Majority of us have a credit card. Many of us have a love-hate relationship with our credit card. We love it when we’re away on holiday, paying for some new furniture or taking our mom out for dinner. However, we hate/cry when our statement (which, by now you should be looking at in close detail!) comes to our inbox or mailbox. Now that we have you organized and creating a budget, you should know what your interest rate is and what you currently owe.
All that being said. Do you still find you’re paying your credit card balance, yet, still rack it back up and by next paycheck you’re not better off than before? Does your credit card leave you feeling anxious, sad and makes you want to tear your hair out? Keep reading friends, we are in this fight together!
What credit card is best for me?
This, our little grasshopper, is where you need to do some research. Thankfully, the fine folks at greedyrate.ca have done the hard work and laid out the best credit cards in various categories. You can check them out here: http://www.greedyrates.ca/blog/category/canadian-credit-card-reviews/#.V2LLCaK-aMs
What card you use is really based on your needs. Do you travel often? Do you shop at one particular store? Do you have bad credit? You will need to think about your current lifestyle and decide how a card can help.
When should I use my credit card?
When used properly, credit cards can be a good thing. You need a credit card to build your credit, so you can be an adult and apply for a mortgage, rental home or car loans. For us, we put everything on our credit card. We do this because we can easily track our purchases and collect travel points. However, we pay off the balance each month. If you’re just climbing out of debt, you may want to not use a credit card until you can get your debt under control.
But I pay the minimum payment! Isn’t that good enough?
NO. NO. NO! Sorry, went a little nuts there. Many people think that because they’re paying off the minimum payment, they’re fine. The minimum payment is set up by the lender so they can collect more interest from you. You are not paying off the principle and this can have a huge cost. For example, if you have a balance of $5000 on your credit card, with a minimum payment of $10 and have an interest rate of 19.99% equals to:
- 251 payments
- $5,983 in interest!
- Almost 21 years to pay off
Imagine what you could do with an addition $6000 a year?! If you take anything from this post, let it be that paying the minimum payment hurts more than it helps.