Monday, April 22, 2024
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Best Way to Use Credit Card in Canada

Top 10 Best Way to Use Credit Card in Canada

Credit cards are one of the most important thing that ensures your financial stability. Credit cards help individuals to make easy pay, purchase on the daily goods and services. Credit cards not only ensure that you can easily purchase anything without any hassle but it is also important for financial verification and score check.

So, it’s always important to mind your credit card. But today many people have a question in their mind: how to use a credit card in the best way so that it will be rewarded back? Well, if you are having the same question in your mind then don’t worry! Because today we are going to guide you on the top 10 best ways to use credit cards in Canada.

Here are the Top 10 Best Ways To Use Your Credit Card In Canada:

1. Pay your balance in full

The most important rule of using credit cards is to pay off your balance in full every month. This will not only help you avoid interest charges that can add up quickly but it can also keep your credit utilization ratio low. Credit utilization ratio is the amount of credit you’ve used compared to your total credit limit. Lenders prefer a utilization rate of 30% or less. By paying your balance in full every month, you are keeping your credit utilization ratio low which is crucial for maintaining a good credit score.

2. Take advantage of rewards

Many credit cards in Canada offer reward programs that can earn you cash back, travel points, or other benefits. Check for credit cards that provide rewards tailored to your spending habits and make sure you are maximizing the rewards by using your card to make purchases everyday. For example, if you drive a lot, choose a card that offers gas rewards. With some rewards programs offering over 5% cashback on purchases, using your credit card can quickly add up.

3. Use your credit card for big purchases

Credit cards often come with additional purchase protection, extended warranties and insurance coverage for larger purchases. By using your credit card for big-ticket items you can benefit from these added protections which may not be offered otherwise. For instance, some insurance policies offer rental car coverage for as long as 31 days.

4. Avoid cash advances

Cash advances on credit cards should always be avoided. They typically come with high interest rates and additional fees making them an expensive way to access cash. Instead, use your debit card or withdraw cash from your bank account if needed. If you’re unable to make payments on the cash advance the interest will start to accrue which may cause more financial problems down the line. Some issuers will allocate payments towards the lowest interest rate balance first keeping your cash advance balance on the card longer.

5. Monitor your credit card statements

Regularly reviewing your credit card statements is crucial for detecting any unauthorized charges or errors. By staying on top of your transactions you can quickly report any issues and protect yourself from fraudulent activity. Sign up for online banking and the auto notification of payments which can alert you of any activity on your account,giving you a head start on detecting fraudulent activity.

6. Set up autopay

Late payments can negatively impact your credit score and result in heavy fees. To ensure you never miss a payment set up auto-pay for at least the minimum amount due on your credit card. This will help you avoid late payment penalties and maintaining a positive credit history. Late payments can negatively impact your credit score for up to seven years which could make it harder to access credit in the future. Ideally, always pay off your credit card balance in full to avoid interest and helping to maintain good credit.

7. Understand your card’s fees and charges

Familiarize yourself with the fees associated with your credit card such as annual fees, foreign transaction fees and balance transfer fees. Being aware of these fees will allow you to make informed decisions and avoid any surprises on your monthly statement. It’s important to be aware of any ongoing fees associated with your credit cards to decide if you are comfortable with paying that amount yearly.

8. Keep your credit utilization ratio low

As mentioned, your credit utilization ratio is the amount of credit you’ve used compared to your total credit limit. Aim to keep your utilization ratio below 30% to maintain a healthy credit score. If your balance creeps up too high, consider making multiple payments throughout the month to keep it in check. Owing more than 30% of your credit limit suggests that you may have problems paying off your balances in full.

Credit Cards to Rebuild your Credit in Canada

9. Use credit card perks

Many credit cards come with additional perks such as airport lounge access, travel insurance or concierge services. Take advantage of these perks when traveling or making purchases to enhance your overall experience. Make sure you are fully aware of what your card offers so that you are taking advantage of all the available perks. Some credit cards also offer value-added perks such as discounts in certain online sites, access to concerts and members-only events.

Stay informed about changes in credit card terms

The Credit card terms and conditions can change over time. Keep an eye on any updates from your credit card issuer to ensure you stay informed about any changes in fees, interest rates or rewards program. If needed consider switching to a different card that better suits your needs. Keeping in mind, always understanding the terms of the card before making a commitment.

Wrapping Up

By following these top 10 best ways to use credit cards in Canada you can enjoy the convenience and benefits they offer while avoiding the pitfalls of debt and high-interest charges. Remember to use your credit card responsibly and always prioritize your financial well-being. Happy spending!

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