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Understanding Credit Cards as a New


If you’re an immigrant who moved from a country where credit cards aren’t commonly used to a country where owning a credit card is highly encouraged, it’s important you quickly get an understanding of how they work so you can use them the right way. Credit cards can be a double-edged sword depending on how they’re used. Some see credit cards as a means of payment while others see them as a treasurable piece that funds their lifestyle. Whatever the case, follow me as I take you through the most important things you need to know about credit cards so you
can understand how to use them as a new immigrant.

I will share:

What Credit Cards are

Investopedia describes a credit card as a thin rectangular piece of plastic or metal issued by a bank or financial services company, that allows cardholders to borrow funds with which to pay for goods and services with merchants. Credit cards impose the condition that cardholders pay back the borrowed money, plus any applicable interest, as well as any additional agreed-upon charges, either in full by the billing date or over time.The process of providing credit (by a financial services company) and using credit (by the customer or lender) is called the credit system. This system is in place to help fund your legitimate goals and access things that you ordinarily wouldn’t be able to without additional support. For example, buy a house, get a car, rent an
apartment, pay tuition, etcetera.

Common Terms Around Credit Cards

Below is a basic yet non-exhaustive list of credit card terms that will help you better understand how credit cards work. They are words you’ll come across as you apply for and start using credit cards:
  1. Annual fee: This is a yearly charge on your credit card. Keep in mind that you’ll be charged a fee for using a credit card, and it will be billed to your account statement. However, while most banks charge an annual fee, some don’t. It depends on the credit card/bank you use.
  2. Annual interest rate: This is the annual interest rate charged on purchases that do not qualify for the interest-free period.
  3. Late payment fee: Late payments usually result in levied charges that can reach $40 and are always included in your next billing statement.
  4. Minimum payment fee: Your minimum payment is the amount you must pay by the due date to keep your account current and creditworthy. If you pay less than the minimum or miss a payment, you can hurt your credit score. And while you should always pay at least the minimum due, you should strive to pay your balance in full to avoid costly interest charges.
  5. Security deposit: This is the amount deposited with the credit issuer as means of security to obtain a secured credit card.
  6. Foreign transaction fee: This is often charged when credit cards are being used for purchases outside the country of residence.
  7. Cash advances or balance transfers: Cash advances are treated as loans by some issuing banks or financial institutions, not as product purchases. You are charged this from the day you take a cash advance or balance transfer. This enables you to withdraw or request cash or a credit loan using your credit card. Cash advances should not be confused with free money because they are intended to be returned/refunded at the end of a specified period.
  8. Annual Percentage Rate(APR): This is the annual interest on your card if you have an outstanding balance expressed as a percentage.
  9. Authorized user: This is someone who has been added to your account by the primary cardholder (You). This person is referred to as a beneficiary because of their access to your account. They can make purchases on your behalf using your credit card. If you’re an international student and have not been issued a credit card, your guardian or relatives can register you as an authorized user.
  10. Credit score: This is a three-digit number that assesses your credit risk and creditworthiness. Depending on the credit report, the credit score ranges from 300 to 850. Credit scoring varies between financial institutions and countries, but the goal is to qualify you for future loan purchases from lenders, mortgages, tuition fees, and even utilities.
  11. Credit history: This is an up-to-date record of your credit activities. It demonstrates your dedication to debt repayment, credit card management, and financial responsibility as a cardholder

Benefits of Credit Cards to New Immigrants

As an immigrant, owning a credit card helps build up your credit score over time
and this allows you to qualify for a loan, buy a car, or rent an apartment. Other benefits include:

  1. It proves your responsibility towards money.
  2. It’s more secure to carry than physical cash and protects you from fraud.
  3. It helps you earn bonuses such as reduced car loan rates, insurance bonuses, and accumulated travel points.


Available credit card options for new immigrants

Many immigrants, especially newcomers, frequently find themselves in a financial fix as a result of not having an active credit card or even knowing what credit card to apply for. In countries like the UK and Canada, having a good credit history allows you access to better options on financial products such as mortgages, higher credit limits, savings and as well lower interest rates. Moving to the UK automatically erases any credit rating you may have had from your home country and this is mostly experienced by international students, because you can’t transfer your credit rating from your home country and must start from scratch. This is also observed in the US. Below is a list of popular credit card providers in the USA, UK and Canada respectively:
  1. DeseJourney Student Rewards from Capital One
  2. Chase Sapphire Preferred® Card
  3. Opensky Secured Credit Card
  4. First Progress Platinum Prestige Mastercard Secured Credit Card
United Kingdom
  1. Capital One Luma Card
  2. Marbles Credit Card
  3. Barclaycard Forward Credit Card
  4. Chrome Credit Card
  5. Aqua Classic Credit Card
  1. Scotiabank Momentum No-fee Visa credit card
  2. Tangerine Money Back Credit Card
  3. Home Trust Secured Visa
  4. Scene Visa Card
  5. BMO CashBank MasterCard

General Steps to Process Your Credit Card

For every time you apply for a credit card, card issuers run a credit check to confirm your eligibility. Take the steps below to process your credit card:
  1. Know your credit card need: Why do you need a credit card? This is the first question you need to ask yourself before applying for a credit card. Do you want to use it to build your credit for other things you intend to do in the future? Or do you just need it as an immediate safety net?
  2. Determine your credit card eligibility: Age, income and residence status affect credit card eligibility so make sure to do your findings.
  3. Compare credit cards: Once you get to the issuer or financial institution, you would be followed up by a financial adviser especially if you are an immigrant to weigh the credit cards options and also get to pick the best card for based on your financial capacity.
  4. Apply
  5. Wait to be approved

Factors to consider when choosing a credit card provider

Below are some important things to consider when choosing a credit card provider:

  1. Annual Percentage Rate: The lower the rate, the more you save. When shopping for a credit card provider, consider those with affordable rates.
  2. Rewards: Choose providers that offer robust rewards in the form of bonuses, reduced rates, and travel points.
  3. Fees: When selecting a credit card provider, consider chargeable fees. Fees vary between financial institutions, depending on whether you are an international student or a working professional.
  4. Credit limit: As a new immigrant who has not fully settled or found a financial balance, it’s best to apply for a credit card with a low credit limit.


If you’ve read to this point then congratulations are in order! You’ve just joined the league of financially literate new immigrants who understand how credit cards work and will use them to build wealth rather than accumulate debt. 

If you want to continue to improve your knowledge of finances as a new immigrant looking to settle in quickly and thrive, then I invite you to join our community. We hold weekly, monthly, and quarterly events with the sole aim of educating the immigrant community on financial literacy.

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