You can use a credit card to make purchases without using cash or debit. It’s better to make online purchases with a credit card because the purchase is insured – it’ll be easier to recover the money if you’re not satisfied with your purchase.

When you use your card responsibly and make payments on time, you build your credit history. Having your own card builds credit history faster than a secondary card.

Good credit history can help you:

• Get a car / house loan.
• Apply for a larger limit on your credit card.
• Secure a rental apartment.

When you pay with credit, you're not spending your own money - you're borrowing from the bank and will have to pay it back. This is a loan, but it can be interest-free for up to 55 days.

If you don’t make the full payment when it's due, you will be charged interest on each purchase you made, starting from the date the item was purchased.

• This can get expensive because credit cards charge high interest rates, often as high as 20%.
• You may also be subject to additional late payment fees.

Don't withdraw cash directly using a credit card from an ATM - you'll be charged interest immediately (no interest-free period).

Credit cards come in handy when you travel - for making hotel / car rental reservations.

But, unless you absolutely must, don’t use your Canadian dollar credit card to pay for transactions abroad.

• The bank probably won’t give you a favourable exchange rate on such transactions and will likely charge you an additional foreign currency transaction fee.
• Instead, load your spending money onto a prepaid card before you go abroad. It’s like a gift card that you can spend anywhere.

You get what you pay for.

• Free cards have fewer features but get the job done.
• Premium cards (those with higher fees) have additional perks, like purchase insurance, additional reward points / higher cashback, and flight / travel points.

Earn points / get cash back when you purchase items with your credit card.

• The bank tracks your spending and sends you a cashback refund once per year.
• Points can be redeemed for goods and services at participating retailers, like movie theaters, gas stations, restaurants, clothing stores, and airlines.

If you don’t make your monthly credit card payment, you’ll be charged a very high interest rate on the money you borrowed. You should never put yourself in a position where you have to pay interest – always make your payments in full and on time.

Credit cards have no limit on the number of transactions.

They do have a monthly limit, which dictates the amount you can borrow over the course of a month.

• If you exceed the limit you will be charged an over-the-limit fee.

You don't need to provide your SIN (social insurance number) when applying for a credit card.

You may be asked if you would like to purchase additional services, for which you’d have to pay, such as payment protection.

• It’s insurance that covers your monthly payment in case you can’t work.

Generally, you should decline and manage your credit card spending responsibly instead.

You will need a government-issued photo ID and proof of address. Try to bring your driver’s license / provincial ID and passport.

• Your address, phone number, and email.
• Your yearly income and where it comes from (family / gift / part-time or full-time / scholarship). Having some income will help with the approval. If you're a student, it's okay to have low / no income.
• The name of your employer (if you work).
• Whether you own a house or rent. If you own property they'll want to know how long you've owned it for.
• If you apply for a student card, provide the name of your college/university, program / area of study, and year.

Ask why you haven't heard from them / were declined - expect a clear and reasonable answer. It's okay to ask the banker for advice on how to proceed - you may be able to reapply.

• Perhaps your application was lost, some information was missing, or there was a mix-up of identities and the bank didn't manage to inform you / you missed the call.
• If you're older and have a credit history, perhaps it has a problem you need to clarify and/or fix.

Apply at a different bank / retailer or for a different card. Each provider runs their credit card business in their own way. Some tailor to students, some won’t approve you without a job / minimum income – always look for a provider that wants you as a credit card customer.

If you can’t get any type of credit card, just use your debit card or cash to make purchases.

• Credits cards should never be a replacement for borrowing money – only spend you can afford to repay by the end of the month.
• Note that if your credit card application was declined, it’s unlikely you’d get approved for a loan anyways.

If you can’t get a credit card in your own name, consider a joint credit card that you’d share with a family member who’s willing and able to support you if you fail to make payments.

Some banks offer secured credit cards. You’ll need to put up some cash (a deposit) against the card as security. Once you show you can use your card responsibly, you should be able to ask the bank if they can remove the security requirement and return your deposit.

• It’s not the same as a pre-paid card, which you load with cash and behaves like a gift card.

If used responsibly, both secured and joint cards help build your credit history. A pre-paid card does not build your credit history.

If your card is from the same bank as your chequing account, it's PIN (personal identification number) may be the same as your debit card's. If it's not, or your card is from a different bank, you’ll have to go to the bank or ATM and set a different PIN. You should always use a different PIN for each card, for security reasons.

• Don’t share your PIN, don’t write it down, and don’t allow anybody to use your card.

You'll still be able to use your card, even you don’t sign it, but it’s easier for a thief to use your card if they can put their signature on it.

Login online to set up email and text alerts. It's good to have alerts when you're getting close to your credit card limit and when large transactions go through successfully.

Protect yourself from going over your credit card limit.

• Call the toll-free number on the back of the card and ask for an ‘over-limit pad’. It stops you from making any purchase that would exceed your card’s limit - this prevents unexpected over-limit fees and interest charges.
• Not all banks /providers offer this feature, but you won’t find out unless you call and ask.

Login online regularly to monitor your transactions. Check for unexpected charges from your provider. If you see any, call / visit your provider and inquire.

If you card is stolen or you notice transactions that are not yours, call your provider immediately. Banks suggest you call within 24 hours if you suspect misuse – the sooner the better.

• The number to call is on the back of your card – if you don’t have your card, call customer service at the bank.
• The bank will likely investigate and will want to ask you a few questions. If you did nothing wrong and did not share your card or its number, you should not be held responsible for transactions that are not yours.

Credit cards are expensive if you don’t pay your balance in full each month. Missing payments also negatively affects your credit history. Before you damage your credit, find a cheaper way to borrow money (lower interest) and pay your credit card debt.

• Focus on repaying the new loan on time – that will actually improve your credit score. You may need to get more hours / another job to earn more money or cut non-essential expenses.
• Cut up your credit card – you clearly don’t know how to use it responsibly. Consider a pre-paid card to make payments or use your debit card.

You should only do so if you feel your credit card debt begins to overwhelm you. Your first option should be to repay everything you owe as soon as possible – to minimize interest paid and avoid over-the-limit and late payment fees.

Counsellors offer free advice and can help reduce your expenses, stay within budget, find cheaper debt alternatives than credit cards, and may help you enroll in a debt management plan (which means you could qualify for lower interest rates or even some debt forgiveness). As a last resort, they may recommend you declare personal bankruptcy.

Banks check your credit history when you apply for a credit card / loan. It shows how financially responsible you’ve been by tracking how punctual you’ve been when paying:

• Your monthly credit card bill.
• Amounts you owe on bank and student debt.
• Certain bills, like your phone or internet (but not utilities).

It also records when you repeatedly come close to or exceed your credit limit, and when you make multiple applications for credit cards / loans.

You can’t delete your credit history. The only way to improve it is by regularly paying bills on time and living within your means.

This is the most important habit to develop if you want to avoid credit card debt. Most people fall into credit problems because they live outside their means and use credit cards to sustain their lifestyles. If your lifestyle is too expensive, find another job / take more hours or remove non-essential spending from your budget.