There are over 80 million credit cards in circulation in Canada according to stats compiled by the website creditcards.com — but only 35 million of us. And since many Canadians are too young to have a credit card, that means card-carrying adults average close to three pieces of plastic each!
I’m one of them. Three cards in my wallet. One is a U.S. credit card for convenience when I travel. One is a loyalty card for a large national retailer that frequently offers a discount of 15% to 20% off goods bought in store or online when you use it. Assuming I stick to my budget and don’t overspend, that’s a nice bonus.
The third card is the one I use most. The dividend card. A cash reward is a real reward in my books. It’s simple. I can use the reward on whatever I want, whenever I want (with no flight restrictions). I pay a fee to own the card, but most of the family’s purchases are on this card, and the cash dividend it pays me at the end of the year makes the fee worthwhile by a wide margin.
Credit cards are convenient but are they too convenient? Creditcards.com says more than half (52%) of Canadian households carried credit card debt in 2014. I try to stay in the camp that avoids an unpaid balance. I save up first for any large purchases, buy on credit, then pay the balance before the due date. I take the maximum amount of time to pay without incurring any charges because, that way, my money is growing in my bank account for as long as possible.
“Sticking to a budget is the best credit card habit to develop,” says Scott Lapstra, managing director for credit cards at Tangerine. “Spend less than you make.”
Loyalty reward cards and having a “just in case” back-up card are the main reasons people carry multiple cards, according to Lapstra. Creditcards.com says 77% of us use credit cards with rewards.
Security and tracking are the other reasons cards can be good tools. “Canadians have been quick to adopt credit card tap technology,” says Lapstra. “Convenience and the added layer of fraud protection with a credit card — that’s why people are starting to switch away from debit cards to tap credit,” he adds. “If you are the victim of credit card theft, and you report it promptly, the card company will cover the loss.”
There are lots of good reasons to use a credit card to your advantage, and maybe even a few good reasons to carry more than one. But the number and type of cards in your wallet is probably not as important as the way you use them.
Find the credit card best suited to your needs. Use the card to your advantage. And as Lapstra says, “Use it as a payment option, and never think of it as ‘free money.'”