Protect your plastic!

A few weeks ago CBC published an article that states there are 74 million credit cards in Canada or three for every Canadian over the age of 18. With all these credit cards being used, we wanted to pass along these tips from Mastercard on how to use your credit card responsibly:

Do...

• pay your credit card regularly. Some people think carrying a balance month-to-month is fine. Its not. Your monthly due date is a deadline. Pay your entire bill, or everything you can afford, each month just like you would your rent.


• pay your bill near the end of your grace period, i.e. the time between your purchase date and the date that interest begins to build, (but always err on the side of getting your payment in on time). This is the equivalent of a free short-term loan. Check the terms of your credit card, but as a rule of thumb, paying on or just before your due date will likely allow you to enjoy the free loan without incurring interest charges.


• contact your card issuer if you have problems. For example, if your bill is delivered late or you know you will be unable to pay your bill on time, contact them to make payment arrangements. Look on your bill for details on how to contact your issuer for questions or problems.


• consider a credit card with a low interest rate (APR) if you plan on carrying a balance each month. And be sure to learn the impact of compounding interest - the amount you're charged in interest on top of purchase and interest charges unpaid in previous months.

Don't...

• use your credit card like a second paycheque. And, do not purchase goods beyond your means.


• put off paying your bill if you're near or past your due date. Payments are processed for the day they are received, not the day they are mailed. If you pay by mail, give your payment as many as five business days to arrive. And, never send cash.


• be ashamed to make payment arrangements if you have financial difficulties. The longer you ignore your bills the worse they get. Call your card issuer to arrange a payment plan, or if your case is severe visit a credit counselor.


• underestimate the negative impact of late payments. Most issuers calculate interest daily, so the longer you wait the more you pay. Late payments can also lead to late fees, higher interest, and a black mark on your credit history.