Credit cards are causing debt problems for many consumers. Used responsibly, however, they can come in handy and even save you money. Here are some tips to help you make an informed choice from the many cards on the market.
Identify your needs
First, determine the expenses you will pay using your credit card. A standard card is perfect for booking a hotel for your annual vacation. On the other hand, if you intend to use it for all your family expenses, or if you travel several times a year, a card offering a reward program may be more appropriate.
Analyze your behavior
Do you repay the full balance of your account each month? If so, your transactions will not be affected by the interest rate. A high-rate credit card with other benefits might be worth it. If you happen to carry over a balance, you should favor a reduced rate card.
Clean up the cards you already have
Do you already have one or more credit cards? Do you have a store that offered you a discount on your purchase at the time of membership? Take the time to cancel the cards you no longer use. Check the limits of the ones you keep and adjust them if necessary (down or up). Then review your need for an additional card, or a replacement.
Check personalized offers
Does your employer, financial institution or business that you frequently regularly offer a credit card with specific benefits? For example, no membership fees if you are employed by a particular organization or a reduced interest rate if you are a member of an association?
Now compare the different products offered on the market. These three tools will help you choose the credit card that best suits your needs:
- Financial Consumer Agency of Canada credit card selection tool.
- Protect yourself credit card comparator.
- Comparison of Ratehub credit cards.
Conditions of use
- If you take advantage of a rate discount at the time of enrollment, check the duration of this promotion and the regular rate applicable thereafter.
- If you happen to make cash advances, check the interest rate for these transactions and the date the fee calculation begins (usually at the time of withdrawal).
- If a card requires an annual fee, make sure the benefits exceed the cost of membership.
- If a card gives cash back, check what rate applies for each type of transaction. Consult your statements for the past year to compare your habits with the discounts offered.
Used responsibly, a credit card can be an asset in your personal finances while making your life easier during certain transactions. It’s up to you to choose the right product!