These daily financial tips are designed to be short ideas covering different aspects of family and business finances. They are short pieces intended to provide information to enable individuals, families and businesses to make informed financial decisions. Not all tips will apply to every situation, but over the course of a year, most financial topics will be covered. Check in regularly and share with friends and associates.
The variety of credit cards has exploded over the last decade. Many credit cards today are affinity based, providing some incentives or points associated with shopping at particular stores or lifestyle shopping such as travel, movies, cash back etc. Banks have multiple different credit card offerings. Some charge fees for the privileges and others do not. It can be daunting and confusing to choose.
Many people choose a credit card based on points or other incentives offered. These incentives are not free. In most cases, there are fees associated with the card. Many credit cards offer special ‘introductory interest rate offers’. Beware that these lower interest rates are only for a short period of time, usually 3 – 6 months. If you’re carrying balances on your credit card, be more concerned with what the regular, longer term interest rates and fees are. Redeeming incentives for travel, etc may also have limitations (such as black out periods, limit seat availability, etc) so may not be as flexible as imagined.
More than any incentive being offered, the best practice when using credit cards is to pay the monthly balances off in full. If you find that you are starting to carry monthly balances on your credit card, then consider modifying your credit card usage (use debit card for payments) to pay down the balances. Interest rates on credit card balances range from 18% – 24% or more. Do not carry multiple credit cards as this can become a debt spiral. One or two (having a back up credit card) is generally sufficient. You can always adjust the credit limit to suit your needs.
If you are carrying credit card balances (especially if you carry balances on multiple credit cards), it is generally more advantageous to consolidate all the balances into one monthly loan payment. Loan interest rates are significantly (50% to 75% less) lower than credit card balances.
As we are in the midst of the prime shopping season, have a shopping plan and budget to avoid the credit card blues in January. If not sure what is the best credit card for your needs, there are a number of online comparison tools available which will compare multiple institutions. One of the more popular sites is www.ratehub.ca
Share these ideas with friends and family and come back to check out daily financial tips and ideas. If there are subjects you wish covered or questions, please email me and I’ll include them in future posts.

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