How to pick the right type of credit card as a newcomer

Types of credit cards for newcomers to Canada

Credit cards are one of the fastest ways newcomers can start building a Canadian credit history, while earning rewards or keeping borrowing costs low.
 

What to look for in a credit card as a newcomer

Choosing your first Canadian credit card can feel overwhelming (there are many options), but knowing what to look for makes it easy. Since you're just starting to build your credit history here, approval with no or limited Canadian credit history is key, which we’ll touch on with specific examples below.

Learn more: How newcomers can build a credit score in Canada

You’ll also want to look for cards with low or no annual fees, especially while you’re working on building trust with Canadian banks. Consider your spending habits, too — cards that offer rewards that match your lifestyle (like groceries, travel, or gas) will be more rewarding.

Be sure to check if the card has options for work permit holders, students, and permanent residents, depending on your status. If you visit your home country or another country, definitely consider cards that don’t charge foreign transaction fees.
 

What to look for in your first credit card

No annual fee. While you’re getting established, a no-annual-fee credit card makes life a little easier.

Low interest rates. To improve your credit, it’s best that you don’t carry any balance, but a lower interest rate offers some protection if you must carry a balance for a month or two.

Rewards that match your spending. If you want to fly, look for a travel credit card. If you want to save on groceries & gas, look for a cash back card that rewards you where you shop.

Reasonable credit limits. It’s fun to be offered a high credit limit, but only if you’re using it. Ask for a credit limit that helps you manage your utilization (how much you use vs. how much you have). Aim for your usage to be around 30%.

Newcomer approval programs. TD offers newcomer banking packages that include unsecured credit cards for those without a credit history, making the application process simple.
 

Who can apply for a newcomer credit card?

Typically, individuals who have recently arrived in Canada and hold certain immigration statuses are eligible for credit card programs specifically designed for newcomers. This includes:

• Permanent Residents: Individuals granted permanent residency status in Canada.
• Work permit holders: Those with a valid Canadian work permit that allows them to be employed in the country.
• International students: Students enrolled in a designated learning institution (DLI) who hold a valid study permit.

Timeframe: Eligibility usually extends to those who have arrived in Canada within the last five years. This timeframe is generally considered the "newcomer" period by most financial institutions.

Required documentation – click here to view the required documentation.
 

Best credit cards for newcomers — by category

Different cards serve different needs. Some focus on building credit, while others reward everyday spending or offer lower borrowing costs. Depending on what you need from your card, you’ve got more than a few options from TD, ranging from cash back to travel rewards. Here’s the best pick in each category for you to consider:

• Best for low interest rate: If low borrowing cost is your top priority, consider the TD Low Rate Visa Card. It has a $25 annual fee but lower interest rates than many other credit cards. The interest rate for purchases and cash advances is 12.90%.
• Best for cash back: The TD Cash Back Visa Card is a no-fee option that offers cash back. You can earn 1% on groceries, gas & electric vehicle charging, public transit, recurring bill payment, and streaming, digital games & media purchases and 0.5% on every other purchase. The interest rate for purchases is 21.99% and 22.99% for cash advances
• Best for travel rewards: If travel is on your horizon, consider the TD® Aeroplan® Visa Platinum* Credit Card This card has an $89 annual fee and allows you to earn Aeroplan points. The interest rate for purchases is 21.99% and 22.99% for cash advances
• Best for students/international workers: The TD Rewards Visa Card is an excellent option for students or international workers seeking a credit card. This card has no annual fee and allows you to earn TD Reward points. The interest rate for purchases is 21.99% and 22.99% for cash advances
• Best with no annual fee: Given there are a couple of options with no annual fee, you’ve got some flexibility. However, the TD Cash Back Visa Card is definitely one of the more compelling options and a good card to consider if much of your spending is on groceries, gas, and recurring bills. The interest rate for purchases is 21.99% and 22.99% for cash advances

For information regarding TD's promotions and offers on Credit Cards, visit TD's Credit Card page.  To be eligible to apply, you will need to be age of majority in your province and a Canadian resident.

How to use your first credit card responsibly

Using your first credit card carefully can help you build a strong credit history in Canada.

• Pay your balance in full and on time whenever possible to avoid interest charges.
• Keep your spending below 30% of your credit limit to help protect your credit score.
• Avoid cash advances, which often come with higher fees and interest rates.
• Review your statements regularly to track spending and catch any unexpected charges early.

Bonus: TD provides free, unlimited credit score monitoring in the TD app for Canadian customers. This service lets you track your credit history, receive alerts for important changes, and view your score without impacting your credit rating.
 

Common credit card mistakes newcomers make

Newcomers to Canada should be mindful of several common mistakes when managing their first credit card:

• Over-application: Avoid applying for multiple credit cards simultaneously. Stick with one credit card for at least a few months before applying for more loans.
• Late payments: Ensure you pay your statement balance on time. Setting up pre-authorized payments to ensure payments are made on a regular basis.
  
• Maxing out: Do not use your entire credit limit; keep your credit utilization low. Aim for around 30-35% (i.e., if your credit limit is $1,000, try to keep your balance around $300 to $350 with bill payments and new purchases).
• Rate oversight: Pay attention to and understand the interest rates associated with your card. An unsecured card at 21.99% will cost you more in interest than a 12.90% low interest rate credit card (not including any late payment fees).
• Statement neglect: Always review your credit card statements thoroughly. Look for incorrect billings, subscriptions you thought you cancelled, and report fraud immediately.
• Avoid using credit to pay off credit: This can be seen as an attempt to avoid paying off debt.
   

TD newcomer banking package — what it offers

The TD Newcomer Banking Program is designed to help you settle financially in Canada. It offers one-stop onboarding, which means you can set up your bank account, credit card, and even mobile phone all at once.

To be eligible, you must meet specific criteria, such as having the appropriate landing status, a Social Insurance Number (SIN), and valid identification. The program also offers credit limits up to $15,000, even if you don't have any Canadian credit history yet.

Plus, TD provides support with language assistance, user-friendly mobile apps, and access to many branches across Canada. To learn more, check out their Newcomer Package page here.