Beginner's Guide to Canadian Credit Cards: Basics You Should Know

As beginners to the world of credit cards, we must grasp the basic principle of using credit cards: to maximize our spending and privileges in the most secure way. We must realize that, using credit cards wherever and whenever you need to make payments should be a routine for you. 

Credit cards payments are gradually taking over debit card and cash payments (https://www.payments.ca/sites/default/files/cpmt_report_english_0.pdf)

There are lots of benefits if you use your credit cards, and here are some of the major ones: 

1. Easy way to build up your credit rating. 

Every Canadian resident has his or her own credit profile kept by the credit bureaus (i.e., Trans Union and Equifax). Using credit cards and paying off the bills on time can help you build up a solid credit-rating, which will benefit you a lot if you are leasing a car or having some bank loans. 

2. Sign-up bonuses = free money.  

Many of the issuing credit cards in Canada have the so called "sign-up bonus": a welcome incentive for the approval (and usually achieving the spending requirements)  of a certain credit cards. Those welcome bonuses usually come in the form of points or frequent flyer miles. If you know well about how to maximize the points value, you will find it easy to use the sign-up bonus to cover lots of your travel-related fees.  

3. Great package of insurance and protection. 

Credit cards have "zero liability" which means all of your transactions must be authorized by you to be validated. You don't have to worry about fraud purchase using your credit card information because you can always claim it by just making a phone call. 

There are also different types of insurance coverage depending on which card you get, including the awesome travel insurance benefits and retail coverage.  

4. Easy access to lots of privileges 

You may be envy of those upscale people who walk in and out of the guest lounges in the airports and always have the priority check-in and reserve the business class seats. These may not be so difficult if you can make the most of your credit cards: some the high-end credit cards can offer you free access to those lounges, faster way to redeem your business class flight with ease, and instant upgrade to high tier membership tiers with lots of hotel loyalty programs. If you travel a lot each year, those FREE privileges can win you a huge deal! 

5. Universal acceptance and much greater spending power. 

Lots of debit cards are not accepted if you are travelling abroad: does it mean you have to carry lots of cash with you? No, you just need your credit cards to deal with this.  

The spending power of credit cards is much higher than that of debit cards: you can boost your credit limit if you keep good records paying off your statement balance. You don't have to worry about transferring money from your savings account to your chequing account before large purchases. 

6. Much better rewards. 

Whether it is a cash back card or a points card, credit card can help you accumulate your rewards: you can usually have at least 2% return on your purchases if you know how to choose which card to pay.