Canadians switching to no annual fee credit cards to save money: survey
TORONTO -- Canadians love to use credit cards and collect rewards for free flights, groceries or to get cashback.
A new survey by J.D.Power found that during the pandemic many have decided to ditch their annual fee credit cards in favour of cards that don’t charge a fee.
Over the past year, 22 per cent of credit card customers switched to a no-annual-fee card to save money.
“It seems there is more of a preference or a move towards no-fee cards. Not having an annual fee on your credit card is important for some consumers right now," John Cabell, J.D. Power’s director of banking and payments intelligence, told CTV News Toronto.
Many Canadians use a credit card that is issued by their bank, but the 2021 Canada Credit Card Satisfaction Study found it may also be a good idea to check around to see what other financial institutions are offering.
“Issuers are issuing new types of credit cards all the time, so there could be new products out there that you are not familiar with that might fit your needs better," Cabell said.
The survey found that Tangerine Bank, Canadian Tire and PC Financial came out as the top three cards when it came to benefits, services and rewards.
2021 Credit Card Satisfaction Survey
- Tangerine Bank
- Canadian Tire
- PC Financial
- American Express
- RBC Royal Bank
- Capital One
- National Bank
- BMO Bank of Montreal
- TD Canada Trust
Before the pandemic, a popular choice for rewards was cards that allowed you to collect points towards flights and hotel stays, but with many people not travelling, 22 per cent have postponed reward redemption for more than a year.
The number of customers choosing travel rewards cards through the comparison website Ratehub.ca has dropped by about 50 per cent.
“The fact is that a lot of Canadians don't want travel points if they are not going to use them any time soon and would rather have cold hard cash in their bank account or credit card,” Mikael Castaldo with Ratehub.ca told CTV News Toronto.
Ratehub allows you to compare credit cards depending on whether you want to earn rewards or pay low interest.
Castaldo said it's best to do research to find a card that's best for the type of spending you do and make sure the rewards you're collecting aren't costing you money.
“Rewards are great when you're paying off your card and you have no balance, but if you are in a situation where you're paying interest, you're missing payments and paying annual fees that can quickly cancel out your rewards," Castaldo said.
Some users take out multiple credit cards to chase rewards, a practice known as “churning.” However, while you may collect extra points, the practice could damage your credit score.