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| Welcome to our December newsletter. In this issue: |
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• How do credit cards work?
• How do I choose the right card?
• How do gift cards work?
• Are your Holiday spending habits naughty or nice?
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How do credit cards work?
The holiday season is here – and for many Canadians, it’s a season of spending – often by using a credit card.
 Are you sure you know exactly how yours works? Are you sure you have the right one for you?
Used wisely, a credit card can be a very convenient way to shop. As a bonus, it allows you to make purchases with nearly a month to pay for them before interest charges kick in.
But buyer beware. Those little plastic cards can get you into trouble. It’s easy to overspend. Minimum payments are low. The debt can creep up on you slowly.
Before you put another piece of plastic in your wallet, make sure you know what you’re signing up for and what it’s really going to cost you. Learn more about how credit cards work. |
How do I choose the right credit card?
 With so many credit card offers out there, it’s enough to make your head spin. There are 4 simple steps to help you choose the right card.
- Learn about your options. Credit cards come in all shapes and sizes. Before you start shopping for a card, make sure you understand the different choices you have. Read: What credit card choices do I have?
- Ask yourself: how will I use this card? Your answer to this question will suggest which type of card would fit your needs better.
- Compare the basic features of each card. These features include:
- the grace period (By law, if you pay your full monthly balance owed, you are given 21 days after your payment is due to pay it without interest being charged to you, but grace periods from credit unions and finance companies may be shorter because these institutions do not have to follow Canadian rules. They follow provincial rules instead.);
- the interest rate you will be charged on the unpaid balance you owe after the grace period is over; and
- fees and when they apply.
- Compare any extra features the card offers. Some cards offer extras like insurance.
Check out our handy check list and detailed charts for comparing credit card features and much more on how to choose the right credit card for you. |
How do gift cards work?
If you’re like many Canadians, you have received a gift card or two in recent years. These cards allow you to spend a certain dollar amount at a retail store. You can usually get them right in the store or online. You simply pay the retailer whatever the card is worth. You can use cash, a credit card or debit card.
The big difference between a prepaid credit card and gift card is that you can use a gift card only at the specific retailer whose name is on the card. You can use a prepaid credit card used anywhere that accepts credit cards. For more information, check out our Blog post on Pre-paid Credit Cards – the Best of Both Worlds?
Gift card rules
There are rules in Ontario about expiry dates and fees on gift cards. These rules apply to most pre-paid gift cards, paper gift certificates and gift cards that can be reloaded. There are also exemptions to these rules. Learn more about how gift cards work. Also check out our blog post entitled “Gift Cards & Retailers – Do You Know What They Know?” for the psychology behind purchasing gift cards that most retailers are counting on.
Did you know?
- The gift card market in Canada is estimated to be worth about $6-billion dollars, so it’s clear that they’re a popular choice with shoppers, but they are also extremely popular with retailers.
- Most gift cards and certificates purchased in Ontario that have a set dollar value cannot expire. Your gift card keeps its value until you use it, as long as the company that sold it to you is in business.
- The seller of the gift card must clearly disclose or display any conditions or limits on using the card before you buy it.
- Service fees are restricted. You may be charged a fee to customize a gift card or replace it. You cannot be charged an inactivity fee or a fee to reactivate your gift card.
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Are your Holiday spending habits naughty or nice?
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Feature article from the OSC
Find out what happens to the shares of a company filing for bankruptcy.
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Funny Money Video on using Credit Cards
Learn the right and wrong ways to use credit cards. |
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We look forward to sending you our next newsletter soon. If you have any questions or feedback, please email us at contactus@GetSmarterAboutMoney.ca For more unbiased money and investing information, go to GetSmarterAboutMoney.ca
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