Skip to main content

A first-timer’s guide to credit cards

How to

Use credit cards wisely


With great power, comes great responsibility. Credit cards can be a valuable tool to your overall financial health, but it’s important to avoid some of the trappings of using a credit card.

What is a credit card?


In the most basic sense, a credit card is a piece of plastic that allows you to pay for things with borrowed money. It’s an agreement between you and a financial institution that lets you opt to pay on credit rather than with actual money. In practice, it’s a little more involved than that. Your credit card comes with a limit, which represents the amount of money you have to borrow against. And those charges? You’re going to pay interest on them if you carry a balance. But we’re getting ahead of ourselves. Before you get swiping, make sure you know why and how to spend using credit, so you can do it responsibly.

Why should you have a credit card?


There are lots of reasons for owning a credit card. Here are some of the most common ones:

To build credit.


Somewhere down the line, you’ll need a credit history. When used correctly, a credit card is one of the easiest way to build credit. When the time comes to take out a car loan or get a mortgage, your financial institution will refer back to your credit history to see how reliable you are with borrowing money. So even if a credit card seems unnecessary, making frequent purchases with it and immediately paying it off will help you build a positive credit history, which will pay off in the future.

To make certain kinds of purchases.


If you want to buy a plane ticket or do any kind of online shopping, you’re going to need a credit card. Ditto for booking a room in a hotel, concert tickets, and more. A lot of cards actually reward you for using them with things like cash back, travel points, or exclusive offers. As long as you’re managing your balance wisely, using your credit card frequently can help you treat yourself later.

For emergencies.


Hopefully it never happens, but every once and while we all get stuck in emergencies where we just don’t have cash on hand. And although you should never put something on your credit card if you don’t have the money to pay for it, your card might help you get out of a tough situation in the very short term, or at least until you can take stock of your situation and sit down with your financial expert to come up with a longer-term plan.

How should you choose your credit card?


Once you’ve decided to get a credit card, you have to ask yourself: which one should I apply for? There are a number of different types of credit cards, each with their own characteristics and advantages:

No or low annual fee cards


These cards offer the convenience of having a credit card in your wallet without a high annual fee. Most low or no annual fee cards offer basic rewards but may not accumulate perks as quickly as a fee-based card.

Low interest rate cards


Many cards have interest rates upwards of 19.5%, but there are cards with lower interest rates available in exchange for a low annual fee. These cards often don’t accumulate rewards quickly, but if you find yourself carrying a balance on your card from month to month, they might a smart choice.

Rewards cards


For every purchase you make on your card, you’ll accumulate a set number of rewards points. Points can be redeemed for all sorts of different things, ranging from the latest gadgets and gift cards to concert tickets and experiences.

Travel rewards cards


These cards are similar to a rewards card, but their rewards are focused specifically on travel. Travel rewards cards feature points that can be redeemed for flights, hotels, and car rentals and often include insurance coverage for things like out-of-country medical, lost luggage, or changes to travel plans.

Cash back cards


Not all card rewards come in the form of points. For every purchase you make, cash back cards offer a percentage back in cash credited to your statement at a set time.

Student cards


You guessed it! These cards are specifically meant for students who are just starting to build their credit. These often come with low or no fees and offer basic rewards.

US dollar cards


As the name indicates, these cards allow you to make purchases directly in US dollars.

When choosing a credit card, it’s best to be honest with yourself about how you plan to use your card and what’s really important to you. For instance, if you’re keeping your card in case of emergencies only, a low or no annual fee card might make the most sense. If you’re a frequent traveller, the protections and perks that come with a travel rewards card might provide you with the best value.

Once you have a better sense of your needs and habits, take the time to go online and do a little bit of research. Read about different cards and compare them. Look at the features and benefits and what you need to apply. Some cards have a minimum income threshold to qualify or are designed specifically for students, so make sure you know what you’re getting yourself into.

How do you apply for a credit card?


Just because you want a credit card, doesn’t mean you can always get a credit card. Like any kind of credit, there is an application process to complete before are approved for a card and you can start spending. To apply for a credit card, follow these three short steps:

  1. Visit your financial institution’s website or branch office.
  2. Fill out and submit an application, including accompanying documents like your pay stubs, Social Insurance Number, a copy of your identification, and proof of employment and income.
  3. If you’re approved, activate your card!

Be thoughtful about the number of credit cards you apply for. Each time you apply for a credit card there will be an inquiry made on your credit history. Lots of inquiries over a short period of time can impact your credit score and lots of open, available cards can hurt your chances of qualifying for more credit in the future.

How do you manage your new credit card?


So, you have your credit card. Now what? While using your card is fairly straightforward, there are a few important things to know about managing your card.


Statements provide a detailed snapshot for a set period of time and outline your purchases, how much you owe, the minimum payment due, and when you need to make a payment. Statements are monthly but may not run from the first day of the month to the last. You can expect to get a monthly statement whether you use your card or not. When you get your statement, be sure to review it carefully. If something doesn’t make sense on your statement, or if there is something you don’t recognize, don’t be afraid to speak up and ask your card provider for more details.


Every credit card has an interest rate. When you make a purchase with your credit card, your grace period for that transaction starts. This means that you have around 21 to 25 days depending on your credit card provider to pay off that transaction before interest charges kick in. If you keep an unpaid balance on your credit card, interest will keep adding up month by month. But if you pay off the full balance on time, you’ll never have to pay interest! And remember, only making the minimum payment required each month still means you get charged interest on the full balance.

Terms and conditions

If an offer seems too good to be true, it probably is. Be cautious when it comes to 0% offers in exchange for making a big purchase and be sure that you understand the terms and conditions before signing up. Zero interest doesn’t last forever, and some credit cards can charge very high interest rates once their introductory offers have expired.

Cash advances

While most of us tend to think of credit card purchases as tapping or swiping your card in a store or inputting your information online, you can also use your credit card to get cash or to make cash-like transactions in the form of a cash advance. Taking a cash advance might sound like a good idea, but it can be a costly way to access cash in the long run. Cash advances often charge a small fee to initiate and almost always charge a higher rate of interest than regular purchases. The other thing to keep in mind is how interest accumulates. With regular purchases, you have a grace period (usually 21 days or more) before interest begins to accumulate on the money you owe. When you take a cash advance, interest starts to accumulate right away and will continue to accrue until the whole amount of the advance is paid off in full.

How can you keep your information safe?


Credit cards have a lot of great security features but knowing how to protect your card information is probably the biggest thing you can do to keep yourself from fraud. Here are a few easy tips that can help:

Be aware of email phishing or fraudulent phone calls.
Scammers will often try to create a sense of panic, trying to persuade you to give out your information. Don’t do it!

Never give you credit card info over the phone or in an email.
Your credit card provider or financial institution will never ask for your credit card info over the phone or via email.

If you ever lose it, cancel your card immediately.
Fraudulent transactions can be refunded if you report the card missing before they happen.

Don’t write down your credit card information to store it.
Enough said there!

Review your transactions regularly and ask lots of questions.
Regularly check your transactions and balance and don’t be afraid to ask your card provider questions if you don’t recognize something.

You can count on us

Online or in person, we’re here to help with all the banking services you need: