Credit in a New Country:
A Guide to Credit in Canada
Tips for Smart Credit Card Use
- Don't pay interest on items you don’t really need, or for things that will be gone
by the time you get your bill. Otherwise, it's the opposite of getting a bargain
– it is like buying that item marked up instead of marked down!
- Read your credit card agreements and the correspondence you get from issuers. There
may be important information in them. For example, credit card issuers can generally
change your interest rate with only 30 days written notice – even on a card with
a fixed rate, if you have missed payments.
- Always mail your payments for your credit cards at least 5 business days before
the due date. Most credit card companies reserve the right to increase your interest
rate on new purchases as well as any current balance to a very high rate if you
are late.
- If you pay your debts late, a late payment can report for six to ten years. Your
other credit card issuers may raise your interest rates if they see you are falling
behind on other accounts.
- Call the credit card company if you can’t make a monthly payment on time. Ask them
about alternative payment arrangements that won't damage your credit or raise your
interest rate. A credit counselling agency like Consolidated Credit Counselling
Services of Canada, Inc. can help you work out a payment plan with your creditors
if you are having trouble keeping up. They can be reached at 1-800-656-3920.
- Notify your credit card issuer 30 days before you move, and don’t assume that just
because you didn’t get a bill you don’t have to pay it. If a bill doesn't arrive,
call your card issuer or lender immediately.
- Try to pay off your total balance each month. Just paying the minimum is a trap.
If you pay just the minimum of a $1,000 debt on a card with an 19% interest rate,
it will take you more than 8 years to repay.
- Aim to keep your debt payments at less than 10% of your income after taxes. If you
take home $750 a month, for example, spend no more than $75 a month on credit
