Disclaimer: I am not a financial advisor. This post is my opinion based on my experience and observation. For more information, click here.

My experience as a Newcomer without a credit card

When I first moved to Canada and visited a bank to set up my account, the account manager asked me what credit card I wanted. I confidently replied that I did not need one. She seemed surprised, as this was probably an uncommon response. She assured me I could always return whenever I changed my mind.

My reasoning was shaped by my experience in Nigeria, where people rarely buy things on credit. You either have the money to pay outright or you don’t buy at all—whether it’s a phone, a car, or a house. In the UK, I also didn’t feel the need for a credit card and wasn’t even sure if I was eligible for one. For more about my experience living on three continents, read here.

I even told a friend about my decision, and he insisted I would eventually need a credit card. I dismissed the idea, convinced that I could manage with my virtual debit card. However, virtual debit cards lacked fraud protection, which made me second-guess my stance.

The Reality Check

As I integrated into Canadian society, I quickly realized that I needed a credit card. Everyday transactions became unnecessarily difficult. Paying for my phone bill, for instance, required a credit card when using certain service providers. Taking a cab meant an extra charge of $1 because I was using a debit card. Online shopping was a nightmare since many Canadian retailers only accepted credit cards or PayPal, and I had to rely on friends to make purchases for me.

Do You Need a Credit Card as a Newcomer?

Yes, every newcomer should get a credit card—even if you don’t plan on using it frequently. Here’s why:

1. Building a Credit Score

Your credit score is crucial in developed societies. It determines your ability to secure loans, access better financial deals, and even rent a home in Canada. When I was searching for housing from Nigeria, many landlords required a credit score, which severely limited my options. Establishing a good credit history early makes life much easier in the long run.

2. Earning Rewards and Cashback

Many credit cards offer cashback and rewards. Depending on your lifestyle, you can choose a card that provides benefits tailored to your interests:

• Do you love movies? Look for a card with entertainment perks.
• Do you travel often? Consider a travel rewards card.
• Do you rent cars frequently? Some cards offer rental car insurance.

While cashback is an excellent perk, always check if the card has an annual fee and whether the benefits outweigh the costs.

3. Convenience and Security When Traveling

A credit card is useful when travelling abroad. Unlike cash, it eliminates currency conversion hassles and minimizes the risk of loss. Withdrawing cash overseas incurs fees, making credit cards a more practical option for purchases.

4. Avoiding Common Credit Card Misconceptions

One of the biggest mistakes newcomers make is assuming that credit card money is “free money.” It’s not! Whatever you spend must be repaid. Each month, you’re required to make a minimum payment, but if you don’t pay your full statement balance, you’ll be charged interest on the remaining balance. Interest accumulates quickly, leading to unnecessary debt.

5. Managing Your Credit Responsibly

To avoid high interest charges, always pay your full statement balance before the due date of your billing cycle. Responsible credit usage builds your credit score and improves financial flexibility.

Best Credit Cards for Newcomers in Canada

If you are a newcomer, consider these credit cards designed specifically to help you build credit:

• Tangerine World Mastercard – Enjoy up to 2% cashback with no annual fee
• Scotiabank SCENE+ Visa Card – Great for movie lovers, no annual fee, and rewards on entertainment purchases.
• BMO CashBack Mastercard – No annual fee and great cashback on groceries.
• CIBC Aventura Visa Card for Students – A good option for students with flexible travel rewards.
• RBC Cash Back Mastercard – Ideal for earning cashback with no annual fee.
• TD Rewards Visa Card – A flexible rewards card for everyday spending.

A credit card is a vital tool for financial success in Canada. It simplifies daily transactions, builds your credit history, and offers valuable perks. If you’re a newcomer, don’t make the same mistake I did—get a credit card early and use it wisely.