Plastic payoff

How credit cards can benefit you

By Angela Ho, Business Manager

I was recently in the checkout line with a friend when I pulled out my credit card to pay for a $5 transaction.

“Why don’t you use your debit or cash?” My friend asked me later. “Don’t you pay a lot in credit card interest?”

The truth is that I use my credit card anywhere that it’s accepted, even for purchases that cost a dollar or less (assuming that there are no minimum-dollar restrictions). It’s not that I don’t have cash—although I don’t like to carry cash in general—and I certainly do own a debit card. I’ll be honest about one other thing: I have absolutely no idea what the interest rate on my credit card is. It could be 12 per cent or 30 per cent, and I don’t care, because I’ve never had to pay interest on my credit card purchases.

There are three rules to follow when owning a credit card. The first rule is to pay off the full balance each month to prevent interest charges from accruing. Secondly, I try to use my credit card for all my purchases, so long as I’m able to pay the full balance each month. Finally, I try to familiarize myself with the features of my rewards cards in order to maximize my benefits.

There are a lot of “points” cards on the market, and the choices can be quite overwhelming. Some cards offer points that can only be used with a specific company, some points can be used for travel, others are purely cash back. You’ll need to do some research, because some cards even offer bonus points if you use them to purchase gas or groceries. In general, you should aim for a card that offers at least one per cent back in points. The type of points that you choose to earn, whether it be a cash-back card, a travel-rewards card, or a company-specific points card, are personal preference. If you’re just starting to use a rewards card, it’s best to find one that doesn’t have many rules, restrictions, or limits, as well as one that doesn’t charge an annual fee.

My best advice on how to maximize your credit card points is to use your credit card for all of your everyday purchases, such as food and gas. After all, you have to buy these items anyway, and earning one per cent back is better than not earning anything back at all. If you don’t like the idea of a surprise bill, you can always log in to view your current balance, and you can always make smaller payments to your credit card account before your bill arrives. And when your bill does arrive, make sure to review your transactions thoroughly. Doing so will allow you to spot trends in your spending and ensure your card has not been compromised.

Finally, for any credit card that you sign up with, be sure to read all of the fine print, and pay attention to any updates that are sent in the mail. Credit card companies sometimes change the rules associated with their cards, which can include major changes to their rewards programs. And always remember the first rule of owning a credit card: never, ever carry a balance.