Raggedly Rich

Canadian Finances, Musings, and Art

The Basics You Need to Know to Use Credit Cards Effectively

There’s a lot of different resources out there dedicated to telling you what kind of credit card would be the best kind of credit card for you. And there’s also a lot of people who have different opinions on them – but I think most personal finance bloggers I know agree on this principle:

Take advantage of credit card points and savings, but only if you’re going to use your credit cards like a debit card.

That means, at the end of every billing cycling, you pay off the entire balance of your credit card, no exceptions.

There’s a little section on every credit card bill that tells you how long it would take for you to pay off your credit card, if you only paid the minimum payment required, and incurred no more debt.

That’s five years and 9 months, to repay $411.23 dollars. I would be paying this $400 off for the next five years of my life. The interest rates on credit cards is absolutely absurd – and that’s why you need to only take on a credit card if you can pay it off in full, and pay it off consistently.

Pay on or before the Bill Due Date

In university I accidentally dropped the ball on paying my tuition before the deadline. I had the money in the bank, I just got caught up in schoolwork and the death of a friend; I only paid two days late, but got slapped with a $35 interest charge. Definitely won’t be doing that again.

And stay away from cash advances – unlike your normal charges, which get a grace period and are interest free until after the payment date, cash advances charge interest starting from the moment you withdraw them. And most ( if not all? ) credit cards won’t let you use any credit on your account towards cash advances. ( They’re also not too happy with you put credit on your account in anticipation of using it a lot, which I learned during my Euro-Trip of Hell ).

Shop Around for What you Need

Weirdly enough, I always have people trying to get me to sign up for a credit card in airports. I don’t know what it is about airports, but there’s always a kiosk or two. And sure, a hat seems like an immediate, tangible thing that’s a fine bonus for signing up – but there are more lucrative bonus’ elsewhere.

When I was preparing for my Euro-Trip of Hell (which I didn’t know was going to be such a hellish experience), I shopped around for a card that had zero foreign transaction fees. The only one I found that was offered in Canada was the Amazon.ca credit card. I wanted to make sure I wasn’t getting gouged by transaction fees while I country-hopped Europe, and every $1000 you spend you get a $20 credit (1 point per dollar spent, 2 points per dollar spent on Amazon; 1000 points gets you $20 credit).

view from Poland – with two torn ligaments and a small fracture, nbd

I also have a VISA that’s linked with my personal banking account; I’ve set it up so it pays off the entire balance automatically every month. I 100% recommend going that route.

Pay Attention to Minimum Charges and Reoccurring Fees

If you only spend $500 a month, there’s no point in getting a credit card that requires you to spend $3000 in the first 3 months to earn the 50,000 bonus points. Likewise, even if you get the card for free for the first year, will it still make sense when you have to pay $100 to maintain it every year afterwards?

Take a look at the minimum charges required to earn bonus points, and to maintain the card. Make sure you’re well aware of what the card’s going to cost to keep beyond the first year. Familiarize yourself with authorized user cards, and whether they have a fee or not.

You don’t want to be surprised in 14 months with a charge that makes you feel credit card remorse.

Use Credit Cards Strategically

Travel hacking is a thing. If you have a travel points card, you can use those points and apply them to travel. Hunt around and take a look at what you do and what works for you. If you fly a lot locally, WestJet’s credit card might be worth it just for your first bag checked for free. Or if you’re abroad, a no foreign transaction fee credit card like the Amazon card I have will be the best bet. Or a hotel points card might be exactly what you’re looking for!

I’ll eventually be making a post about how to find the cheapest deals and lodgings for travel. But for now, my family usually uses:

Skyscanner (US): for flights (affiliate link – see the disclaimer!)

Skyscanner (CAD): for flights (affiliate link – see the disclaimer!)

RedTag.ca – for flights / vacation packages

Hostel World – for accommodations

Hostel Bookers – for accommodations

AirBnB – for accommodations (message me for a referral bonus!)

The important thing about using these sites is that they make comparisons easier. But always make sure to check back at the original site to see if the price is better on the comparison price, or if it’s better directly. I found some places to offer a slight discount when booking directly, while others had a cheaper price listed on HostelWorld. It always pays to double check!

