Using a credit card (like the offers from Tangerine Bank) for additional purchasing power is a great way to lock in emergency spending capital. However, smart credit card usage is crucial for all homeowners and other buyers in Canada, the U.S. and elsewhere. Credit cards offer unrivaled access to capital, yet they can also ruin the financial future for a spender without good purchasing habits.
Avoiding credit card mistakes is something that all borrowers will need to do, yet it can be a challenge to even understand the full spectrum of no-no’s when it comes to making purchases, from clearance sneakers to brand new apparel from Nordstrom, with a credit card. Read on for our case study article of 3 major Credit Card mistakes and how to avoid them.
1. Pay complete credit card bill every month
The number one rule for using any credit card, whether MasterCard, Visa, or any other card, is to not spend more than you can afford. This is of course easier said than done, but maintaining great spending discipline is a core component of proper credit usage. The average American carries over $6,000 in credit card debt, not to mention their student loans, mortgage obligations, and medical bills. This is more than the typical consumer can pay off in any one month, meaning that finance charges will quickly add up to increase the total debt burden to a huge new level. These same debt obligations exist for Canadians even though they are, on the whole, better at leveraging their savings accounts than their U.S. counterparts.
Paying off balances every month saves you from incurring the punitive interest rates that finance charges tack on for the privilege of utilizing someone else’s money for your purchases in the short term. But in order to do this, you need to be in the habit of only spending on the things you can afford. You should also know how to use virtual card for online shopping and many other activities. If you use in a safe manner, it can do wonders for you.
2. Take advantage of incentive programs
Credit card incentives are highly enticing for those looking for a new card. However, the best way to leverage a cashback card (for use on purchases ranging from the basics to handbags, Father’s Day presents, or your favorite denim shop), coupon options, mobile app offers, or the travel points that can be racked up on purchases at The Rack, your favorite restaurant, or the grocery store is to always maintain a low revolving balance. This is done by internalizing that first and most important rule of credit usage.
By maintaining low or zero balances, you can then mobilize points or cash back to their full potential. Otherwise, you’re overpaying for the ability to lower your travel costs or other points rewards redemptions.
3. Continue to monitor credit offers of enrollment from online banks
The average Canadian holds just over two credit cards (actually, 2.2, to be exact) in their wallet at any given time. As compared with Americans or Brits, this is far lower. Yet swapping out cards when an introductory offer expires is a great way to always get the best bang for your buck when it comes to purchasing on credit.
With an online bank, like Tangerine, and the Tangerine credit card in your wallet, you can lock in a great new introductory rate from a trusted savings account and chequing account provider with years of community goodwill across Canada. Tangerine was formerly known as ING Direct Bank, and its Tangerine Card offerings are robust enough to fit any Canadian’s financial needs. In addition to savings accounts offered by the online bank, automated payments and overdraft offerings come standard with the bank’s chequing account.
It’s no wonder why Tangerine and its wide range of financial product are much loved among the Canadian consumer community as one of a few essentials. Looking to ScotiaBank, Tangerine, and others for great card bundled chequing account, savings account, and credit offers that are backed up by great customer service is every consumer’s responsibility.
Locking in great spending habits with the help of credit starts with your approach to the use of this capital. Credit can provide a solid boost in times of need or act as a shovel to help dig you into a hole. Making sure that you’re always leveraging capital for the best possible benefit is just a part of life. Use a fantastic card issuer and bank that you trust for the best results.