credit cards in Canada

Part
01
of three
Part
01

Credit Cards In Canada

After an exhaustive search, we were unable to find any public or paywall resources with information on offline and online destinations where people go to learn about different credit cards in Canada. Although there are humongous information and statistics available on the Canadian credit card market, our research indicates that little or no surveys, reports and publications have been generated in connection with the research criteria for this request.

METHODOLOGY

We started our research by searching for credible surveys and reports and research publications with information relating to destinations that people visit in order to learn about different credit cards in Canada. Here we searched through Canadian market research databases such as Fresh Squeezed Ideas, Antenna Consulting Ltd., and iData Research. We also searched for reports from researchgate.net and forrester.com. Our focus was on finding information pertaining to preferred online and offline destinations, as well as data/statistics about the traffic that is generated at these destinations. Unfortunately, there were no reports or surveys found with information on the points of contact visited by people in Canada to learn about credit cards.

Our next strategy was to find data that may be helpful in triangulating the required information. In order to achieve this, we visited government databases such as the Canadian Financial Literacy Database; we also searched through banking forums like the Canadian Bankers Association. However, this also did not yield any useful results. What we found through this means was facts and statistics associated with credit card usage in Canada. We also located publications on credit card and debt management, mortgage and loans, and several other publications that weren't directly related to our query. We then decided to locate any paywall resources with insight on destinations (offline or online) visited in Canada for the purpose of learning about credit cards. Here we visited sites such as Statista, Clootrack and NumHub. Unfortunately, no paywall resources contained reports related to our research criteria.

Still determined to triangulate a response, we broadened our search criteria by searching for reviews, news reports, articles and expert opinions relating to points of contact for credit card selection. We also searched for the main blockers to using third party sites like ratehub.ca to select and purchase credit cards. In addition, our research team visited less credible sites (blogs, social news, and discussion websites) like greedyrates.ca and reddit.com. Here we hoped to compile users' feedback and expert opinions. Sadly this also did not yield any results to aid our search for online/offline destinations visited in order to select credit cards. We were able to locate some feedback from users of ratehub.ca and other third-party websites, however. These opinions provided some insight into the skepticism expressed by users of these third party websites. Our research efforts indicate that this is a unique search query that is yet to be explored, and so there are currently no public or paywall reports with this information. We believe the use of an online survey tool such as SurveyMonkey, SurveyGizmo or Qualtrics in conducting a survey will help in providing the desired information.

HELPFUL FINDINGS

  • Canadians spend more than $300 billion on their credit cards yearly, a figure that exceeds the Russian and Chinese defense budgets combined.
  • There are a lot of low-interest rate cards in the Canadian credit card market and more than 30 of those cards have an interest rate of under 13%.
  • 58% of Canadians usually pay their credit card balance in full every month, thereby paying 0% interest rate.
  • Canadians process about 3 billion transactions yearly using their credit cards. This amounts to about 5,700 transactions per minute.
  • The number of Visa and MasterCard cards in circulation in Canada currently is 74.3 million.
  • About 72% of Canadians own at least one credit card that has a rewards program; while 82% prioritize rewards when selecting a credit card.
  • Canadian financial institutions refunded about $800 million to their credit card customers in 2017, representing the losses these customers suffered due to criminal activities.
  • Some users believe rates posted on third-party websites like ratehub.ca are genuine; however, several users claim that the rates posted on these websites can be misleading and it is better to visit banks in person to obtain genuine rates.
  • Canadians are interested in credit cards that offer rewards such as cash-back and travel points.
Part
02
of three
Part
02

Credit Cards - When and How Canadians Choose

Canada is ranked only second in the world in credit cards volume per capita after South Korea, with 2.2 cards per Canadian on average. In most of the country, it is legal to have a credit card from the age of 18 and companies have a whole range of offerings for students. The cashless culture as well as the need to build a credit history are two major drivers of the popularity of credit card use in Canada. However, the choice amongst a multitude of card providers and options is mainly determined by the rewards program, card brands and interest rate.

Popularity of credit cards in Canada

A study has found that for the fourth year running, Canadian chose credit cards as their number one method of payment. This was the case across all ages groups polled for the first time. It was also found that 67% of the consumers polled had at least two credit cards in 2018, a rise compared to 63% in 2017 and 61% in 2016.

Rewards Programs

A Canadian Consumer Payment Study released in 2018 found that rewards programs were the top criterion considered for choosing a credit card. This has been the case in Canada for five years in a row. 90% of the consumers polled by the survey chose rewards as a reason to change cards, a trend that is reflected across all age groups.

Another survey conducted by market research firm JD Power in September 2018 has found that 48% of applicants for new credit cards were motivated by better rewards programs. The latter represent a major draw in Canada for customers, as highlighted by research that shows 87% of credit cards users polled were enrolled in a rewards program. A consumer satisfaction survey for credit card users has ranked President's Choice Financial first, mainly due to the high amount of rewards per dollar spent that it offers. Canadians value their rewards points, with a majority using them for traveling and cash-back. Another research has shown that 82% of respondents consider that the main criteria of choice for their new credit card was rewards.

