Personal
Home Bank accounts
Credit cards
Borrowing
Mortgages
Savings and investments
Insurance
Advice
Business
Home My business
Banking Solutions
International
Financing
Investing
Tips and Tools
Wealth Management
Home
CLOSE

A primer on credit cards

29 October 2015 by National Bank
credit card

When properly used, a credit card can be very useful in helping you gradually build your credit history.

Contenu

When properly used, a credit card can be very useful in helping you gradually build your credit history.

Are credit cards your friend or enemy? When properly used, a credit card can be very useful in helping you gradually build your credit history. Here is some practical information to help you choose the right credit card and use it wisely.

3 reasons to obtain a Canadian credit card

  1. It's a practical and safe way to pay for your purchases and your everyday expenses. Most businesses accept credit cards as a form of payment for goods and services. In Canada, credit cards are one of the most commonly used methods by consumers to pay for their purchases.
  2. It's often required for certain transactions, such as signing a cell phone contract, renting a car or making an online purchase.
  3. It enables you to make purchases in Canadian dollars directly. This will prevent you from having to pay any foreign exchange fees for using a card from your native country.
  4. What is the difference between a debit card and a credit card?

    Commonly used for everyday purchases, debit cards enable you to withdraw funds from an ABM or make a payment in a store. They give you immediate access to the funds deposited in your account. If your account does not contain sufficient funds, the withdrawal or purchase will not be allowed.

    A credit card issued by a Canadian financial institution enables you to obtain goods and services and pay for them at a later time. However, you will need to make a minimum payment every month. If you repay the total balance before the due date, you will not be charged interest.

    In short, a debit card enables you to use money in your account to make purchases in places of business, whereas a credit card uses borrowed funds.

    Ensure your payments or balance in case of major problems

    Paying off your credit card balance is a new financial responsibility. If a major event occurred in your daily life, such as a disability or serious illness, death, accidental mutilation or involuntary loss of employment, would you be able to pay the monthly payments?

    A credit card payment protection helps you pay your balance in part or in full when one of these situations occurs. A peace of mind that allows you to use your money for what really matters at a time in your life when every dollar is important.

     

    How do credit cards work?

    The credit card issuer provides a line of credit to the consumer. This can then be used to make purchases or borrow funds from the issuer, which is called a "cash advance."

    A credit card's borrowing limit is set by the card issuer based on the borrower's credit rating. Credit cards incur interest charges and are intended as a source of short-term financing. However, Canadian consumers have shown a tendency to keep debt on their credit cards for long periods of time.

    Interest is usually charged to a credit card account one month following a purchase. It should be pointed out that credit cards generally have higher interest rates than personal loans and lines of credit.

    Certain credit cards are issued free of charge by lenders, while others come with an annual fee in exchange for advantages and services, such as car rental insurance, loyalty points and rewards for travelers.

    • To learn more about the types of credit cards available and how to use them wisely.
    • To view a comparative summary of the credit cards available to Canadian consumers.
    • 3 tips for using your credit card wisely

      1. Pay the entire balance of your credit card every month before the due date on your statement to avoid interest charges. Allow a few days (usually three days) for your payment to be processed, depending on the type of payment used.
      2. Never disclose the personal identification number (NIP) linked to your credit or debit card.
      3. Avoid having several credit cards at once. This can reduce your borrowing power.
      4. Legal disclaimer

        Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.

        The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.

        The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.

        This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.

        The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.

        Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).

        Tags:

        Categories

        Categories