Every Credit Card Impacts Your Credit Score

Buying something at The Bay, and tempted to sign up for their credit card for an extra 20% off? It’s true that you can apply and obtain it, and cancel it after you’ve made your payment. But what they usually fail to mention is that it affects your credit score. I talked a little bit about credit scores in my post about Alexander Hamilton and his inclinations towards finance, and the take away you need to know is that new credit card applications and the type of credit you have, impact your score.

If you have 12 different kinds of credit cards, your record will show that. If you keep getting and cancelling credit cards, your record will show that. If you do enough shopping at The Bay to make the points / savings worth it (if you’re an interior designer, for instance? Maybe? My style is a bunch of stuffed animals on shelves I got when I was about 10, so I wouldn’t know), then by all means, get the credit card that gives you those. But if you’re just signing up for a credit card to save for one purchase, think twice before you commit.

Variety Doesn’t Hurt

Unfortunately, I only have VISA cards, as that’s what my bank / Amazon via Chase offers. But I don’t think it’s a terrible idea to carry two different kinds of cards, in case one of them goes down / isn’t accepted. Having a MasterCard and VISA covers a lot of bases – Costco only accepts MasterCards (though that may change / be different in other locations), so having a MasterCard would open options up for you.

The bottom line is what it always is for the raggedly rich: be smart and honest, know yourself, know what you want, and know why you want it.

What kind of credit cards do you have? Do you even have any? Let me know what your favourites are and why, and why not below!



  1. Dear Raggedly,

    I like that Amazon’s credit card has the “Time to Pay Off” information. Pretty crazy on the overall amount.

    I’ve always wanted to have my credit card balance paid off AUTOMATICALLY every month but didn’t think that I could. Now that I have a TD Visa Cashback card and bank with TD, maybe it’s possible. Thanks for the thought.

    I hope that your ankle is doing better.

    Besos Sarah.

    • Ms. Raggedly Rich

      August 11, 2017 at 9:30 am

      I think most credit cards have the “Time to Pay Off” information – at least, the two I have, and Capital One!

      When I called my bank they said they could set up an automatic deposit for a credit card, but only for a fixed amount; but since yours are in the TD family, I don’t see why they wouldn’t!

      And thanks! It took a year and a month, and while my ROM still isn’t back, at least I can walk and run and hike and skate like normal : )

  2. Hi! Some credit cards (like most issued by Chase and Citi in the US) have price protection – when the price drops on a purchase you’ve made, you can get the difference refunded. All you have to do is find a lower price at any store within a set period after your purchase (usually 60 or 90 days).

    I love the Earny app, because it does this automatically for you, for a 25% cut of the refunds.

    I agree that, as long as you don’t pay interest charges, credit cards can bring huge benefits, such as travel rewards.

    • Ms. Raggedly Rich

      August 11, 2017 at 10:20 am

      That’s true! Thanks for mentioning it! And there’s also a whole bunch that offer extended insurance / product protection for things like electronics, and car rentals. It really pays to figure out what you need the card for, and what’s out there on offer.

      I’ve never heard of that app, but I might have to check it out. A 25% cut seems steep, but then again, I know I wouldn’t be hunting for the best deals up to three months after I purchased something.

      My favourite for national travel rewards is the West Jet card – we almost also travel with West Jet anyway, so the companion seat and the free bags would probably come in handy!

      Thanks for stopping by!

  3. I love travel hacking! I’m also glad they let you know how long it will be before you pay off your credit card bill (if you choose not to pay it off) now. I think it was enforced in the last few years recently, which is good.

    I have an MBNA World Elite MasterCard (used to be the SPG card which was AMAZING, I got to stay at Westin in Waikiki for $50 a night from what I recall). I used to have the TD Aeroplan but given that the points are changing soon I am hesitant to get it again.

    • Ms. Raggedly Rich

      August 17, 2017 at 10:25 am

      I think they only recently (last five/ten years) started enforcing the ‘how long’ too – and it’s such a shocking timeline! Ridiculous.

      It’s good to realize that your life changes too – something that worked when you were travelling a lot might not work for you now that you stay in one place more often. I’m glad you’re hesitant! Definitely worth it to really figure out what you need, and what you don’t need; and how things have changed.

  4. We need to up our variety game because we don’t actually have a card that doesn’t have foreign transaction fees yet – we did but we cancelled it after we got the reward bonus.

    “My style is a bunch of stuffed animals on shelves I got when I was about 10.”

    High five – same style! I have a bunch of stuff animals on the bed board, thankfully Jared doesn’t mind and rather likes it haha.

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