Card brands

In 2018, a survey has found that card brand was the second most important factor in deciding to choose a credit card, coming behind rewards, with 52% of respondents listing it as a criterion. This is the case across all income levels, but differs with age, and holds more for adults over 44.

Interest Charge

The interest charged by different credit cards companies plays an important role in influencing the choice of consumers. A study found that 44% of respondents in 2018 considered interest rates as an influencing factor to choose a new credit card. It has decreased compared to 57% in 2017. This is especially true for younger adults under 44, who rank interest charge above brand, as they are more likely to carry balances, and thus get charged high rates for it.

Generational trends

In terms of generational differences in credit card usage, a survey has found that 98% of millenials had at least one credit card, whereas only 80% of baby boomers did. This shows that credit cards are becoming more accessible to younger users and to the majority of society in Canada. When it comes to choosing a new credit card, millenials and baby boomers have different criteria, with millenials mostly opting for cash-back (71%) and traveling perks. Baby boomers are more divided in their priorities, evenly split between cash-back, low-interest and traveling rewards. The study also found that 75% of millenials polled valued credit cards that did not charge an annual fee. A small majority of millenials, or 53%, would value a card with extra security.

Credit History

Young borrowers in Canada need to have a credit history to be able to apply for a mortgage or a loan. However, this is not possible if they have not previously had a credit. One of the easiest ways to build a credit history is through using a credit card. This is done through paying off the balance every month. Credit history can also play a major influence in Canadians holding more than one credit card. They tend to switch cards because of rewards, but canceling their old cards might affect their credit history, which would motivate them to keep the old ones.

Credit cards for students

In Canada, the culture of credit has been emphasized by the heavy promotion of credit cards for students. All major companies offer these type of cards, and it is legal to have them from 18 or 19 years of age, depending on the region. Some of these offers do not charge annual fees, and do not require a security deposit. These cards allow younger Canadians to build their credit score, and benefit from discounts at various merchants.
Part
03
of three
Part
03

Credit Cards - Most Popular Rewards/Perks: Canada

Canadian consumers leverage various rewards and perks in using credit cards for transactions. While most Canadian consumers across all age groups and income levels consider the available rewards/perks as an important motivation in deciding which credit card to make use of, the most popular rewards/perks are merchandise, cash-back benefits, gift cards, travel benefits and experiences.

THE MOST POPULAR CREDIT CARD REWARDS/PERKS

About 90% of Canadians own at least one credit card. Of these, 84% have one with some form of reward or perk attached.

Also, 78% of credit card users revealed that they have a loyalty/rewards program attached to their preferred credit card. However, consumers redeem the reward points from their credit for various perks and benefits and the reward preferences are similar across the different age ranges and household incomes, according to the survey data. A majority (59%) of the survey respondents revealed that they redeem their points for merchandise, 56% revealed that they redeem theirs for cash-back benefits, 54% revealed that they redeem theirs for gift cards, 53% revealed that they redeem theirs for travel benefits while 27% revealed that they redeem theirs for experiences.

THE MOST POPULAR REWARDS BROKEN DOWN BY AGE, INCOME AND GENDER

According to the TSYS survey data, the following are consumers' credit card usage preferences details broken down by age.
  • Fifty-six per cent of Canadian consumers aged 18-24 years identified credit cards as their preferred payment method.
  • Sixty-three per cent of consumers aged 25 – 34 years identified credit cards as their preferred payment method.
  • Fifty-five per cent of consumers aged 35 – 44 years identified credit cards as their preferred payment method
  • Sixty per cent of consumers aged 45 -54 years identified credit cards as their preferred payment method.
  • Fifty-eight per cent of consumers aged 55 – 64 years identified credit cards as their preferred payment method.
  • Sixty-five per cent of consumers aged 65 years or older identified credit cards as their preferred payment method.

According to the TSYS survey data, the following are consumers' credit card usage preferences details broken down by household income.
  • Fourty-nine per cent of consumers with household income less than $24,999 identified credit cards as their preferred payment method.
  • Fifty-one per cent of consumers with household income in the range of $25,000 — $49,999 identified credit cards as their preferred payment method.
  • Fifty-nine per cent of consumers with household income in the range of $50,000 — $74,999 identified credit cards as their preferred payment method.
  • Sixty-four per cent of consumers with household income in the range of $75,000 — $99,999 identified credit cards as their preferred payment method.
  • Sixty-seven per cent of consumers with household income in the range of $100,000 —$149,999 identified credit cards as their preferred payment method.
  • Seventy per cent of consumers with household income of over $150,000 identified credit cards as their preferred payment method.
  • According to the survey report, 51% of credit card users (respondents) were female, while 49% were male

Considering that 78% of credit card users have a reward/loyalty program attached to their card and that reward preferences are similar across the different age ranges and household income, then, it can be safely inferred that 78% of each of the different consumer populations who identified credit cards as their preferred payment method, broken down by age ranges and household income respectively, have the same reward preferences. Hence, the most popular credit card rewards/perks are the same as those identified above.

Sources
Sources