Make the Most of Everyday Spending with Your Credit Card
Do you have the right credit card to match your everyday spending habits? Are you using your card to maximize your points and benefits? Or are you leaving valuable rewards and savings on the table?
Finding a Canadian credit card that matches your daily spending habits can help you boost your points and rewards and may save you money. Using the right rewards card responsibly can support your everyday spending, assist in building a positive credit history and benefit you for years to come.
Here are a few tips for getting the most out of your credit card every day.
Track your spending habits
To make the most of your spending, you need to understand where your money is going. Review your last few credit card statements to identify your main spending categories. Is most of your money going towards groceries, gas or travel?
Do you make many small purchases? Or a few big ones each month? Do you carry a balance or pay your credit card in full?
Compare your habits to the perks and rewards that your card offers and see if there’s a mismatch. For instance, if you don’t travel much and your card rewards you in miles, maybe it’s time to consider a different card.
Maximize bonus categories and welcome offers
Once you have a better understanding of your spending and your credit card rewards, it’s time to create a budget for your credit card use. A budget can prevent you from overspending and can help you earn rewards more strategically.
With a budget, you can plan purchases based on the categories that will earn you the most points. For example, if your card offers different bonus categories every quarter, planning ahead can help you remember to prioritize purchases in those categories.
If you’re applying for a new card, planning ahead can also help you time large purchases to ensure you hit any spending threshold you might need in order to qualify for sign-up bonuses.
Always pay on time
Always pay at least the minimum required amount on time, even if you can’t pay the rest right away. Your payment history has the largest impact on your credit score, so you want to avoid making a late payment. Not only can a late payment damage your credit score, but it can also result in late fees and interest charges.
If you have a balance transfer credit card, a missed payment can result in losing your low or 0% interest rate and being bumped up to the standard rate.
To avoid late or missed payments, consider scheduling automatic payments.
Pay off your credit card in full each month
To make the most of your credit card, only use it for purchases that you’d normally make with cash, so you’re able to pay it off in full at the end of the month. That way, you can avoid paying interest on your purchases while earning any rewards your card may offer.
Paying off your card in full each month lowers your credit utilization ratio — the percentage of your available credit that you’re using at a given time. Credit utilization is a significant component of your credit score. Ideally, you want to keep your balances below 30% of your credit limit to avoid hurting your credit score. Paying off your card in full each month is key to keeping your balances low.
A higher credit score may help you qualify for better credit options in the future, which can be helpful when you want to buy a car or a house. It may also help you qualify for better loan terms, like a lower interest rate, which may save you money over the life of the loan.
Hint: If you find it difficult to pay a large balance at the end of the month, you can try making multiple smaller payments throughout the month instead.
These tips may help you take your credit card benefits to new heights
To make the most of your daily credit card spending, start applying these tips. By taking inventory of where you spend your money, you can easily find a credit card to maximize your rewards and perks. By paying your bills on time and in full each month, you can avoid interest and late fees and focus on maximizing your benefits and saving money.
