income requirements, sometimes as low as $12,000 per annum, such as in the case of Scotiabank Gold American Express. Some no-fee and secured credit cards do not have a minimum income requirement and are very easy to qualify for first-time applicants or newcomers to Canada. The more premium credit cards often have a higher income requirement and higher fees; however, they offer greater rewards and perks to the cardholders.
To qualify for a credit card, you need to meet the minimum individual income requirement or the minimum household income requirement. The credit card’s minimum income requirement is commonly found on the card’s online application page.
- Score Requirement
Your credit score also influences your chances of approval for a credit card. Similar to the income requirement, many premium credit cards require a good or excellent credit score to be approved. You can check your credit score through the credit bureaus, your bank, or one of the free credit score providers. While you can’t find the credit card’s minimum credit score requirement on their online application portal, you can always consult the bank or financial institution before applying for their credit card. You can discuss your income and credit situation with them and understand your chances of approval.
In general, credit cards with a higher fee and more perks have a higher credit score requirement than those with no fee and no rewards have a lower credit score requirement. Store credit cards, secured credit cards, and prepaid credit cards usually have low or no credit requirements and are thus a good option for those who are credit invisible or have bad credit.
Whenever you apply for a new credit card, the issuer checks your credit report, which results in a slight temporary dip in your credit score. Thus, you should always space out your credit applications to prevent your credit score from getting hurt severely. You should bear in mind that your credit score will get hit even if your application is rejected, and thus, it is a good idea to apply only for the credit cards you are likely to be approved for.
- Residency and Age Requirement
To be able to apply for a credit card in Canada, the applicant must be a resident of Canada and of mature age in their province of residence. That said, some secured credit cards and prepaid cards, such as the KOHO prepaid credit card, may allow non-resident applicants to sign up, as there is no credit requirement for such cards. Newcomers, on the other hand, have some more options. Most major Canadian banks offer newcomer packages that include newcomer accounts and credit card options for new residents of Canada. Students who move to Canada for education can sign up for student accounts and credit cards.
Reviewing Important Details Before Applying
In Canada, the right to information applies when you apply for a credit card. Due to this, all federally regulated financial institutions must disclose the card's important details at the beginning of the application form or in a separate document supplied with it. You thus have the chance to review all the card details before applying. The information should be clearly outlined in a ‘single prominently displayed information box.’ The information generally covers the following:
- The annual interest rate for purchases, cash advances, and balance transfers
- Interest-free grace period
- Minimum payment requirement
- Foreign currency conversion fee
- Annual credit card fees, including fees for additional cardholders
- Any other applicable fees, such as fees for cash advances, balance transfers, etc.
Example of credit card information box:
| Annual Interest Rate or Rates | Standard Rate:Purchases: 19.99%Cash advances: 22.99%Balance transfers: 22.99%These interest rates are effective the day your credit card account is opened. We may increase the rates to 24.99% on Purchases and 27.99% on Balance Transfers and Cash Advances if you:
|
| Interest-free Grace Period | 21 days Your payment is due at least 21 days after your statement date. No interest is payable on purchases if you pay your statement balance in full by the due date. There is no interest-free period on cash advances and balance transfers. |
| Minimum Payment | 2% or $10 Your minimum payment will be any past due amount plus the greater of
|
| Foreign Currency Conversion | 2.5% Foreign currency transactions made with your card are converted to and billed in Canadian dollars. The transaction amount will be directly converted to Canadian dollars at the exchange rate in effect when we post the transaction to your account. You will be charged a foreign currency conversion fee of 2.5% for each foreign currency transaction. |
| Annual Fees | Primary Cardholder: $120Additional Cardholder: $50 To be charged on your first statement and annually on your statement anniversary date. |
| Other Fees | To be charged on the day the transaction occurs: Balance transfer: 1% of the amount transferred Cash advance: $5 per transactionOverlimit fee: $20 |
Credit Card Approval Time
Depending on the credit card and your situation, the approval can take from few seconds to a month. There are many instant-approval credit cards in Canada for which you can get approved straight away. If the credit card does not offer instant approval, approval could take 5-7 business days. Online applications usually get faster approval than those made in person or over the phone. If you are applying for a credit card for the first time and have no credit history, it could take longer to get approved. The physical card gets delivered to your address in another 5-7 days; however, many financial institutions offer a digital card you can use immediately.
Activating your Credit Card
Once your credit card is delivered, you may have several options for activating it, depending on your bank. Most credit cards come with a document or a sticker with the activation instructions. The three main options commonly available are
- Online activation tool: Many banks offer an online activation tool on their website, where the cardholder must enter the card details to activate it. This is a quick and easy way to activate your card.
- Online or mobile banking: Another way is to log in to your online or mobile banking account, where you will find the new card in the list of your cards. Follow the activation instructions to activate your credit card.
- Toll-free phone number: Some cards allow you to activate the card over a phone call. If this is an option, your card usually comes with a sticker stating the toll-free number for activation. You may also find this number on the document you receive with the card.
FAQs
What should I do if my credit card application is denied?
If your credit card application is denied, you should contact the credit card issuer to check why the application was denied. There could be many reasons, such as an error on your application, a low credit score, not meeting the minimum income requirements, an error on your credit report, already having a lot of debt, and not having a long enough credit history.
In some cases, you may be able to provide additional documents and request the financial institution to reconsider your application. For example, if your application was rejected for not meeting the minimum income requirements, you may provide proof of additional income or proof of household income and request a reconsideration.
Your application may have been rejected because of an error on your credit report. For example, there may be misreported missed payments on your credit report. You should get a copy of your credit report to find any such errors. You must then contact the credit bureau that generated the report (TransUnion or Equifax) and dispute the errors. Once the errors are fixed, you can request a reconsideration of your application.
In other cases, you may have to work on improving your creditworthiness before you can apply again. If you have a bad credit score, this could take several months or even years.
How long should I wait before applying again after my credit card application is rejected?
You should wait at least three to six months before applying for a new credit card, regardless of whether your application was approved or rejected. When you apply for a credit card, your credit score takes a temporary hit, and it takes a few months for it to come back up. If your application was rejected because your credit score was low, you should improve your credit score and check your credit score before applying again.
How often can you apply for a credit card?
Experts usually suggest spacing your credit card applications three to six months apart. It is ideal to wait for at least three months before applying for a credit card from when you applied for a credit card or any type of loan. If you apply for too many credit cards in a short period of time, it increases your chance of rejection and will also hurt your credit score.
Can you apply for the same credit card twice?
You can generally apply for most credit cards more than once; however, there may be some conditions or restrictions. For example, you may not be able to get the welcome bonuses for a second time when you apply for the same credit card again. Some credit cards also have a waiting period, which means that the credit card issuer requires you to wait for a defined period of time before applying for the same credit card again. This is to prevent credit card churning, which is the practice of repeatedly applying for the same credit card to take advantage of its welcome bonuses. With some credit cards, you may be restricted from applying for the card for a second time.