Is It Worth It for Canadians to Open a US Credit Card?

TORONTO, February 4, 2021 (Newswire.com) - US and Canadian credit cards operate quite similarly — you swipe (or tap or insert) your card to pay, you have a grace period to pay your bill, and you get charged an interest rate for any balance you carry over past your due date.

But US credit cards tend to have more generous rewards programs, fewer annual fees, and lower interest rates, so some Canadians may have considered adding an American card to their wallet, either for travelling in America or using at home. If you use an American credit card outside of the US, though, you could get hit with a foreign transaction fee, so consider credit cards with no foreign transaction fees.

How to get a US credit card

Getting a US credit card if you're not a US citizen or resident can be complicated. You'll need a US residential address and US bank account before you can even really think about applying for an American credit card. If you have familial or business ties in the States, this can give you a bit of a head start.

Unless you have a Social Security Number as a result of being born, living or working in the US, you'll also need an Individual Taxpayer Identification Number (ITIN) to get a credit card with many US card issuers.

If you can tick all of these boxes, you're well on your way to getting a US credit card.

Benefits of having a US credit card

Build US credit history

One major difference between Canadian and US credit cards is your credit history likely won't transfer from one country to the other. While the three major credit reporting bureaus — Equifax, Experian, and TransUnion — are in both countries, they operate independently. Having a US credit card is a great way to build up your credit history and score in the US, which can help you down the road if you relocate and will be applying for a loan or mortgage in the US. But keep in mind, you won't build your Canadian credit score by using your American credit card.

Earn better travel benefits and rewards

If you frequently travel to the States, be it for work or leisure, you can make use of the wide array of travel benefits that many US cards offer, from travel insurance to luggage reimbursements. The cash back rewards similarly tend to be better in the US. In Canada, most credit cards yield about 0.5% to 1% cash back while US cards can offer up to 5% cash back on certain purchases, sometimes with revolving categories. US travel cards tend to favor US airlines over Air Canada when it comes to the best redemption opportunities, though.

Manage US spending

If you've ever tried to pay for gas in the US with your Canadian credit card, you've likely run into an issue when prompted for your zip code. With a US credit card, you can avoid little nuances like this, plus you can pay in USD more easily when shopping online. Separating your at-home spending from your US spending can help you manage expenses.

The bottom line

A US credit card can be a great asset if you have connections to the States, spend a fair amount of time there, or are looking to relocate. While the benefits can be greater than what you'd get with a Canadian credit card, make sure a foreign transaction fee doesn't negate any potential rewards and perks. A card with no foreign transaction fees will give you the best bang for your buck.

Source: iQuanti, Inc.