Working through the maze

There are several great tools, including independent websites, that can help in your quest for a credit card that suits your financial needs and lifestyle.

Let's start with the obvious. Anyone who can’t afford to pay off his or her credit card balance every month should not be thinking about credit card rewards programs. That’s because any benefit that may be received can’t come close to the 20% interest or more that credit card revolvers are likely to pay on their rewards card balance. These people should use a basic low-interest card with few or no benefits.

But if you don’t carry a balance, there are hundreds of rewards to choose from, including cash back; miles/points redeemable for travel/vacation, groceries, gas, general merchandise, gift cards, vehicle lease/purchase/rental and charitable donations; travel insurance, including accident, medical, trip cancellation/interruption, flight delay, rental vehicle or lost baggage; and benefits, such as cellphone insurance, purchase protection, extended warranty, price protection and roadside assistance.

So which is right for you? It depends on your specifics. If you travel a lot, then travel rewards are important. If you don’t, then a simple cash-back card is probably best for you.

It’s also smart to change your cards when your circumstances change. For example, you may travel a lot during your working years but not so much during retirement. Switching to a cashback card when you leave the rat race might make sense.

To help in your quest for the most beneficial card, there are several great independent websites at your disposal.

One of the best is the Financial Consumer Agency of Canada’s site ( Choose your language, then under “tools and calculators” select “credit card tools,” where you’ll find the “credit card selector tool.”

You can narrow your search by choosing your province or territory, then the type of card you prefer (general use, secured, student, US dollar or charge), the annual interest rate range on any balance, the maximum fee, if any, you are willing to pay and the type of rewards you want.

Another excellent tool is the You select a type of card (consumer, business or student), then a reward type (cash back, retail rewards or travel) and then confirm whether you carry a balance or think you might in the future. It will ask about your spending habits. That is key because when you drill down to the details of how miles/ points are accumulated on cards, it depends on what you buy.

The tool will ask what you spend monthly on gas, groceries, pharmacy purchases, travel, car rentals, recurring bills, restaurants, entertainment, the retailer you spend the most at and how much you spend, as well as any spending outside of Canada.

Those who track their spending are in a much better position than those who don’t — without accurate spending data you’ll be forced to guess, which can lead to inaccurate results.

I just entered an example for a consumer card with travel rewards and no balance for $6,000 average monthly spending with $200 on gas, $700 on groceries, $400 at the pharmacy, $600 on travel, $50 on recurring bills, $400 at restaurants, $50 on entertainment and no spending outside of Canada.

Here are the top three results, with the estimated annual rewards after fees, the annual fee and the interest rate:

• American Express Gold Rewards (base fare converted to Aeroplan), $1,415.49, $150, 0%;
• American Express AeroplanPlus Platinum, $1,392.23, $499, 0%; and
• MBNA Rewards World Elite MasterCard, $1,388.80, $89, 19.99%.

It’s important to note the details beyond the rewards and costs. In the above example, the American Express cards are charge cards requiring you to pay off the balance in full each month, while the MBNA MasterCard lets you carry a balance. The site says the American Express cards include trip cancellation and trip medical insurance; the MBNA MasterCard does not. And of course, you need to take into account whether the merchants you frequent accept American Express cards because they aren’t as widely accepted as Visa or MasterCard.

And before you make a switch check the current details of the cards you are considering as rules change on a daily basis.