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).
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.