Credit cards - the right way

Obtaining a credit card today is simpler than ever; with banks, credit unions, retail stores and even grocery stores offering attractive credit card options. When used the right way, credit cards can be an effective way to build and improve your credit score, making it easier to obtain financing for other larger purchases such as buying your first home.

On the contrary, they can also be your financial downfall if you don’t use wisely. If you can manage spending and use your credit card responsibly, there can be a number of advantages; just be sure to follow these simple suggestions:

  • Select a card that meets your needs based on your income and spending habits.
  • Charge only what you can pay back at the end of the month. If you are unable to completely pay off your card balance each month, always pay more than the minimum amount owing and make payments as soon as you can to reduce daily interest costs.
  • Make sure you understand the features and benefits of your card. Some cards eliminate the need for separate purchase or travel protection, such as trip cancellation and interruption insurance or extended warranty protection.
  • Many credit cards offer some kind of rewards program, giving you back about one percent of every dollar spent in the form of cash, points, travel reward miles, merchandise or even investments. Although it’s not recommended to use credit cards just to earn rewards, when you use a rewards card wisely, you get features and value you don’t get with cash or debit cards.


Despite the advantages of a credit card, take caution. Using a credit card may not be right for you if:

  • You can't pay your credit card balance in full and on time. If this tends to happen to you, stick with cash to avoid additional fees.
  • You tend to spend more than you can afford or make impulse purchases
  • If your monthly balance is growing, analyze your expenses and cash flow and create a plan to begin to pay down the balance. Consider paying cash or debit to limit your spending.
  • You apply for more cards than you really need. Each time you apply for a credit card, reporting agencies record that action; applying for too much credit can damage your credit rating as it can appear that you are relying too heavily on credit.
  • You make cash advances on your cards. Remember, you are charged interest from the day you take the advance until the day you pay it off, making it even more costly.

When used correctly, credit cards can be useful financial tools. But it’s important to remember that there are many other tools and strategies that can help you achieve all your financial objectives. Start filling your financial tool kit by talking to a professional advisor today.


This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.

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About the Author

As a Regional Director at Investors Group it is my mission to grow the Okanagan Region of Investors Group. I help recruit, train and develop Consultants at Investors Group. I am always looking for professionals that would like to be their own boss and enjoy the training, support, rewards and compensation for being a successful Consultant. Also ensuring that we continue to be involved in the community in which we live.

As a Financial Consultant it is my passion to serve clients by giving them full financial planning advice. This includes investments, insurance, retirement & estate planning and tax reduction strategies.

Connect with me on LinkedIn: http://www.linkedin.com/pub/karen-erickson/15/391/1b6

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Contact Karen by email at:  [email protected]


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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