‘Tis the season for giving to others (and sometimes sneaking in a little something extra for yourself). It’s also the time of year when you may be racking up more dollars on your credit card than Rudolph’s collecting frequent flyer miles.
Here Ivy Chia, CWB Assistant Vice President, Personal Banking, gifts us with her top tips for good credit card use both during the holidays and all year long. Either way, following these nice credit card habits will help keep you off the naughty list – both Santa’s…and your bank’s.
Alert your credit card company if you’re on the move this holiday season
While none of us are really traveling these days like we used to, if you are going to be moving around extensively over the holidays it’s best practice to let your credit card company know. It’s not uncommon this time of year to see activity on a card that shows it being used in one location and then in a different one a very short time later. If your credit card company doesn’t have a heads up, they could flag this as suspicious activity and try to get a hold of you to confirm.
Also, be sure to take advantage of the travel benefits your card may have, including things like trip cancellation insurance, free Global Wi-Fi, and airport lounge access.
Collect points –and make your points card your primary card
As long as you’re always paying off your card on time, use it to your advantage and collect those points!
You can maximize your point collection by having a primary card (think: more dollars = more points). If that card is a CWB Mastercard®, you’ll earn up to 30 per cent back on your spending with the ability to use your cashback towards your credit card balance at any time. And remember to explore any holiday rewards that may be available when you use your card at certain retailers.
And while sometimes it’s tempting when you see a promotion to get this points card and that points card, the reality is a) multiple cards can be hard to manage, and b) you’re not getting the biggest bang for your buck in terms of collecting those points if you’re spreading your dollars over numerous cards.
If you have multiple cards, remember to manage all of them
It’s best practice to have both a primary card and a back up – for example, if your primary card is a Mastercard®, maybe your back-up card is a Visa. This ensures you’re covered in a scenario where only one of the two is accepted by a vendor. That said, going beyond a primary and back-up card to having multiple cards can be really tricky to manage when it comes to keeping track of what’s on them, as well as their payment deadlines. Regardless, for all cards, always read the fine print so you know what it covers and what it doesn’t – for example, benefits like travel, or loss, or theft, or car insurance.
Something else to be mindful of: every time you’re applying for credit, your credit bureau is pulled and it shows the last time somebody pulled it. So, in addition to credit cards, maybe you’ve applied for a car loan, or another line of credit, or maybe you opened a bank account – all of these things are credit products. The credit bureau will show the history and frequency of your credit being checked, and if it’s a case where there have been multiple pulls in a short period of time, your credit score could be negatively impacted.
Pay on time – and at least the minimum amount
While the best practice is to always pay the full balance by the statement due date to avoid incurring that high interest rate, at the very least you need to be paying the minimum amount. If you don’t, this will show up as a missed payment on your credit bureau report. Frequently missing payments will negatively impact your credit score, which will have an unwelcome effect the next time you’re looking for a loan or any kind of credit.
(Tip: For eligible purchases over $500, CWB Mastercards offer Flexible Payment options that can help manage larger payments in smaller monthly payments.)
At the end of the day, it’s important to be disciplined about making those payments. If you’re someone who’s tempted to spend more than you have, your safest option is probably to re-think putting it on your card in the first place
Be mindful of statement deadlines and set a time to sit down and pay them
We’ve all got a lot on the go, so it can help to schedule paying your card into your calendar so those deadlines don’t accidentally slip on by. You might also consider setting up an automatic monthly transfer to your credit card from your bank account if you have a good sense of how much you’re typically charging to your card each month. But if you’re someone who always forgets to pay their credit card bill (even if you have the funds to do so), then the best thing so you don’t get into a bind might be to simply use cash or a debit card instead.
Know your limits
The good news is, generally you’ll be notified if you’re getting close to your credit card limit. But the bottom line is you never want to go over it – there’s a not-so-pleasant charge if you do. If you’re someone who’s paying off your balance every single month, then you know your limits. (Tip: Some credit cards offer budgeting and tracking tools to help you track your monthly spend. These kinds of tools can be a great way to support your financial goals.)
If you’re keeping balances on there and it just keeps racking up, then it can get really hard to keep track of where you’re at compared to your limit and it’s best to speak with your bank about coming up with a plan for paying it off.
But if you’re repeatedly getting close to the limit and are still able to pay it off, you may find that you actually just need a higher limit. Be proactive, contact the credit card company, and have a conversation.
If you’re having trouble paying off your balance, talk to your bank about lower-interest options
Carrying a balance for one or two months is one thing, but if you know you can’t make even the minimum payments and the balance is just going to keeping sitting there, contact your bank and have a conversation about other ways to pay it down. For example, transferring the balance into a debt consolidation loan that has a much lower rate.
When it comes to good credit history – start young and keep it up
A credit card is usually the first credit product a young person will have. And they’re usually pretty easy to get – even as a student, where you’ll typically be set up with a low limit. It’s a good idea to get a credit card as early as possible to establish credit history. Having a credit history, especially in good standing, gives you credibility that can work in your favour down the road.
Of course, and this applies to anyone, don’t just get a credit card – but maintain it (aka please pay your balance!). If you forget or don’t make payments, this can actually follow you on your credit bureau report for years. Having good credit is good currency for so much more in your life, so make it a priority.