The #1 Tip for Credit Card Holders

Did you know more than half of all users use their credit card incorrectly? Check out the #1 rule you need to follow!

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Did you know the average Canadian has 2 credit cards, yet most do not know how to use them correctly? The average credit card holder in Canada has nearly $4,000 in credit card debt.

These facts make credit cards sound like the worst idea ever. But, there are benefits to having a credit card, such as:

  • Establishing a credit history
  • Earning rewards or cash back
  • Additional insurance on purchases
  • A sense of security from having an emergency line of credit at your fingertips

Despite these benefits, credit cards can become dangerous if you are not financially responsible.

Do you have a credit card? Here is the number 1 rule you should follow.

The Golden Rule for Credit Cards

Let’s start with the basics. What is a credit card?


Credit Cards 101

A credit card is essentially a line of credit available at all times up to a designated limit. You can swipe your card at any time to make a payment.

When you use your card, your bank makes a small loan to you for your purchase. They are issuing you a short-term interest-free loan. This loan remains interest-free during your grace period (often 20-30 days). Once your grace period is over you will begin to owe interest on your purchases. Credit cards often have high interest rates. Many interest rates are 15-25%.

You are often only required to pay off a very small amount of the balance you are holding on your credit card. Banks allow you to do this because they earn big bucks from charging you interest. Unfortunately, this is often what gets people into financial trouble.


The Debt Trap

When you only make the minimum payment on your card a few things will happen:

  1. Your debt will continue to grow. When you pay the minimum balance you are spending money you do not have. This means you are simply the debt you have accumulated and postponing payment to another month.
  2. You will have interest charges. The banks are more than happy to charge you interest on the balance that you do not pay. Interest charges will continue to accumulate until you pay off your purchases. This can create a snowball effect on your debt.


Check out the remainder of this blog post over at Conifer Realty Investing!
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Did you know more than half of all users use their credit card incorrectly? Check out the #1 rule you need to follow!


24 Replies to “The #1 Tip for Credit Card Holders”

  1. Credit cards are so easy to misuse. But they’re so necessary nowadays. I use them more than cash usually.

    1. I definitely agree that they are necessary and they can be so beneficial! I rarely use cash. I usually prefer to use my credit card because I can earn cash back!

  2. Credit Cards are not always beneficial especially if you dont have self control. Its hard now a days to NOT rack up credit card debt. I am learning to live (barely) without using cards!

    1. I am also learning how to not rely on my credit card so much. I am one of those individuals who struggles with using my credit card correctly.

  3. I think the bulk of the post got cut off?? I can’t see beyond “What is a credit card?” SOS!

    Coming Up Roses

    1. Hi, Erica. This is just a small snippet of the post. The remainder of the post can be found at on Confier Realty Investing ( 🙂

  4. What is it about Canadians in particular in not using their credit cards correctly? I’m an American and know far too many people who have massive credit card debt. Always important to be on top of your finances.

    1. I think not using credit cards correctly is an issue for any individual regardless of what country they live in. Unfortunately, personal finance is typically not taught to everyone which results in unresponsible behavior.

  5. credit cards are a necessary part of today’s society

    1. They really are! The benefits often outweigh any benefits you would get from paying with only cash. I think it’s important for people to learn how to use credit cards correctly so they can utilize those benefits.

  6. Credit cards one of those grey areas in life. They are great if you are responsible

    1. You are absolutely right! Unfortunately, many people struggle with using credit cards repsonsibly.

  7. Harmony, Momma To Go says: Reply

    I’m American assuming all this info is the same we have the big rewards card but we pay off every month. Ahhh being a legit grown up…

  8. I’ve seen a lot of people mis-use credit cards too. It shows who is taught how to use a credit card and who isn’t. Pretty sad when you realize most people aren’t taught.

    1. It’s too bad that most people are never taught crucial personal finance skills. I really wish schools would add a personal finance class to their curriculums.

  9. Credit cards were dangerous to me. Thanks for sharing this “valuable” {pun intended ?} information.

    1. Haha! Glad you enjoyed this post!

  10. Credit cards can be dangerous, but yet so helpful. It is very important to know how to use one so you don’t go into debt. It is always a great reminder for those of us who have one, why we have one.

    1. I definitely agree! If you know how to be financially responsible they really can be a great financial tool.

  11. So true! Credit card companies hounded me even my senior year of high school. I was approved even without a job. I got in over my head and took years to pay them off. I learned to use credit cards responsibly and make it work for me and not against me.

    1. It amazes me that credit card companies will give credit cards to students who don’t even have a job. So many people go into debt because of it.

  12. Such a necessary evil. While I do appreciate the security and fraud protection that you get with a credit card, they are so easy to misuse. My husband and I are working through the Dave Ramsey method right now to pay ours off.

    1. They are super easy to misuse, which is why so many people end up in debt. Glad you and your husband have found a method to work on paying off your CC’s!

  13. Great post! It is very easy to accumulate debt with a credit card if one is not careful. I agree that pating in full each month is the best! Those interest rates can kill you! Thanks for sharing! 🙂

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