Having the right information about credit credits and how they work is key to making them work for you. There is a lot of choice in the type of card and in benefits, but using credit wisely is important to avoid money mishaps and to build a strong personal credit history.

What You Need to Know:

  • A credit card is a convenient and flexible payment tool accepted online and at millions of locations worldwide in more than 200 countries.
  • There are more than 30 low interest-rate cards on the market that have an interest rate of less than 13 per cent.
  • The Credit Card Comparison Tool from the Financial Consumer Agency of Canada (FCAC) makes shopping for the right credit card easy.

Credit Card Benefits

A credit card is a convenient and flexible payment tool accepted at millions of locations worldwide in more than 200 countries and territories. There are a number of benefits to using a credit card as a payment tool:

  • As long as you pay your full outstanding balance by the due date, any purchase made during the current billing cycle is interest-free.
  • The card may offer insurance coverage for purchases if the item is damaged, stolen or not delivered within 90 days.
  • You have fraud protection with zero liability to you in cases of fraud.
  • Some cards also have other rewards and benefits such as travel points, rental car insurance, travel insurance, cash back options and extended warranty programs.

Choosing a Credit Card

Banks offer consumers a variety of credit cards. You can choose:

  • a standard card without an annual fee
  • a premium card that offers rewards and features and that may have an annual fee
  • a low-rate card if the interest rate is important to you. There are many low-rate cards on the market and over 30 of those cards have an interest rate under 13 per cent.

It’s important to shop around for the card that best meets your needs. The Credit Card Comparison Tool from the Financial Consumer Agency of Canada (FCAC) makes this easy.

For longer-term borrowing requirements, a term loan or line of credit may be a better choice because the interest rate is typically lower.

 

There are many low-rate cards on the market and over 30 of those cards have an interest rate of under 13 per centcredit cards

 

Using Credit Wisely

It is easy to pay for purchases on a credit card, but it’s important to keep track of your purchases so you don’t inadvertently overspend. Here are some guidelines for keeping control of your spending and making credit work for you, not against you.

  • Make a budget for yourself and stick to it. Make sure that you know how much you can afford to spend and don’t go over that limit. That way you will avoid nasty surprises when you receive your credit card statement.
  • Avoid impulse buying. If you had to pay in cash, would you be making this purchase?
  • Keep track of all your credit purchases. Save the receipts to keep track of what you’ve spent and check them against your monthly statement or online.
  • Always read and understand credit application forms before you sign them.
  • Be sensible about the number of credit cards you use. How many do you really need? Are you using them simply because you have them?

Protecting Against Credit Card Fraud

Banks and credit card companies take significant steps to protect customers and minimize credit card fraud as much as possible. For example:

  • Banks’ systems can automatically detect unusual activity in a customer’s account. This means that steps can be taken to detect fraud and prevent additional fraud from occurring.
  • Visa, MasterCard and American Express have zero liability policies in the case of unauthorized transactions. This means that if you are a victim of fraud, you won’t be held responsible.

There are simple steps you can take to protect yourself, including:

  • Report a lost or stolen card as soon as you notice it is gone.
  • Regularly check your transactions online or on your monthly statement. If there are any charges that you didn’t make, report them to your card issuer right away.
  • Never give out your card number over the phone or online unless you know you are dealing with a reputable company, especially if the company contacted you.
  • Scammers will try to trick people into revealing information about their credit cards either over the phone or through email. It’s important to know that your bank or credit card company would never call to ask for personal information like your credit card number, expiry date, PIN, or the three-digit security number on the back of your card.

Questions?

If you have general questions about banking in Canada, call the Canadian Bankers Association’s Banking Information Line at 1-800-263-0231 or send an email to inform@cba.ca.
(Please note that if you believe that you have been a victim of fraud, you should contact the police and your bank immediately.)