Using your credit card responsibly

From: Financial Consumer Agency of Canada

Tips when using your credit card

When you use your credit card, you’re borrowing money that you have to pay back. A credit card doesn’t increase the amount of money you have available. Your credit card spending should fit within your regular household budget.

If you don't use your credit card wisely, you may end up:

  • building up debt
  • paying interest
  • hurting your credit score

Aim to pay off your balance in full every month

The money you owe on your credit card is called your balance. Try to pay it off in full by the due date each month. If you don't pay your balance by the due date, you'll pay interest from the date you made the purchase. The interest you pay will increase the cost of everything you buy with your credit card.

Paying your balance in full each month shows lenders that you’re a responsible borrower. Regularly making late payments or missing payments entirely, will hurt your credit score.

Pay at least the minimum amount you owe

If you can’t pay your balance in full, always aim to pay at least the minimum amount you owe.

If you don't pay at least the minimum payment, you risk:

  • your interest rate increasing
  • negatively affecting your credit score
  • losing the benefit of any promotional rate offer you have
  • your financial institution cancelling your credit card
  • your credit card balance insurance being cancelled by your credit card provider

Regularly check your statement for errors

Carefully review your monthly credit card statement to make sure that there are no errors.

When you check your credit card statement online, purchases will usually appear after a few days. Keep receipts of all your credit card purchases so you can check the amounts against your statement.

If you find an error, report it right away. Contact your bank or other financial institution that issued you the credit card.

Get electronic alerts from your financial institution

Your financial institution may send you an electronic alert when the credit available on your credit card falls below a certain amount.

These alerts may help you manage your day-to-day finances and avoid fees.

Learn more about these electronic alerts.

Keep your personal information confidential

Keep the following information confidential:

  • your card
  • your personal identification number (PIN)
  • your card security code, also known as the CVV number located on the back of your credit card
  • your credit card password for online transactions

If you share your PIN or card security code, you may be held financially responsible for unauthorized transactions.

Warning signs that you're overspending

If one or more of the situations below apply to you, you may be living beyond your means:

  • your credit card balance keeps growing
  • you’re using all your available credit
  • you carry a credit card balance from month to month
  • you don’t make a payment or only make the minimum payment on your credit card bill
  • you take out cash advances with your credit card

If you often find yourself in one of these situations, do the following:

  • stop using your credit card, if possible
  • avoid applying for a new credit card because you've reached your credit limit on other cards
  • look at your budget for ways to trim spending
  • if you have to use credit, consider other less expensive credit options

You may be overspending if your balance keeps growing or you’re using all your available credit.

Learn how to make a budget.

Consider getting help if you’re having trouble making payments.

Consider other credit options

Consider other ways to borrow money that cost less in interest if you’re having trouble paying off your credit card.

Other credit options that may have lower interest rates than a standard credit card include:

Related links

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