New to Canada or moving abroad: what to consider with credit cards

Do this in your first weeks, not after six months. A secured credit card requires a refundable deposit — commonly $500 — and gives you a card with that limit. Home Trust, Neo, Capital One and most big banks offer one, and approval does not depend on Canadian credit history because your own deposit is the security.

The card is the point, not the credit. Put one small recurring bill on it, a phone plan or a streaming subscription, set up automatic full payment from your chequing account, and otherwise leave it alone. Twelve months of that produces a usable score.

Two rules decide almost everything: never pay late, and keep the reported balance under 30% of the limit. On a $500 limit, that means under $150 when the statement closes. Paying the full balance every month costs you nothing in interest and still builds history.

Also ask your bank for its newcomer package. Most big banks will approve an unsecured card with a modest limit using your immigration documents and proof of income, sometimes without a deposit, for the first year. Take it in addition to — not instead of — the secured card if the limits are small.

What not to do: do not apply to several lenders at once, because each application leaves a hard inquiry. Do not take a high-fee 'credit builder' loan when a secured card does the same job for free. Do not close the secured card once you graduate to a normal one if it is your oldest account — length of history counts.

Secured card — pros: near-guaranteed approval, no credit history required, reports to both bureaus, deposit refunded when you close or upgrade. Cons: your money is locked up, limits are small, and a few issuers charge an annual fee, so pick a no-fee one.

Bank newcomer unsecured card — pros: no deposit, sometimes a decent rewards rate, bundled with a fee-waived chequing account. Cons: only available for a limited window after arrival, limits are low, and approval still depends on documented income.

Being an authorised user on a spouse's or family member's established card — pros: instant history if the issuer reports authorised users. Cons: their mistakes land on your file too, and not every issuer reports it.

Store or 'guaranteed approval' cards — generally avoid. Interest rates near 30%, tiny limits and weak reporting make them a poor way to build a file compared with a plain secured card.

This is the single most useful move for anyone planning to emigrate. American Express runs a Global Transfer programme: if you hold an Amex card in Canada and then move to another country where Amex operates — the US, UK, Australia, and many others — you can transfer your Canadian Amex history to a new card issued in that country, without a local credit file.

That matters because in most countries you would otherwise arrive with zero history and face exactly the secured-card problem newcomers face in Canada. A transferred Amex gives you a real, unsecured card from day one, which then seeds your new local credit file.

How to set it up: apply for an Amex card in Canada well before you leave — six to twelve months of statements is far more persuasive than one. Any Amex product works, including a no-fee one, so there is no need to pay for a premium card. Keep it in good standing with on-time full payments.

After you land abroad, contact Amex in the new country and ask for a Global Transfer application rather than applying normally. You will need your Canadian card details and your new local address. Once the local card is issued and used, apply for a normal local card from another issuer a few months later, and only then close the Canadian one if you no longer need it.

The same logic runs in reverse: if you are moving to Canada and already hold an Amex in the US, UK or elsewhere, ask for a Global Transfer into a Canadian Amex before you arrive. It is the one legitimate way to skip the secured-card year.

Keep one Canadian card and one Canadian chequing account open if you can service them from abroad. It preserves a live Canadian credit file in case you return, and it gives you somewhere for a tax refund or a final pay deposit to land. Check whether the issuer permits a foreign mailing address — some do not, and the card may be cancelled if the address becomes non-Canadian.

Set every remaining Canadian card to automatic full payment before you go. Unpaid annual fees on a forgotten card are one of the most common ways people wreck an otherwise clean credit file after leaving.

Understand tax residency separately from credit. Leaving Canada may make you a non-resident for tax purposes, which affects TFSA contributions, RRSP treatment and departure tax. That is a different question from your credit file and worth confirming with an accountant.

Download your credit report from Equifax and TransUnion before you leave and keep a copy. Some foreign lenders will accept it as supporting evidence even though it does not import automatically.

For foreign spending, a no-foreign-transaction-fee card saves about 2.5% on every purchase. If you keep one Canadian card while abroad, make it that one.

Newly arrived with no history and no relatives here: secured card plus a bank newcomer package, both used lightly and paid in full. Expect a usable score in about a year.

Newly arrived but already holding an Amex abroad: request a Global Transfer before you arrive, and still open a secured card as a cheap backup while the transfer processes.

Planning to leave Canada within a year or two: open a Canadian Amex now, use it consistently, and apply for the Global Transfer once you have an address in the new country.

Moving back and forth repeatedly: keep one no-fee Canadian card permanently open on autopay. A dormant but current account keeps the file alive at almost no cost, and re-establishing from scratch every time is far more expensive.